DLA Piper has outlined its fee arrangement with Philadelphia Entertainment and Development Partners in the firm’s application to be approved as bankruptcy counsel to the owners of the once-proposed Foxwoods Casino.
Partners at the firm will charge between $530 and $1,120 an hour for their work helping shepherd PEDP through a Chapter 11 bankruptcy in the Eastern District of Pennsylvania, according to DLA Piper’s application. PEDP filed for bankruptcy March 31 after several years of battling for, winning and then seeing revoked a license to operate a casino in Philadelphia.
DLA Piper partner Carl M. Buchholz is the relationship partner on the matter and will be charging PEDP $715 an hour, according to the engagement letter attached to court filings. Partner Thomas R. Califano, co-vice chairman of the firm’s restructuring practice, will lead the firm’s work on the bankruptcy and will charge $930 an hour, according to his declaration in support of the application.
The engagement letter was signed Oct. 31, 2013, and stated that DLA Piper normally adjusts rates once a year, around January. Buchholz said the rates were not raised. Buchholz said this was a new relationship for DLA Piper that he brought with him when he joined the firm in 2012.
“We were retained by the principals to clean up a matter that needed to be cleaned up,” Buchholz said, noting his firm has been working for several months on drafting plans.
Califano said in the declaration that DLA Piper counsel working on behalf of PEDP will charge between $300 and $940 an hour, associates will charge between $320 and $730 an hour and paraprofessionals will charge between $85 and $455 an hour.
According to Califano, prior to the bankruptcy filing, DLA Piper received funds from certain of the partners of PEDP totaling $550,000. Additionally, RBS Citizens gave DLA Piper $150,000 from the proceeds of the sale of some real estate owned by PEDP. All of the funds were placed into a client trust account. Since the Oct. 31 engagement, DLA Piper has been paid about $365,000 from the fund from six different invoices, Califano said in the declaration.
According to the engagement letter, DLA Piper required a $550,000 security retainer, which was the firm’s estimated fees plus costs. If approved to serve as counsel, DLA Piper will submit for approval regular applications for compensation. Buchholz said the fees could exceed $550,000 and the firm would seek court approval for the additional charges.
DLA Piper is not the only firm seeking to represent PEDP in relation to its bankruptcy.
PEDP wants longtime counsel Cozen O’Connor to help it recover the $50 million it paid for the now-revoked license.
In an application to authorize PEDP to hire Cozen O’Connor, the company said it believed it had a claim to the $50 million licensing fee given the 2008 license to operate a casino in Philadelphia was revoked in 2012 and the Pennsylvania Gaming Control Board is expected to receive another $50 million for the same license from whichever entity wins the bid for the license PEDP once held.
According to an engagement letter attached as an exhibit to the application, PEDP intends to pursue its claim against the commonwealth of Pennsylvania and the state secretary of the Department of Revenue.
PEDP and Cozen O’Connor have entered into an engagement agreement in which Cozen O’Connor Chairman Stephen A. Cozen and Vice Chairman F. Warren Jacoby would lead the firm’s representation of PEDP as special litigation counsel for the sole purpose of recovering the fee. Under the agreement, Cozen O’Connor would be paid a nonrefundable $50,000 deposit toward fees and PEDP would pay all costs associated with the representation. The rest of the firm’s work would be done on a contingency fee basis in which the firm would receive 25 percent of any recovery it helped achieve.
As part of its prior representation of PEDP, Cozen O’Connor noted PEDP owes the firm $6.5 million in unpaid legal fees. Cozen O’Connor is the second largest unsecured creditor of PEDP behind RBS Citizens Bank, according to filings in the bankruptcy court. Jacoby said in his declaration that the unsecured claim did not create any adverse interest to PEDP. Cozen O’Connor partner Neal Colton entered his appearance in the case on behalf of the law firm in the firm’s role as an unsecured creditor.
DLA Piper said in its filings that PEDP does not owe DLA Piper anything else for services rendered before the bankruptcy petition was filed.