By Nick Brown
NEW YORK, Nov 14 (Reuters) - A bankruptcy judge on Wednesday
approved about $158 million in lawyers' and other fees in Lehman
Brothers' liquidation, a first step toward final approval of more
than $1 billion in professional fees, a lawyer for Lehman's fee
committee said on Wednesday.
Judge James Peck allowed the fees at a hearing in U.S.
Bankruptcy Court in Manhattan, attorney Katherine Stadler told
Reuters. Stadler represents the committee that oversees fee
requests and objects to those it deems unreasonable.
Wednesday's hearing covered $157.86 million split between 25
law firms and other professionals. That included about $80
million to Alvarez & Marsal, which managed Lehman's assets
during bankruptcy, and about $40 million to Houlihan Lokey,
financial adviser to Lehman's creditors' committee.
Lehman Brothers Holdings Inc filed for bankruptcy in
September 2008 at the height of the financial crisis.
Total fees in the case, the largest-ever Chapter 11
bankruptcy, are about $1.8 billion, though only about another
$985 million is subject to court approval, Stadler said.
That portion, slated to be heard at another hearing on Nov.
29, includes two of the highest earners in the case: law firms
Weil Gotshal & Manges and Milbank Tweed Hadley & McCloy, counsel
to Lehman and its creditors' committee, respectively.
Those firms remain at odds with the fee committee over
aspects of their fee applications. Stadler said the committee is
"optimistic" it can resolve the issues by the Nov. 29 hearing.
Spokeswomen for both law firms did not respond to requests
for comment on Wednesday.
Part of the dispute could center on rate increases requested
by lawyers at Weil and Milbank over the course of the four-year
case. Such mid-stream rate hikes have received particular
scrutiny from the Lehman fee committee.
In a June memo, the committee told professionals it would
question rate increases in certain circumstances and would
consider imposing its own formula to determine appropriate rate
increases based on cost-of-living and market data.
The fee committee in court papers cited a "very restrained"
legal market in which rate increases have slowed, yet certain
associates at Weil and Milbank raised rates 40 to 60 percent
during the Lehman case, according to the firms' interim fee
Rate hikes are also a hot issue among bankruptcy regulators.
The U.S. Trustee Program, the Justice Department arm that
oversees how companies spend money in bankruptcy, is pushing new
guidelines that could require law firms to be more accountable
for rate increases.
The guidelines, proposed earlier this year, would compel
firms to show why an increase is warranted and how much it would
cost the bankruptcy estate.
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