On Tuesday in Manhattan, a judge will consider approving nearly $400 million in fees and expenses for the professionals who worked on the American Airlines bankruptcy.
The amounts were recommended by fee examiner Robert Keach, a former American Bankruptcy Institute president who said the attorneys and advisers engineered “perhaps the most efficient airline reorganization case on record.”
Mr. Keach, a lawyer from Bernstein, Shur, Sawyer & Nelson PA in Maine, said in a filing that the case was one of the most successful ever, pointing to the full repayment of the airline’s secured and unsecured creditors as well as a return to equity holders, a rare outcome in a bankruptcy case. American parent AMR Corp. exited bankruptcy through a merger with US Airways Group Inc.
American’s lead bankruptcy counsel, Weil, Gotshal & Manges LLP, is set to earn the most on the assignment, with a $77.4 million bill. Law firm Debevoise & Plimpton LLP, which served as aircraft counsel, logged $54.1 million.
Four other advisers requested more than $20 million: Deloitte Financial Advisory Services LLP, with $36.2 million; financial adviser Rothschild Inc., with $30.5 million; and law firms Skadden, Arps, Slate, Meagher & Flom LLP and Paul Hastings LLP, with $28.9 million and $27.4 million, respectively.
Mr. Keach worked with the professionals to trim several million dollars off the bills over the life of the case, according to court filings.
On Wednesday in Manhattan, General Motors Co. will update a bankruptcy judge on its case with the so-called “economic victims” of its ongoing ignition switch fiasco.
The new iteration of GM in early May asked Judge Robert Gerber, the bankruptcy judge who oversaw “old” GM’s Chapter 11 and eventual sale to the U.S. government, to halt class-action fraud lawsuits filed by GM owners following the auto maker’s recall of 2.6 million vehicles with a faulty ignition switch.
At the May hearing, a lawyer for plaintiffs who have been financially harmed by the faulty switches said they were denied due process in 2009 as part of the company’s government-orchestrated 2009 bankruptcy and sale.
The judge said he would consider the due process issue first, a win for the plaintiffs.
In the first round of issues, Judge Gerber, who five years ago oversaw GM’s bankruptcy case and approved the sale, said he will consider whether General Motors is discriminating against the class-action plaintiffs by treating personal injury claimants separately.
The judge said he also would weigh in on whether GM committed fraud in 2009 as a result of the ignition-switch issue. He permitted limited discovery, if the parties could agree on the scope, in connection with the fraud argument.
In 2009, General Motors ‘ healthy assets were sold to a government-backed entity, forming the “new GM.” As part of GM’s bankruptcy plan, burdensome liabilities were left with the old GM.
The auto maker says plaintiffs in some 60 class-action lawsuits can pursue claims only against the old GM’s liquidating trust.
Also on Wednesday in Manhattan is a judge’s self-imposed deadline to rule on Genco Shipping and Trading Ltd.’s restructuring plan.
Judge Sean H. Lane has scheduled a Genco hearing on another matter for that day, but if is likely he will also issue a ruling from the bench on Genco’s highly contested proposal.
A group of equity holders vehemently fought the company’s plan at a multiday trial earlier this month, saying Genco undervalued itself and that more money could be available to shareholders. Genco disagreed.
Genco’s plan of reorganization would slash $1.2 billion in debt from Genco’s balance sheet by swapping more than $1 billion of senior debt for 81.1% equity in the restructured company. Current equity would be canceled, and holders would receive seven-year warrants for 6% of Genco’s new equity struck at a $1.295 billion valuation, which Genco said are worth $32.9
Judge Lane said at the end of the trial that he wanted to rule by July 2, according to Reuters.
-Stephanie Gleason and Sara Randazzo contributed to this article.
Write to Joseph Checkler at joseph.checkler@wsj.com. Follow him on Twitter at @JoeCheckler.
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