JUDGE ON MACY’S LAWYERS’ FEES: ENOUGH IS ENOUGH
Byline: Jeff Siegel
NEW YORK — The final fee application hearing for lawyers, investment advisers and other professionals in R.H. Macy & Co.’s Chapter 11 case erupted into fireworks Wednesday, when six of the nine applicants looked to top off their salaries with a combined $8 million in bonuses.
Attorneys for the six firms asked Bankruptcy Judge Burton L. Lifland for bonuses as reward for their “extraordinary” work in the case, which has netted them more than $60 million in fees and expenses in the three years in which Macy’s was mired in Chapter 11.
But an irate Lifland denied all but one of the requests and bristled at the suggestion that those involved in the case deserved bonuses to supplement what he called “handsome” hourly payments.
“There is nothing in this case that justifies bonuses or enhancements,” the judge railed during the two-hour hearing. “Nothing here was extraordinary. Everyone here was confident from the beginning that they would be paid and paid handsomely.”
Robert Miller, of Berlack, Israels & Lieberman, counsel to Macy’s unsecured bondholders, who sought a $2 million bonus, was one of several lawyers who argued that they were instrumental in maximizing Macy’s value to creditors.
He noted, for example, that before his group became fully involved in negotiations between Federated Department Stores and Macy’s, Macy’s was valued at only $3 billion and by the time the case concluded Macy was worth $4.2 billion.
Lifland, however, said Miller and others “very eloquently overstate” their contributions in bringing Macy’s Chapter 11 case to a successful conclusion and forget “my own efforts” in handling the case.
“This case was enhanced by a process,” said Lifland in an uncharacteristically angry mood. “This court set that process in motion.”
“I don’t look for any kind of bonus; I just look to do my job,” Lifland said in administering a tongue-lashing to the 10 attorneys at the hearing, which included some of the country’s top bankruptcy lawyers.
Lifland added that “this is not a case where creditors were paid 100 percent [of their claims], and it is not a case that was very swift…”
Harvey Miller, of Weil, Gotshal & Manges, counsel to Macy, along with the U.S. Trustee and Macy’s ad hoc committee, responsible for overseeing all fee applications, all argued against granting the bonuses.
“The respective applicants said they did a good job for their constituencies. That’s what they were supposed to do. They were engaged to do the best job possible,” observed Miller.
Weil, Gotshal’s Miller did argue in favor of giving a bonus to The Blackstone Group L.P., Macy’s financial adviser. Blackstone, the only firm that received approval for its bonus request, was granted the award, Lifland said, because “there was a time that Blackstone became the merger and acquisition adviser to the debtor” even though it was not retained for such work. Blackstone received a $3.4 million bonus.
In addition to Blackstone and Berlack Israels, the four firms seeking bonuses were: Otterbourg, Steindler Houston & Rosen, attorneys for Macy’s unsecured creditors, asking for $600,000; BDO Seidman, accountants for the unsecured creditors, seeking $343,000; Helmold Associates Inc., financial advisers to unsecured creditors, requesting $726,000, and Houlihan, Lokey, Howard & Zukin Inc., financial advisers to the unsecured bondholders, wanting $1 million.
Almost lost amid the rancor of Wednesday’s hearing was Lifland’s decision to approve another $1.6 million in fees and expenses for the period between Nov. 1, 1994 and Dec. 18, 1994, the day before the Macy’s merger with Federated was completed. With the approval, the total sum of fees and expenses in the case jumped to over $60 million.
— Fairchild News Service