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In a rare personnel move for Wachtell, Lipton, Rosen & Katz, bankruptcy practice head Chaim Fortgang has left the prominent New York law firm after relations between the two soured, sources said. “I’m officially not a member of the firm,” Fortgang said, adding that he had left Wachtell Lipton “within the last two weeks.” He declined comment on his reasons for leaving and on his plans. “I have no plans right now,” he said. “I’m winding down matters.” Wachtell Lipton partner David Katz said he would not characterize Fortgang’s departure as a “firing” but declined further comment. He referred any questions to another partner, Dick Katcher, who did not return calls. The firm has removed Fortgang’s name from its Web site. “This is news in our industry,” said a source who asked not to be identified. “His standing as a professional is at the top of the heap.” News of Fortgang’s departure, which, according to sources, will be announced by year’s end, have been circulating throughout the bankruptcy community for the past two weeks. Such moves are unusual for Wachtell Lipton, which over its history has seldom parted with partners. German-born Fortgang, 54, a tenacious and well-respected bankruptcy practitioner, started with Wachtell Lipton in 1971. A specialist in creditors’ rights, he has landed some of the biggest cases of the year. Fortgang represented the creditors committees in the high-profile bankruptcies of Finova Corp. of Phoenix; PSINet Inc. of Herndon, Va.; Comdisco Inc. of Chicago; and Pacific Gas & Electric Co. of San Francisco. He also is known for his work advising Donald Trump in the early 1990s in the real estate baron’s efforts to restructure his financial empire. While the reasons for Fortgang’s departure are unclear, sources say the bankruptcy practice’s earnings at Wachtell Lipton lagged behind those of other practices within the firm. In addition, many objected to Fortgang’s brusque personal manner, sources said. Wachtell Lipton is far and away the most profitable large New York law firm, according to The American Lawyer magazine, a perch it has attained by charging top-dollar rates or collecting a percentage of completed deals, rather than billing according to the standard hourly structure common to many firms. But bankruptcy lawyers typically get paid hourly, and judges must approve attorney fees, among other stipulations. The restriction has widened the profitability gap between Wachtell Lipton’s mergers and acquisition and litigation practices and its bankruptcy group, a source said. “When they have one small group where they have to charge ordinary hourly rates, it kind of pales in comparison,” he said. A dispute over the fees that Fortgang charged Comdisco in the technology services company’s ongoing bankruptcy may have hastened his departure. As the lawyer representing the company’s creditors’ committee, he requested fees of $200,000 per month, plus a monthly bonus. That would have brought his fees from the case to $6 million, according to a source. The U.S. Trustee overseeing the Comdisco case recently filed an objection to the payment scheme. In a Nov. 1 Wall Street Journal article, Fortgang referred to the trustee’s move as “moronic.” That comment was “the final straw,” said another source, who added that Wachtell Lipton “had been concerned with the reputation he was building in the industry.” Copyright (c)2001 TDD, LLC. All rights reserved.

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