Counsel slams "excessive" Proskauer and Dewey fees on MF Global bankruptcy
Fee requests filed by Proskauer Rose and legacy Dewey & LeBoeuf in the administration of derivatives broker MF Global have been labelled "excessive" in a US court. In an objection filed yesterday, a counsel to the administration rejected the applications and recommended Proskauer reduce its fee from $5m (£3.1m) to $3.25m (£2m) and Dewey drop its request from $3.75m (£2.3m) to $3m (£1.9m).
October 23, 2013 at 07:26 AM
3 minute read
Fee requests filed by Proskauer Rose and legacy Dewey & LeBoeuf in the administration of derivatives broker MF Global have been labelled "excessive" in a US court.
In an objection filed yesterday, a counsel to the administration rejected the applications and recommended Proskauer reduce its fee from $5m (£3.1m) to $3.25m (£2m) and Dewey drop its request from $3.75m (£2.3m) to $3m (£1.9m).
According to the filing from the Southern District of New York bankruptcy court, a large portion of the fees have already been paid out, with Proskauer and Dewey collecting $4.4m (£2.7m) and $3.4m (£2.1m) in fees and expenses respectively.
Jones Day restructuring partner Bruce Bennett, who is acting as counsel to MF Global Holdings, recommended the court appoint a fee examiner should to determine how much the firms should be paid.
Bennett states in a footnote that upon learning of his intention to object to the fee applications, "certain professionals…have taken it upon themselves to place rather aggressive and confrontational calls to members of the Board, senior management…in what appears to be an attempt to convince the Plan Administrator to not file this objection".
The objection was supported by MF Global Holdings board member Daniel Ehrmann, who said Proskauer and Dewey "spent an impertinent amount of time monitoring the foreign insolvency proceedings of the debtors' affiliates" in the UK.
The court docket concludes that "certain services provided by the committee lawyers were unnecessary and had little possibility of benefitting the debtors' estates" and that "there was no meaningful oversight of professionals' fees in these chapter 11 cases by any estate fiduciary".
Elsewhere in the filing, London-based Proskauer partner Mark Fennessy and of counsel Mark Griffiths, both of whom transferred from Dewey following the firm's collapse in May 2012, were singled out for billing a combined $2.3m for their work at both firms, at an average rate of $859 an hour.
The filing says the firms' work was largely unrelated to Chapter 11 and MF Global committee proceedings, and instead focused on the administration of MF Global's UK arm.
"Put another way, the fourth level of oversight of the MFGUK proceedings cost the Debtors' estates over $3.5 million," the filing states.
A note in the docket states that aggregate professional fees for the Chapter 11 bankruptcy have reached $67m.
MF Global, a derivatives broker with around $40bn in assets, filed for bankruptcy in the US and UK in October 2011, after $6.3bn of investments in European sovereign debt and increased trading risk led to a spiral of regulatory sanctions and credit downgrades.
Weil Gotshal & Manges has billed around £16m in the 19 months to May 2013, for its work advising KPMG on the MF Global's UK administration. Norton Rose & Fulbright has also billed more than £2m for its work advising KPMG on regulatory matters.
Last week, a Weil team headed by London restructuring head Adam Plainer acted for KPMG on the settlement of the MF Global Group's pension liabilities.
Proskauer declined to comment.
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