New York firms cash in on insolvency tide

Big ticket insolvency and restructuring work is keeping the fees rolling in to New York's top law firms. Skadden Arps Slate Meagher & Flom has asked a Chicago bankruptcy court to authorise payment of its $10.6m (£7.1m) bill to Kmart Corporation.
While Skadden's bill is high, it is small change compared with Weil Gotshal & Manges' mounting charges to Enron Corporation. The firm has asked bankruptcy Judge Arthur Gonzalez to approve its $26m (£17.4m) bill, which comprises $23.7m (£15.8m) in fees and $2.3m (£1.5m) of expenses, for work undertaken between the beginning of December and the end of March.
Since the company's Chapter 11 filing last year, Weil Gotshal has dedicated more than 90 partners and counsel, billing between $365 (£244) and $700 (£468) per hour for more than 21,000 hours. The senior lawyers have been supported by 177 associates from the firm's international network, charging for 35,000 hours at up to $545 (£364) per hour.
Milbank Tweed Hadley & McCloy has submitted its bill to Enron for representing the Official Unsecured Creditors Committee. It has requested $2.5m (£1.7m) in professional fees and $232,000 (£155,000) in expenses for its work for the committee in February. Earlier this month, The Lawyer reported that Milbank had survived a challenge to its role as adviser to the creditors' committee.
Skadden also has an Enron tab running. Co-head of the firm's restructuring group and lead counsel for Kmart John Butler said: “As a matter of policy, we do not comment on fee applications pending before any bankruptcy court.” He added that Skadden had made accommodations on fees to the tune of more than $750,000 (£501,000) to Enron and $1.1m (£735,000) to Kmart.
According to the Detroit Free Press, Skadden's bill is made up of $9.5m (£6.3m) in fees for work handled from the date of Kmart's filing in January to the end of April, and $1.2m (£802,000) in expenses. Butler is understood to have recorded around $443,000 (£296,000) worth of billable time.
In addition to restructuring work, Skadden spent nearly 9,000 hours interviewing 125 former and current Kmart employees and analysing 700,000 pages of documents to assess possible wrongdoing.
A statement from Kmart said: “Paying professional fees is an appropriate part of the process. The applications are subject to scrutiny by a fee review panel and ultimately approved by the court.”
New York bankruptcy law firm Otterbourg Steindler Houston & Rosen is advising the unsecured creditors' committee in the Kmart bankruptcy. It has billed $1.2m (£802,000) in fees and expenses of $45,000 (£30,000).