By Enron's own reckoning, the legal and accounting costs of its bankruptcy will exceed $1 billion in 2006. Typically, legal fees in a bankruptcy drop off dramatically after a company gains approval for a plan of reorganization -- a road map for its exit from bankruptcy -- which Enron expects to do early next year. But the company's budget through 2006 estimates more than $300 million will be spent after Enron confirms its plan. That's more than any company has ever spent confirming a Chapter 11 bankruptcy plan.while we keep track of the Miserable Failure Project, snicker at Senator Bill Frist's Web Shenanagans, and marvel at the Damn Liberal Media thanks to the efforts of oour newest member, Turquoise Waffle Irons in the Back Yard. Remember to update your blogrolls, and favor this Slimy Mollusc with a few links.
"It's shocking," said Lynn Lopucki, a law professor at the University of California at Los Angeles law school who studies bankruptcy professional fees. The largest amount of professional fees on record is the Luxembourg-based case of Saudi Arabian Bank of Credit and Commerce International, with $200 million in fees, although WorldCom may meet or exceed this total.
Sometime this summer, Enron surpassed $500 million in legal and accounting fees billed by more than three dozen law firms and a handful of accounting and consulting firms since the company filed for bankruptcy Dec. 2, 2001. According to Enron's budget estimates, it will spend $156 million in the second half of 2003 on professional fees. It projects professional fees of $229 million in 2004, $112 million in 2005 and $68 million in 2006.
The budget estimate is located in one of 18 appendices and more than 1,000 pages of amended documents Enron submitted to its bankruptcy court Thursday in support of its plan of reorganization. This is the third version of the plan and disclosure statement prepared by Enron. The modifications to the disclosure statement, which provides financial information and legal framework supporting the plan, came in advance of a hearing next Tuesday when Enron will ask Judge Arthur Gonzalez to approve the massive document, a key step toward confirming the plan.
Creditors have urged Enron to move quickly in developing a compromise plan of reorganization in large part because of a legal fee burn rate that exceeds $25 million a month. A lawyer for some creditors of Enron Corp.'s Enron North America unit that have closely followed professional fees said the future fee estimates are disturbing. "Obviously, that's of concern to our constituency," Judith Ross, of Thompson & Knight, said. "The whole point of a compromise was to move quickly."
Enron's legal expenses are notable both in gross and as a percentage of assets. Based upon estimates of about $12 billion in cash and stock to distribute among creditors, and an estimated cost of $700 million in legal fees before confirming its plan, Enron should expend about 6 percent of its assets for plan approval. By contrast, Kmart, with assets of about $11 billion and legal fees of about $138 million, spent just over 1 percent of its assets to confirm a plan. That's a more typical expenditure in a large bankruptcy, Lopucki said.
Enron, its bankruptcy lawyers and some bankruptcy professors have defended the company's expenditures by noting it is easily the most complex bankruptcy ever. The money in coming years will be spent to wind down outstanding issues and on litigation, Enron spokeswoman Karen Denne said. Legal battles include settling billions of dollars in claims and the dozens of lawsuits filed by Enron against former partners, including banks and other energy companies, seeking the return of millions and, in some cases, billions of dollars.
Study the Myths of the War on Terrorism and Iraq, travel around the world in 80 days with Nellie Bly, or learn how to shake hands with the president. While you're welcoming Pip and the Blogmanac to the League of Liberals, you'll be thinking universally and acting terrestrially. Just wait--it will all become clear!
The League of Liberals is
NOTE: If any of the membership wishes to call into question the leadership that has allowed inclusion of Ayn Clouter and The Politburo Diktat to the League now is the time to speak your piece. Welcome to "The Big Tent"
2 Tits Up Bush Brit Tabloid Growth Industry Here's shocking proof that US takes hostages and buys votes dying for Halliburton with the pilgrim Jihadist