Failure to Raise a Stern Objection Violates a Lawyer’s Standard of Care
The lawyer whose waiver led to Wellness International avoided malpractice by the skin of his teeth.
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Debtors’ Attorneys Are Paid in Chapter 13 Before Secured Creditors
Indiana bankruptcy and district judges rule that secured lenders are only entitled to ‘adequate protection’ until the debtor’s counsel’s allowed fees have been paid in full.
Journal Issue
Bankruptcy Code
Bankruptcy Rule
PG&E Pays a Million a Day for America’s Biggest Utility Bust
Court filings show that fees and related expenses for lawyers, bankers and restructuring experts advising PG&E and its creditors have added up to nearly $140 million since the company went bust in January, Bloomberg News reported. That’s more than $1 million for every weekday since the case began — an expense that potentially cuts into funds that would go to victims of wildfires started by PG&E’s equipment. Those liabilities are what forced PG&E into the biggest utility bankruptcy in U.S. history. If the company exits court protection as planned by June 2020, and bills keep piling up at the current pace, the total could surpass $400 million. “The numbers are eye-popping, but that’s just how much bankruptcy costs,” said Jared Ellias, a professor of bankruptcy law at the University of California Hastings. And that’s not counting the court fight over PG&E’s soon-to-be released reorganization plan, or the millions in adviser fees to get it through the California Public Utilities Commission.
Judge Dismisses Jay Alix's Racketeering Case vs McKinsey
A federal judge dismissed claims yesterday by turnaround pioneer Jay Alix that McKinsey & Co violated racketeering laws when the consulting firm expanded into advising bankrupt U.S. companies, Reuters reported. Alix accused the consulting firm, known for its secrecy, of improperly concealing potential conflicts when it sought bankruptcy court approval to advise companies in chapter 11. The decision is part of a larger battle between McKinsey and Alix that has been waged since at least 2016 across multiple courts. Alix has said that he is fighting for the integrity of the bankruptcy system, while McKinsey has said that Alix is using the courts to try to stifle competition. Alix said that McKinsey’s bankruptcy work was a “criminal enterprise” that generated an unlawful profit of at least $101 million, at the expense of AlixPartners, the firm Alix founded. In yesterday’s ruling, U.S. District Judge Jesse Furman of Manhattan dismissed claims brought under a racketeering law known as RICO that McKinsey had harmed AlixPartners. “In sum, the link between McKinsey’s allegedly unlawful conduct and AlixPartners’ alleged injury is too remote, contingent, and indirect to sustain a RICO claim,” Judge Furman wrote.
