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Some of the $15 million McKinsey & Co. is paying to resolve allegations of inadequate conflict-of-interest disclosures in large corporate bankruptcies could end up in the pockets of the firm’s own employees because of its extensive investment holdings, WSJ Pro Bankruptcy reported. Lawyers for McKinsey told a bankruptcy judge on Thursday they couldn’t guarantee the firm’s employees won’t indirectly benefit from the settlement payout, which is meant to hold McKinsey accountable for allegedly improper disclosure practices that have dogged its bankruptcy business. The payment stems from a settlement between McKinsey and the U.S. Trustee Program, a unit of the Justice Department that oversees the bankruptcy system. The trustee alleged McKinsey wasn’t forthcoming about investments it held that gave it an interest in the outcome of bankruptcy cases it advised on and said the firm lacked “timely, voluntary and direct candor in making disclosures.” McKinsey didn’t admit any wrongdoing.

More than 100 Kirkland & Ellis partners, and about 240 firm lawyers overall, billed time in the Toys “R” Us bankruptcy proceedings, netting the law firm more than $50 million, American Lawyer reported. A judge on Friday approved $56.2 million in fees requested by Kirkland, according to an order filed in the Eastern District of Virginia. Kirkland billed for 57,237.30 hours of work as debtor’s counsel over nearly a year and a half in the toy retailer’s chapter 11 proceedings. Toys “R” Us filed for bankruptcy in September 2017, marking the latest in a string of brick-and-mortar retail failures in the online shopping era. The company retained Kirkland to restructure its nearly $5 billion in debt, as previously reported by The American Lawyer. Kutak Rock, Goodmans and Munger, Tolles & Olson landed roles in the case. In all, 105 partners, 131 associates and two of counsel from Kirkland billed time on the case between the September 2017 bankruptcy filing and Dec. 17 2018. Its partner billing rates for the work ranged from $565.00 to $1,795.00, according to the firm’s final fee application.

Fee examiner Brady Williamson has submitted for U.S. District Court approval in Puerto Rico’s bankruptcy-like process up to $52.3 million in legal and service fees for 13 entities from October to January, along with a warning about increasing litigation costs, Caribbean Business reported. The fee examiner also called on the court to approve certain presumptive standards that would help curb the increasing spending on litigation related to the commonwealth’s debt-restructuring proceedings. For instance, he said professionals seeking fees or expenses through the Title III fee process under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) should not be able to submit reimbursement requests for any other firm’s professional firms. Williamson also said hourly rate increases on fees will continue to be identified, as will evaluations of such increases for reasonableness. The number of professionals subject to review has grown to 50 firms, and the total fees and expenses submitted for review has grown beyond $400 million. Puerto Rico has five bankruptcy processes under Title III and must also deal with hundreds of adversary proceedings.

A Justice Department fund fed by the quarterly fees that bankrupt companies pay to use the federal court system is growing but still falls short of the $200 million target that would prompt department officials to lower the fee rate, WSJ Pro Bankruptcy reported. The fund contained about $44 million as of September. The program’s account contained about $15 million on Sept. 30, 2017. Federal lawmakers in 2017 voted to increase fees starting Jan. 1, 2018, rattling bankruptcy industry professionals who said that they were concerned that already-struggling companies wouldn’t be able to afford higher fees. Under the new fee system, companies using chapter 11 protection that have operating expenses of more than $1 million must pay a fee to the Justice Department equal to 1 percent of those expenses, up to $250,000. The previous cap was $30,000.

A lending industry trade group is pressuring judges at the U.S. Court of Appeals for the Seventh Circuit to keep the cost of filing for chapter 11 protection low for financially struggling small businesses across the country, WSJ Pro Bankruptcy reported. In a court-filed brief, the Commercial Finance Association, which represents banks and other lenders to small and middle-market businesses, accused the Justice Department of trying to collect more money than it is entitled to from bankrupt businesses. Companies that file for chapter 11 protection pay a quarterly fee to a Justice Department division to use the court system. When federal lawmakers voted to increase that fee in 2017, courtroom battles broke out across the country over the unclear wording in federal law that mandates how much companies owe. In the dispute before the appeals court, Commercial Finance Association officials said that the Justice Department’s position on the fee calculations “has the potential to decimate the DIP lending market by materially increasing the cost” of some loans. The 28-page document, filed earlier this month, said some scenarios involving complex loan agreements and transfer scenarios would enable the Justice Department to collect the fee twice. “As lenders try to devise workout strategies with troubled borrowers, they need certainty over what will be considered a disbursement and thus subject to the 1 percent quarterly fee,” the group said. Under a new law, companies using chapter 11 protection that have operating expenses of more than $1 million must pay a fee to the Justice Department equal to 1 percent of those expenses, up to $250,000. The previous cap was $30,000. Government officials estimated the change would affect 10 percent of companies that file for chapter 11 protection.