Lehman Brothers Holdings Inc. (LEHMQ), whose fees to advisers have exceeded $1.2 billion during its bankruptcy, paid lawyers and managers $31.9 million in March.
Restructuring firm Alvarez & Marsal LLC, whose co-founder Bryan Marsal runs the defunct investment bank, made $422.9 million in “interim management” fees for 30 1/2 months of work, including $10.2 million last month, according to the filing with the U.S. Securities and Exchange Commission. Weil, Gotshal & Manges LLP, based in New York, was paid $286 million for acting as Lehman’s lead bankruptcy law firm through March, including $6.1 million last month.
“Fees at this level suggest that the bankruptcy courts may not be a practical solution for the largest financial institutions,” said Lynn LoPucki, a bankruptcy-law professor at the University of California, Los Angeles. The Federal Deposit Insurance Corp., which has said it could liquidate Lehman more effectively, might be an alternative, he said.
Marsal, who bills Lehman hourly, worked 64 hours in December at $850 an hour, charging $54,400 plus $632 in expenses, according to a separate filing in bankruptcy court today. The Lehman CEO aims to raise $61 billion from the defunct company’s assets to pay $322 billion in claims, giving creditors 18.6 cents on the dollar, on average.
Kimberly Macleod, a Lehman spokeswoman, didn’t immediately respond to an e-mail seeking comment on the FDIC’s claim about costs.
Total administrative costs exceed $2.4 billion for the Lehman bankruptcy, including separate liquidations of Lehman Brothers Inc., the remnants of the brokerage, and Lehman Brothers International Europe, the investment bank’s U.K. unit.
London-based LBIE paid its advisers $774 million in fees through March 14. PricewaterhouseCoopers LLP, the unit’s administrators, paid themselves 325 million pounds ($540 million). The bank’s law firms, including London-based Linklaters LLP, got $242 million as of March 14, the accounting firm said in an April 14 report.
The bankrupt brokerage’s total administrative fees for the first 24 months were $420 million, according to the SEC’s Office of the Inspector General. Brokerage trustee James Giddens and his law firm Hughes Hubbard & Reed LLP received about $121 million in fees through September, according to a March 31 bankruptcy court filing in Manhattan.
The Lehman parent’s bankruptcy in Manhattan became the most expensive in U.S. history in April 2010, when it topped the $757 million cost of energy trader Enron Corp.’s three-year liquidation, according to data compiled by LoPucki.
In the SEC filing, the Lehman parent and its affiliates reported cash and investments of $23.2 billion as of March 31, compared with $22.6 billion on Feb. 28.
Once the world’s fourth-biggest investment bank, Lehman is fighting for control of a $61 billion liquidation plan with a group of bondholders including hedge fund Paulson & Co. and a rival group of derivatives creditors that includes Goldman Sachs Group Inc. (GS) and Morgan Stanley.
Lehman creditors range from banks and hedge funds to the New York Giants and Abu Dhabi Investment Authority, as well as individuals who hold Lehman bonds. Lehman filed for bankruptcy on Sept. 15, 2008, with assets of $639 billion.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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