Detroit has retained Jones Day—a firm known for handling restructuring work across the industrial Midwest—as it seeks to fight the state of Michigan’s decision to impose an emergency financial manager on the Motor City.
Though Jones Day media representatives did not immediately respond to requests for comment about the matter, Detroit communications director Robert Warfield confirmed that the city has hired the firm when contacted Monday by The Am Law Daily. In a prepared statement on the subject provided by Warfield, Mayor Dave Bing said that the "experience of the Jones Day law firm will be a valuable asset as we proceed with our plan for restructuring the City of Detroit."
The Detroit City Council, which has not always gone along with Bing’s plans, must still approve Jones Day’s hiring. The council threw the city’s finances into disarray and put Detroit on the road to a state-managed municipal bankruptcy late last year when it initially rejected a $300,000 legal services contract for Miller, Canfield, Paddock and Stone. (The contract for Miller Canfield, which serves as the city’s bond counsel, was eventually approved in December.)
While the private sector—including a resurgent auto industry that itself has benefited from Jones Day’s restructuring expertise—is booming, Detroit’s own fiscal condition is so dire that the city is teetering on the brink of insolvency. Michigan Governor Rick Snyder has responded by moving to seize control of the municipal coffers via the imposition of an emergency manager.
Bing opposed the installation of an outside manager, but has agreed to work with a manager in lieu of being completely sidelined. Whether Jones Day can help Detroit in that effort has yet to be determined, although Reuters reports that history is not on the city’s side as it seeks to avoid a state takeover. Detroit is facing a long-term debt load of about $14 billion.
As it happens, the city’s hire of Jones Day came the same day that former Detroit mayor—and disbarred attorney—Kwame Kilpatrick was convicted of racketeering and corruption charges following a five-month trial.
Below are some of the latest significant bankruptcy filings to emerge in recent weeks and their lawyers of note. As usual, hourly billing rates are also listed (in parentheses) where available.
Two years after private equity firm Golden Gate Capital bought Conexant Systems for $184 million, the semiconductor manufacturer filed for bankruptcy in Delaware on February 28. Reuters reports that an entity controlled by the hedge fund headed by billionaire George Soros will exchange about $195 million in secured debt into equity in the reorganized company through its prepackaged Chapter 11 proceedings.
Kirkland & Ellis restructuring partners Paul Basta ($1,045) and Joshua Sussberg ($815) in New York and litigation partner Stephen Hackney in Chicago are representing Newport Beach, California–based Conexant in its bankruptcy case. Court filings by the firm show that partners are billing between $655 and $1,150 per hour, of counsel between $450 and $1,150, and associates at rates ranging from $430 to $790. Conexant has paid Kirkland a $1 million retainer for its services, according to court records, including an engagement letter between the company and the firm signed in January.
Bankruptcy partner Domenic Pacitti and of counsel Michael Yurkewicz from Delaware’s Klehr Harrison Harvey Branzburg are serving as local counsel to the debtor. The firm has not yet filed billing statements with the bankruptcy court.
Dennis Gallagher currently serves as general counsel for Conexant, having taken over the role in April 2011 from predecessor Mark Peterson, who left the company after its acquisition by Golden Gate Capital and returned to O’Melveny & Myers, according to our previous reports. Gallagher also once worked at O’Melveny.
Houston–based Geokinetics, which provides seismic data to the oil and gas industry, filed for bankruptcy in Delaware on March 10, listing a mere $12 million in assets against $350.8 million in liabilities. The filing comes about two months after the company announced that it had reached an agreement with bondholders to restructure $300 million in debt by converting it into equity.
Akin Gump Strauss Hauer & Feld, which has provided general corporate counsel to Geokinetics since 2007, is serving as general bankruptcy counsel to the company through financial restructuring partners Sarah Schultz ($850 per hour) and Michael Haynes ($625). The firm is holding an evergreen retainer in the amount of $468,884.
Delaware’s Richards, Layton & Finger is serving as local counsel to the debtor through partner Paul Heath. The firm has not yet filed billing statements with the bankruptcy court. Court records show that Fried, Frank, Harris, Shriver & Jacobson and national bankruptcy boutique Pachulski Stang Ziehl & Jones are representing bondholders in the Chapter 11 case.
According to a list of the company’s 30 largest unsecured creditors, Geokinetics owes $392,561 to Haynes and Boone, which has handled securities work for the debtor. William Ziegler, a former of counsel at New York’s Satterlee Stephens Burke & Burke, serves as chairman of the board of directors for Geokinetics. The company’s general counsel, William Moll, has held that title since April 2010.
We couldn’t ignore it, now could we? GGW Brands, the Santa Monica–based company founded by Joe Francis that sells the Gone Wild videos of nude women at various party spots around the country, filed for bankruptcy in Los Angeles on February 27.
Francis, who has kept more than a few attorneys from Am Law 200 firms busy in recent years with his various legal travails, is not mentioned in GGW’s bankruptcy case. But a $7.5 million dispute between him and casino mogul Steve Wynn figures to rear its head in the Chapter 11 case, according to various news reports.
Woodland Hills, California–based solo practitioner Robert Yaspan is advising GGW in its bankruptcy case. The company lists less than $50,000 in assets against roughly $16.3 million in debt.
According to a list of the GGW’s 20 largest unsecured creditors, the debtor owes $10.3 million to the Wynn Las Vegas, $75,701 to Las Vegas–based Ecoff Blut, and $5.8 million to Tamara Favazza, a St. Louis woman who successfully sued Francis and the company over a video in which she appeared without her consent. The Los Angeles Times reports that despite the bankruptcy, Wynn intends to collect on the $30 million he claims he’s owed by Francis.
Grand Canyon Skywalk
Peach Springs, Arizona–based "Sa" Nyu Wa Inc., the Hualapai tribal corporation owned operator of the popular Grand Canyon Skywalk, filed for Chapter 11 protection on March 4 in Yuma, Arizona, after a federal judge upheld a $28 million arbitration award in favor of a Las Vegas developer who built the tourist attraction, according to The Associated Press.
John Harris ($625), chair of the commercial bankruptcy, restructuring, and creditors’ rights practice group at Quarles & Brady in Phoenix, is representing the debtor, along with partner Kelly Singer ($425). Partners, counsel, and associates from the firm are billing between $230 and $625 an hour for their services in the case, according to court filings by Quarles & Brady, which show that after prepetition invoices were paid it currently has a retainer balance of $371,256.
Aluminum producer Ormet filed for bankruptcy in Delaware on February 25 for the second time in seven years. The company, which lists $406.8 million in assets against $416 million in liabilities, is seeking to sell itself to prepetition lender Wayzata Investment Partners, according to The Deal.
Kim Lewis, chair of the bankruptcy and restructuring practice at Dinsmore & Shohl in Cincinnati, is advising Hannibal, Ohio-based Ormet along with partner Tim Robinson, who joined the firm in 2009 from Squire Sanders. An affidavit by Lewis reveals that in addition to a $350,000 retainer, Dinsmore & Shohl has been paid nearly $1.4 million in prepetition fees and expenses for its work on behalf of Ormet. Partners from the firm are billing between $225 and $850 per hour, counsel between $140 and $575, and associates at rates ranging from $140 to $350, according to court records.
Morris, Nichols, Arsht & Tunnell business reorganization and restructuring partner Robert Dehney and special counsel Daniel Butz are serving as local counsel to Ormet in its Chapter 11 case. Court filings by the firm show that it has been paid $62,424 by the debtor for prepetition services, and that it currently holds a retainer balance of $80,000. A declaration by Dehney details more payments to the firm, noting that Morris Nichols partners are billing between $525 and $820 per hour, while associates are at rates ranging from $330 to $500.
David Robertson, a member of Pittsburgh’s Spilman Thomas & Battle, sits on Ormet’s board of directors and serves as chair of the company’s compensation committee.
Bloomberg reports that New York–based Rapid-American Corp., a former holding company for the McCrory " five and dime" store chain that inherited 275,000 asbestos claims via a series of acquisitions, filed for bankruptcy in Manhattan on March 8. Reed Smith commercial restructuring and bankruptcy partner Paul Singer ($750) in Pittsburgh is leading a team from the firm representing Rapid-American in the Chapter 11 case.
Reed Smith states in court filings that its client "never engaged in an asbestos business of any kind," but through a "series of merger transactions going back more than 45 years," it "incurred successor liability for personal injury claims arising from plaintiffs" exposure to asbestos-related products sold by The Philip Carey Manufacturing Company" prior to June 1, 1967.
A declaration by Reed Smith’s Singer reveals that Rapid-American has so far paid the firm roughly $119,932 in fees and expenses, as well as a $100,000 retainer to work on the bankruptcy. Reed Smith partners are billing between $410 and $1,005 per hour, while associates are billing at rates ranging from $260 to $600.
SNR Denton, which has served as corporate counsel and national coordinating counsel for asbestos litigation for Rapid-American, is seeking to serve as special counsel to the debtor in the Chapter 11 case. Leading the engagement for the firm are commercial litigation partner Stephen Marshall ($750), bankruptcy and litigation partner Robert Millner ($850), corporate reorganization partner Jo Christine Reed ($625), and litigation counsel Martin Schwartz ($625), all of whom are in New York.
Court records show that Rapid-American paid SNR Denton a $600,000 retainer for its services just prior to filing for bankruptcy. Of that sum, roughly $523,015 was earmarked to cover fees and expenses related to the firm’s ongoing asbestos litigation work. SNR Denton partners are billing at discounted hourly rates ranging from $389 to $491 per hour, while associates are billing between $295 and $371 per hour. (SNR Denton—which is set to change its name to Dentons when a three-way merger takes effect later this month—states that its standard hourly rates for partners are between $695 and $1,050 per hour, while associates typically bill between $415 and $575 an hour.)
A list of Rapid-American’s 20 largest unsecured creditors shows that the company owes monies to asbestos litigation claimants represented by firms like Baron & Budd, the Law Office of Peter G. Angelos, Motley Rice, Thornton & Naumes, and Weitz & Luxenberg.
Virginia United Methodist Homes of Williamsburg
Seeking to slash $61.7 million in debt, Richmond-based retirement community Virginia United Methodist Homes of Williamsburg filed for bankruptcy in Richmond on May 1, claiming it would exit Chapter 11 proceedings within three months.
DLA Piper restructuring practice vice chair Thomas Califano ($930) and partner George South III ($895) are serving as general bankruptcy counsel to the debtor. A declaration by Califano states that the firm has not yet received any fees in the case.
McGuireWoods public finance partner David Richardson and restructuring and insolvency counsel Sarah Boehm are serving as special bond counsel to the debtor. The firm has so far been paid roughly $120,679, according to court filings by the retirement home operator, which show that McGuireWoods lawyers are billing between $350 and $1,020 an hour for their services in the Chapter 11 case.
Bankruptcy practice leader Robert Westermann ($395), commercial real estate head Michael Terry ($465), and litigation partner Sheila deLa Cruz ($295) from Richmond’s Hirschler Fleischer are serving as local counsel to the debtor. A declaration by Westermann states that the firm has not yet received any fees for its work.
Virginia United, which is also known as WindsorMeade of Williamsburg, has agreed to refund payments to residents, according to the Richmond Times-Dispatch.