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Wall Street firm leads on GM bankruptcy; Weil Gotshal, CC and Bakers take on Euro work

Weil Gotshal & Manges looks set to earn more from the landmark bankruptcy of General Motors than it did from its mandate advising on the collapse of Lehman Brothers.

The US law firm has around 200 lawyers working on the instruction worldwide, led by high-profile New York bankruptcy partners Harvey Miller and Stephen Karotkin. It is also advising on the restructuring of the European arm of GM, led by London office head Mike Francies.

The stricken car giant filed for bankruptcy protection for all of its US assets last Monday (1 June), but it intends to restructure itself under section 367, with the ‘bad’ assets going into liquidation, while the rest goes into a new company.

An unprecedented number of law firms have been brought in to advise on GM’s disintegration, which is the biggest industrial failure in the US. Weil Gotshal has the largest role for the company alongside Chicago’s Jenner & Block, which is GM’s main corporate and M&A adviser, under partners Joseph Gromacki and Michael Wolf.

Weil Gotshal and Jenner & Block are both working alongside GM’s Detroit-based general counsel Robert Osborne, a former partner of Joe Gromacki at Jenner & Block, as well as his European counterpart, Riccardo Ventura in Zurich.

Dewey & LeBoeuf bankruptcy partner Martin Bienenstock, who switched from Weil Gotshal in November 2007, played an instrumental role in setting up the restructuring plan and, while he is not involved currently, it is understood he will reprise a role acting on the establishment of the new company later this summer.

A report by Legal Week’s sister title The American Lawyer in April said that Weil Gotshal had billed Lehman $55m (£34.3m) for 100,296 hours of work between 15 September, 2008 and 31 January, 2009. At that point, Miller, the firm’s lead partner, had billed the most hours – 794.8 – at a rate of $950 (£594.70) an hour, with some 128 partners and counsel and 365 associates involved. Some press reports have estimated the firm could make more than $200m (£125m) in fees from Lehman, though Miller declined to comment.

However, the firm is expected to make more from GM than Lehman.

Miller told Legal Week: “GM is a very large matter which is consuming a lot of people and a lot of time. We have a couple of hundred lawyers working on the issue and for the past month people have been working 24-7, so you can do the math. I spent months working on the Lehman Brothers bankruptcy but this is a much more complex matter.”

On the European side it is thought that the restructuring work is split roughly equally between Weil Gotshal, Clifford Chance and Baker & McKenzie, but the instruction is significantly smaller than Weil’s US brief.

Commenting on the deal, Kirkland & Ellis US bankruptcy partner James Sprayregen said: “As big as it is, it is actually quite a straightforward use of bankruptcy law. So while it is bigger than what has been done before, it actually is quite a common process. But there is a massive amount of legal work that has been done in preparation and that will be needed to finish the deal off. It has got to be costing tens of millions of dollars.”

Miller added: “The main objective is to turn GM into a profitable company and save jobs.”




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