The latest evidence: The Wall Street Journal's lead story in the C-section on Tuesday, which covered the "indignity" law firms must suffer while making 20-minute pitches to try to capture the role as counsel to Linens' creditors committee.
Though the process of electing a creditors committee and then choosing counsel to represent them is not new by any means, reporting a behind-the-scenes look at the process is at least a refreshing change of pace from the bankruptcy's coverage thus far.
Since the New York Post on April 15 reported that Clifton, N.J., home furnishings retailer would file for bankruptcy, the mainstream press, led by the Journal, have gone out of its way to beat the proverbial dead horse to keep Linens in the news, despite the fact that virtually nothing has happened in the case yet. To date, Linens has hired a financial adviser, and will Wednesday choose a staking-horse bidder to liquidate certain stores.
But the Journal's piece -- while still not telling us anything new -- is an interesting behind-the-scenes look at how creditors committees pick their lawyers. And how the panels themselves are formed. The U.S. trustee for the region selected the unsecured creditors who would sit on the committee. Meanwhile, 10 law firms and advisory firms made the trek to the Doubletree Hotel in Wilmington, Del., where only four were even given the chance to make a 20-minute pitch to the committee. Only two of those four -- one advisory firm and one law firm -- left Wilmington with a job.
"I've been complaining about the indignity of these things for years, but no one listens," Jay Indyke from Cooley Godward Kronish LP told the Journal. "You fly in, spend a day and might never get a chance to speak or meet with creditors."
Indyke did get his chance to make a pitch, but lost out to Otterbourg, Steindler, Houston & Rosen LLC, whom the creditors committee ultimately chose.
But one has to wonder about "indignity" here. According to Bankruptcyinsider.com, the top of the pay scale for lawyers representing unsecured creditors committees is Ira Dizengoff of Akin Gump Strauss Hauer & Feld LLP, at $825 an hour. Indyke himself makes $760 an hour. At that kind of money, is asking for 20 minutes really that demeaning? - John Blakeley
Comments
Just weeks into Linens 'n Things Inc.'s Chapter 11 filing, it's already clear that the case will be the headline bankruptcy of the year, at least as far as the mainstream press is concerned.
I believe a main point that the reporter didn't focus on which I had stressed to him was that the in-person meeting process appeared to be a waste of time and resources for credit executives and CFO's for creditors that make the trip, for a non-substantive report on what is happening in the case, and with most of them being told to go home. Also, professionals show up without knowing who will be on the committee, so a lot of firms waste their time and effort to prepare for a presentation they will never make. There are many jurisidictions where the committee is pre-selected by the US Trustee's office without an in-person meeting, which saves resources and doesn't add insult to injury for those who are most likely to have to forgive a substantial part of their AR. Also, the committee once formed can narrow the list of professionals they want to talk to.
Jay Indyke