Judge Dennis Montali, of the United States bankruptcy court, said that the Howrey estate is not an ATM machine when it comes to professional fee applications. From the months of June to October, Wiley Rein acquired $1.03 million from Howrey for its work done as debtor’s counsel on the Howrey case, according to the AM Law Daily.
In the month of April, Howrey filed for involuntary Chapter 7 bankruptcy in San Francisco, which was one month after the company dissolved. In June, the case was switched to a Chapter 11 when urged by Citibank, the estate’s largest creditor. In October, the case was put into the hands of Allan Diamond from Diamond McCarthy.
The $1 million payment from Howrey was approved by Montali despite arguments against it from Diamond, who was being represented by Steve Loden, a fellow partner at Diamond McCarthy. Loden said that the estate could not afford to pay that fee, which is why Wiley Rein should not receive the entire payment. Loden also claimed that none of the five firms that previously worked on the case should be permitted to receive more than 80 percent of the fees they have requested from Howrey.
Three firms, Murray & Murray, Salter and Company, and Richard Burdge all agreed to take the 80 percent now. Murray billed Howrey $119,235, Burdge billed Howrey $22,562, and Salter billed Howrey $632,560.
Protiviti, a financial adviser, is requesting a $1.15 million fee, which has been approved by Montali despite the objection by Diamond. Protiviti and Wiley Rein have already received partial payments for the work the companies completed on the case, with Montali approving the two companies to draw down on the retainers to acquire the remainder of the money.
Wiley Rein is still owed $364,000, which the $500,000 retainer fee will cover. Montali also told the firm that they could keep $68,000 from the retainer fee that was for a supplemental fee application. Protiviti is still due to acquire $65,000 even with its retainer fee.
The counsel for Citibank, Kelley Cornish, from Paul Weiss Rifkind Wharton & Garrison, objected to the fact that Protiviti and Wiley can collect the full fee amounts due to them. Cornish claimed that close to $11 million from the cash collateral of Citibank had been used to fund the case since it started. Cornish also went onto say that only $500,000 in new accounts receivable had been received by Citibank since November 1.
Diamond’s team is working on bringing new money into the estate while also trying to figure out how much each firm gets paid for its work prior to the trustee’s appointment to the case.
Joel Adler, a San Francisco attorney, was recently named in an application by Diamond to hire him for the bankruptcy case. Diamond hopes Adler can help to recover $36.8 million in accounts receivable still outstanding.