Written by Craig D. Robins, Esq.
The Future of Attorney’s Fees in a Big-Three Auto Maker Chapter 11 Bankruptcy Case
My friend and colleague, Scott Y.Stuart, Esq., a former Long Island bankruptcy attorney, wrote an opinion piece that appeared in today’s Dow Jones Daily Bankruptcy Review, entitled, “Big Brother And The Big Three: How Will Professionals Fare?”
With possible bankruptcies by each of the big three auto makers distinct possibilities, the news has been rife with articles about every aspect of a possible bankruptcy filing.
In Scott’s article, he poses the question: “In the unchartered waters of direct government intervention into the Chapter 11 process, where do professionals stand?”
Scott points out that the government will likely be a central player in any auto maker bankruptcy. He suggests that debtor-in-possession financing in such a case would likely be funded with taxpayer dollars. Thus, any case professionals, such as the bankruptcy attorneys, will in effect be getting their fees from this same pool of funds.
Scott ponders whether the bankruptcy attorneys will be under additional scrutiny and transparency since the government, in effect, would then be paying their fees.
He concludes that in the context of a Big Three Chapter 11 filing, since the continued operations of the company will likely be largely funded through public money, the dynamics of how bankruptcy attorney’s fees will be viewed and evaluated may radically change.
Scott is the former Senior Trial Attorney in the Office of the United States Trustee here on Long Island. He and I had a number of matters together in the 1990’s when I represented various debtors in Chapter 11 proceedings and he represented the U.S. Trustee. We also served on some panels together, explaining bankruptcy law to fellow attorneys and judges. He then went on to become department chair of Rivkin Radler’s insolvency department. Now he is a partner with Donlin Recano & Company, Inc., a prominent claims, noticing, balloting and distribution agent for complex Chapter 11 reorganization cases.
I was able to read the article because I currently have a trial subscription to Dow Jones Daily Bankruptcy Review, which I couldn’t justify subscribing to ordinarily, as the annual subscription rate is $4,800. They have a special three-year promotional subscription rate of $13,100 that will save you a few thousand bucks.