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A federal judge on Tuesday approved nearly $400 million in fees and expenses owed to the professionals responsible for guiding American Airlines through its chapter 11 restructuring, the Wall Street Journal reported yesterday. During a hearing at the U.S. Bankruptcy Court in Manhattan, Judge Sean Lane signed off on a recommendation from a fee examiner that proposed paying $16.3 million in expenses and $371.7 million in fees to 47 professional firms, including lawyers, accountants, consultants and other advisers. The examiner, attorney Robert Keach, had been tasked with keeping costs down and worked with the professionals to trim several million dollars from the total bill, according to court filings. Judge Lane praised Keach's work, noting that the case had presented many complicated and challenging legal issues and that the fees and expenses also covered professional work related to the airline's ordinary course of business.

A fee examiner tasked with keeping costs down in the American Airlines bankruptcy recommended this week that a court approve nearly $400 million in fees and expenses earned by professionals who he said engineered "perhaps the most efficient airline reorganization case on record,” the Wall Street Journal reported today. Robert Keach, an attorney from Maine, made the request in a series of filings on Tuesday in U.S. Bankruptcy Court in Manhattan. Keach recommended paying $371.7 million in fees and $16.3 million in expenses to 47 professional firms, including lawyers, accountants, aircraft consultants and other advisers. A handful of firms who submitted fees after a deadline will be included in separate requests, he said. The final fee and expense tallies cover work completed from the November 2011 inception of former American Airlines parent AMR Corp.'s chapter 11 case through the approval of its bankruptcy-exit plan 23 months later. American Airlines exited bankruptcy through a historic merger with US Airways Group Inc. — initially opposed and later cleared by the Justice Department — that created the world's largest airline. American also used its bankruptcy proceeding to negotiate deep concessions from its main labor unions, ultimately cutting about $1 billion in annual labor costs. Nancy Rapoport, a bankruptcy law professor at University of Nevada at Las Vegas who has served as a fee examiner in large chapter 11 cases, said the appointment of Keach at the beginning of the case was crucial to keeping costs down. "These fees would have been way higher" if Keach hadn't created ground rules governing what could and couldn't be charged, Rapoport said.

Bankruptcy Judge Martin Glenn largely approved the final fee requests for the professionals working on Residential Capital LLC 's bankruptcy case, which totaled nearly $400 million, Dow Jones Daily Bankruptcy Review reported today. Judge Glenn made some small subtractions from the fee requests and said that he would rule later on the application of Morrison Cohen LLP, the law firm representing ResCap's independent directors. ResCap's liquidating trust had objected to nearly $1 million of Morrison Cohen's request for $4.3 million in fees and expenses, saying that among other things that the firm held too many unnecessary meetings.

The trust in charge of overseeing Residential Capital LLC 's liquidation is trying to make the former mortgage servicer's expensive bankruptcy case a little cheaper, Dow Jones Daily Bankruptcy Review reported today. The liquidating trust, managed by Quest Turnaround Advisors LLC, is taking aim at some of the fees charged by the professionals working for the court-appointed independent examiner, including $2.5 million related to typesetting the report when, the trust says, Microsoft Word could've done the trick. The trust has no objections to the $568,612.50 charged by the examiner himself, former bankruptcy judge Arthur J. Gonzalez. The court-ordered examination, which helped get ResCap out of bankruptcy, ended up costing the estate about $90 million, more than 20 percent of the total $400 million in professional fees that ResCap's lawyers, advisers and others charged in the case.

The bankruptcy trustee unwinding defunct law firm Dewey & LeBoeuf LLP has brought new allegations against two former Dewey executives in a lawsuit seeking the return of more than $21.8 million the two allegedly were paid as the law firm “fell deeper and deeper into insolvency,” the Wall Street Journal reported today. The amended complaint, filed in bankruptcy court on Monday against Dewey’s former executive director, Stephen DiCarmine, and ex-chief financial officer, Joel Sanders, comes six months after Dewey trustee Alan Jacobs first sued the pair. The updated suit incorporates criminal and civil allegations brought against DiCarmine and Sanders in March by the Manhattan district attorney’s office and the Securities and Exchange Commission. Those actions, which also charge Dewey’s former chairman, Steven Davis, and a former lower-level employee, claim that Dewey employees used fraudulent accounting methods to cover up the state of Dewey’s finances for several years leading up to the firm’s 2012 collapse. All four have denied wrongdoing.

U.S. Trustee Judy A. Robbins wants the attorneys and advisers working on Freedom Industries Inc.'s chapter 11 case to temporarily forgo some of their fees until it's determined how much the company will need to pay to clean up the West Virginia chemical spill, Dow Jones Daily Bankruptcy Review reported today. Robbins says Freedom's bankruptcy case, filed shortly after chemicals from a Freedom-owned site tainted the water supply of 300,000 West Virginians, is at "high" risk for significant legal fees and environmental cleanup obligations. As a result, Robbins is asking the bankruptcy court to consider directing Freedom's legal and other advisers to hold off from requesting full payment of their fees and expenses until further along in the chapter 11 case.

Energy Future Holdings Corp. is paying $23.5 million this month to retain two law firms help guide the Texas power provider through the biggest energy-industry bankruptcy, Bloomberg News reported yesterday. Sidley Austin LLP is getting $17.5 million and Kirkland & Ellis LLP $6 million, the Dallas-based company said in budgets filed yesterday in bankruptcy. Professional fees and related payments are projected to cost Energy Future’s competitive unit $218 million in May, putting cash flow at a negative $151 million before a $154 million loan. Energy Future, after a record leveraged buyout in 2007 led by Henry Kravis and David Bonderman, filed for bankruptcy April 29 listing $49.7 billion in liabilities. It plans to seek a judge’s approval for about $10 billion in debtor-in-possession, or DIP, loans to finance a restructuring.

Lawyers for defunct brokerage MF Global yesterday asked a U.S. bankruptcy judge to impose procedures to limit mounting legal fees incurred by Jon Corzine and other former company insiders in litigation over their role in MF's 2011 collapse, Reuters reported yesterday. James Giddens, trustee for MF's former broker-dealer unit, and Bruce Bennett, a lawyer for its defunct parent company, in court papers said that former Chief Executive Officer Corzine, former Chief Operating Officer Bradley Abelow and other ex-insiders are mounting exorbitant legal bills through excessive defense tactics. The filings came in response to requests last month by the insiders for a $10 million increase, from $30 million to $40 million, on the money they are allowed to tap from MF Global insurance policies to fund their defense costs.

A Canadian judge yesterday blasted the lawyers involved in the fight over $7.3 billion raised in the sale of Nortel Networks Inc.'s businesses, calling their tactics "a huge waste of money" and their fees "shocking,” the Wall Street Journal reported today. Citing the interests of thousands of pensioners who lost benefits and pay in Nortel's 2009 collapse, Justice Frank Newbould threw out a series of motions arguing over what evidence is to be presented at a trial set to start on Monday. The trial will determine how to split the proceeds of the sale of Nortel's businesses among the fallen technology giant's creditors around the globe. At an expected cost of at least $1 million a day, the trial is set to run for six weeks in the U.S. and Canada, two of the jurisdictions where Nortel has launched insolvency proceedings. Attorneys have been preparing for the trial for a year, following failed efforts to reach a compromise that would have allowed Nortel Canada, Nortel U.S. and Nortel Europe to split up the money and pay off creditors without a court battle.

The company behind the chemical spill that tainted the water supply of 300,000 people in West Virginia spent $1.9 million on attorneys and advisers in the first months of its bankruptcy case, the Wall Street Journal reported today. Freedom Industries Inc.’s lead bankruptcy law firm, McGuireWoods LLP, charged nearly $746,000 in fees and expenses for work performed between Jan. 17, when Freedom filed for bankruptcy, and the end of March. Two specialist law firms, one for environmental matters and one for litigation, billed a combined $535,000 in fees and expenses for work during the same timeframe. Less than 5 percent of the bills from bankruptcy professionals come from lawyers representing Freedom’s unsecured creditors’ committee, whose members include people claiming injury or other damages from the disastrous Jan. 9 chemical spill from a Freedom-owned tank farm.