Sources: Men Arrested Trying To Repaint Bedford Bike Lane
Video: Sad Subway Rant
Call to Ban Carriage Horses, Close Stable
VIDEO: Cycling Activists Repainting Bedford Ave. Bike Lane
Oh D'Oh They Didn't! TSA Posts Airport Screening Manual On Web
Who knew that old creditors get paid after lawyers? According to law professor Lynn LoPucki who spoke to the Daily News about corporate bankruptcies, "The lawyers and all the other professionals who work on the case get paid first. The system deliberately makes the old creditors wait - sometimes for two or three years - while payday for the new creditors comes once a month." So while the now-bankrupt Lehman Brothers is selling off assets like their corporate jet for almost $25 million, LoPucki tells the News that legal and professional fees may be as high as $1.4 billion, "with Weil Gotshal & Manges, lawyers for the debtor, snaring about $209 million, and Milbank, Tweed, Hadley & McCloy, counsel to the creditors, getting some $58 million." Lawyers, FTW?
Lehman Sells Off Assets... to Pay Lawyers First?
add to stumble upon
add to reddit
tweet this
post to facebookComments (12) [rss]
Post a comment (Comment Policy)
Tips
Newsmap
Contribute
Latest Tip:
So it turns out that the man that was pinned by the 5 train this weekend was high. This was off the
[more]
The trial lawyer lobby owns the democrat party fyi. (that's why the nominated Edwards in '04)
First off, Ides, these aren't trial lawyers. These are corporate lawyers working on these deals.
Second, before everyone jumps on the lawyer-hate bandwagon per usual, there's a reason for this bankruptcy law. Companies entering bankruptcy need attorneys to handle the process. If the attorneys working on the deals are subordinated behind the existing creditors, would any lawyer choose to do any of this type of work, knowing that they'd be working for pennies on the dollar, if not for free? Would you? We're not talking about the lawyers who'd worked for the companies before the collapse - these are the attorneys who clean up the mess. There's a reason they're paid first.
Right, but it's painful to know that devoted shareholders and employees are rewarded by being subordinated to bankruptcy lawyers.
FTW? more like WTF is this posted for?
Once a company files for bankruptcy anyone else...creditors, stockholders, etc. take a back seat to administrative claims (and legal fees) for the very obvious reasons that Sleepy outlined above...
Beyond that, everyone that "invests" in a company in one way or another..senior creditors, subordinated creditors, stockholders..in making their investment know that this is the law before they ever lay a single dollar out to invest.. if they do not know..then clearly they need to learn a thing or two before they start taking risks with their money..
..the loss of jobs is certainly upsetting..but they lost the day the company filed..and the due course of bankruptcy has little to do with them at this point....
Point being..I hate lawyers as much as the next guy..and love to lawyer bash..but at lets at least try to do it on an informed basis.. no?
Inform me please, what exactly are these lawyers doing that pays them better than a brain surgeon? Shouldn't this be settled more by accountants?
I knew two corporate attorneys that worked for one of the big investment banks and for the life of me I couldn't figure out what they did day to day. Inform me please. BTW, they lived in our small coop and were nothing but idiots the ten years they lived here. Fortunately they were moved overseas and I hope they are coldly received by their new neighbors.
Eh..they know a bunch of boring legal mumbo-jumbo..can stand in front of a judge and ask for waivers and motions and whatnot.. which I suppose most accountants cannot do.
I wish I could be more descriptive..but every time I ask a lawyer what it is they do exactly I fall asleep...perhaps thats they're value add...they're keen ability to stay awake through it all..
*their
Thanks for the clarification of a lawyer's duties. I believe it's called obfuscation. They probably should be called obfuscatorians, or pieces of shit, which is a clearer definition of them and their occupation.
Lawyers get paid first because they're the ones who will sue your asses off if you don't pay them.
Thanks Spirit that clarifies everything. But I think the corporate lawyers will hire other lawyers to do the actual suing. They only know corporate law versus all the other types of law that is actually used in a court of law.
Remember that this was a firm that had over $200 billion in assets under management. That's a lot of unwinding to do for each creditor and when you look at the number of billable hours times the going rate in this business, you're talking some serious money. But believe me, these lawyers would much rather Lehman had stayed afloat so they could juice them again and again instead of getting just one good payday.
For an audience that is likely unfamiliar with the ins-and-outs of corporate bankruptcy, this post, like the Daily News article, is carelessly written by an ignorant writer. Many important details are missing.
Bankruptcy is quite different than other areas of law; because the debtor is, by definition, in financial distress, protections must be put in place to make sure that all professionals in the case--which includes counsel to the debtor, counsel to the creditors' committee (counsel to a group of unsecured creditors who are elected to look out for the interests of all the unsecured creditors in the case), accountants, etc.--are fairly and timely compensated. As Sleepy correctly stated above, without this protection (which is written into the Bankruptcy Code), such necessary professionals would never get paid nor even agree to represent debtors--why would they risk getting paid by taking on such work? To wit, such professionals file "fee applications" (similar to a motion) on a quarterly basis with the court which outline the services rendered in detail (a portion of the fees sought are generally paid by the clients on a monthly basis) and seeking reimbursement of fees and expenses; such applications are reviewed by other professionals, committees, the court, and, in larger bankruptcies, a fee examiner. Objections are (usually) raised and amounts sought are adjusted accordingly, with the final amount awarded being determined by the court. Without the work of these professionals, debtors would never get reorganized and creditors would never get any money. Additionally, the U.S. Trustee's Office, an arm of the Department of Justice, maintains an oversight role in all bankruptcy cases.
It takes time to sort out what led to the bankruptcy and to develop a workable plan of reorganization that is well-received and is approved by the court. Only when this is done can creditors be prioritized and distributions be made in a manner that is fair to all.