Four years ago last month, one of the nation's largest publishers turned to Sidley Austin as it spiraled into bankruptcy a little more than a year after being taken private by billionaire Sam Zell in a disastrous $8.2 billion leveraged buyout.
On December 31, 2012, the Tribune Company finally emerged from Chapter 11. The media giant's new hedge fund owners plan to sell most of the company's assets, including newspapers such as the Chicago Tribune, Los Angeles Times, and Orlando Sentinel, as well as broadcast holdings like cable networks WGN America and a stake in the Food Network.
As of November 30, 2012, Sidley has billed Tribune almost $105 million in legal fees and expenses for its work guiding the Chicago-based company through multiple bankruptcy battles in Delaware, according to court filings by the Am Law 100 firm examined by The Am Law Daily.
Roughly 100 Sidley lawyers worked on the case, according to a quarterly fee application filed last summer by the firm, with corporate partners Larry Barden and Michael Hyatte, restructuring partner Bryan Krakauer, and bankruptcy and corporate reorganization cochairs James Conlan and Larry Nyhan all billing Tribune $1,000 an hour for their services.
Neither Conlan nor Nyhan immediately responded to requests for comment about the firm's fees and work representing Tribune during its 1,323 days in Chapter 11. (For a closer examination of Sidley's work in the case, click here for a fee examiner's report filed by Stuart Maue this week.)
As The Am Law Daily has previously reported, Sidley's recent run of work for Tribune began before its bankruptcy filing on December 8, 2008. By that point, the company had already paid the firm roughly $3 million after being retained the previous March amid Tribune's efforts to sell off assets including Long Island–based newspaper Newsday and Major League Baseball's Chicago Cubs and their historic ballpark Wrigley Field.
Also representing Tribune in the Chapter 11 case were an array of firms serving as special counsel, including Davis Wright Tremaine, Jenner & Block, Jones Day, Paul Hastings, Reed Smith, Seyfarth Shaw, SNR Denton, Delaware's Cole, Schotz, Meisel, Forman & Leonard, and First Amendment shop Levine Sullivan Koch & Schulz. A host of accounting, financial, restructuring, and other professional advisers also grabbed key roles in the bankruptcy.
While legal fees in most large corporate bankruptcies are usually equal to 3 to 4 percent of a company's total value, in Tribune's case the figure was double that at more than $500 million due to the long-running nature of the litigation and the company's sliding valuation, according to a report last week by the Chicago Tribune.
Big though they may be, the legal fees amassed by Tribune still pale in comparison to what Lehman Brothers racked up during its nearly four years in Chapter 11. Weil, Gotshal & Manges—hired as lead bankruptcy counsel to the now-defunct investment bank in that case, which drew to a close last year—reaped roughly $442 million for its efforts, according to our previous reports.
Below are some of the latest noteworthy business bankruptcy filings and their lawyers of note. As usual, hourly billing rates are also listed where available.
Big M Inc.
Bloomberg reports that the owner of discount women's clothing chains Annie Sez and Mandee has filed for bankruptcy in Newark after Superstorm Sandy forced the closure of several stores in the New York and New Jersey region.
Kenneth Rosen, head of the bankruptcy and creditors' rights group at Lowenstein Sandler, is advising Big M in its Chapter 11 case. The firm—one of several Am Law 200 shops that have provided free legal advice to those affected by Sandy—has not yet filed billing statements detailing its Big M work with the bankruptcy court. (Many businesses and property owners in the tristate area are grappling with difficult insurance issues as a result of Sandy, according to a recent report by sibling publication the New York Law Journal, while legal newswire Law360 reports that the storm has spawned a wave of insolvencies in the Garden State.) Rona Korman is general counsel of Big M.
Edison Mission Energy
An unregulated power generation unit of public utility holding company Edison International filed for bankruptcy in Chicago last month under a plan to restructure $3.7 billion in debt and separate from its parent by December 2014. Irvine, California–based Edison Mission Energy (EME) lists $5.1 billion in assets against liabilities of more than $5 billion in its Chapter 11 filing.
