A judge cut the fees of financial adviser Capstone Advisory Group by about $1.57 million on Monday for its work on the bankruptcy of GSC Group Inc, saying it withheld information about a relationship with one of its contractors, Reuters reported yesterday. The ruling brings to a close a nearly year-long saga over how bankruptcy professionals handled GSC's insolvency and eventual sale to Black Diamond Capital Management. Bankruptcy Judge Shelley Chapman said that Capstone should have disclosed that Robert Manzo, the restructuring expert who helped sell and liquidate GSC's assets, was working as a contractor rather than a direct employee of Capstone. However, Judge Chapman said that the relationship itself, and the associated fee-sharing arrangements between Capstone and Manzo, did not violate bankruptcy rules, a blow to Black Diamond, which had accused Manzo of gross negligence.
