The (Monthly) Cost Of Bankruptcy
Readers have been recently inquiring why it is that so many financial advisors have sprouted all over the place and are scrambling to represent bankrupt companies: after all the company is, well, "bankrupt" - how much money can financial advisors really make on these kinds of deals? The answer may be surprising, especially in light of the proliferation of various splinter financial advisors who had previously been part of larger firms.
I present to you comparable fee schedule, compliments of Miller Buckfire, which itself was recently the target of a gratuitous campaign to demonetize the advisor in its noble (yet definitely not pro bono) cause of representing bankrupt REIT General Growth Properties. Luckily, the firm managed to convince the Judge and anyone else who cared that the total complete all in cap of $33 million in the event of a successful restructuring (and somehow nobody even jokingly assumed the Obama administration would let this bellweather of everything that is wrong in CRE liquidate) is more than earned: whoever said being proficient with excel macros, making pretty powerpoints and having a (formerly) big rolodex does not pay off.
But back to the matter at hand: below are the monthly retainer fees that firms such as Evercore ($400,000 a month in its reorganization of nationalized General Motors), Lazard, Blackstone and Rothschild extract out of complacent creditor committees and nationalized entities (in colorful splendor compliments of Miller Buckfire):
So when you wonder next how it is that banks will sustain themselves in the future and expense $1,000 dinners every night, now that IPOs (as much as Cohen and Steers would like to invest in the IPO of Simon Property for the 2nd time... and 3rd) and M&A are dead, Goldman controls all equity and fixed income markets, and the vertical yield curve is set to flatten, wonder no more: the vultures already are circling and are picking off the meat of their clients to the tune of about $10,000/day.
And speaking of $1,000 dinners, shortly Zero Hedge will analyze the expense report of one Capstone Advisory Group, made famous for employing one Robert Manzo, and how its "investment bankers" tried to slip one too many past the myopic eyes of its dazed, shocked and hypnotized creditors who had already gotten the Vaseline treatment thanks to Stephen Rattner's strikingly convincing negotiating tactics.