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Lehman Pays CEO’s Firm Alvarez & Marsal $77.3 Million (Update3)
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By Linda Sandler and Christopher Scinta

June 15 (Bloomberg) -- Lehman Brothers Holdings Inc., the investment bank liquidating in bankruptcy, paid restructuring adviser Alvarez & Marsal LLC $77.3 million in fees, according to a filing with the U.S. Securities and Exchange Commission.

New York-based Alvarez & Marsal, which provided Lehman with its chief executive officer Bryan Marsal, has received the most of any of Lehman’s advisers since it declared bankruptcy in September, according to papers filed today. Lehman’s bankruptcy law firm, Weil Gotshal & Manges LLP of New York, has received $45.6 million for a team headed by partner Harvey Miller.

Marsal declined to comment and Miller didn’t immediately respond to an e-mail seeking comment.

Lehman has paid its professional advisers, including lawyers, bankers and accountants, $171 million from September through April.

The filing shows how lucrative corporate bankruptcies can be for advisers, even when creditors stand to take losses. Lehman may eventually raise $45 billion for its remaining creditors who are owed $200 billion to $250 billion, Marsal told Bloomberg News last month.

“While the Weil and Alvarez numbers are certainly eye- popping, they are probably not out of line for a case that is so large,” said Seton Hall University School of Law professor Stephen Lubben in Newark, New Jersey.

Cash Level Rises

Lehman said in the filing that its cash rose to $9.3 billion on April 30, up about $1 billion from the previous month. More money will come from spinning off real estate and private-equity properties to Lehman creditors, with an eye to taking the unit public as values improve, Marsal has said.

Milbank Tweed Hadley & McCloy LLP, which advises Lehman’s creditors, has received $10.4 million from the investment bank.

Lynn LoPucki, who teaches bankruptcy law at the University of California, Los Angeles, and maintains a database to calculate fees, has estimated that Weil Gotshal could see as much as $209 million in fees from the Lehman case. Overall, the bankers, accountants and lawyers in the case may reap judge- approved charges of $906 million, LoPucki has said.

Those fees refer only to the Lehman holding company.

Separately, James Giddens, who was appointed by the Securities Investor Protection Corp., to recover funds for customers and creditors of Lehman’s brokerage, is accruing further fees.

Adding Up

The cost of administering the wind-down of Lehman Brothers Inc. has been $55.6 million, while Giddens raised about $16.3 billion in cash and securities since the September collapse of the Wall Street firm, according to bankruptcy court documents.

Some $17.4 million of those administrative fees were paid to New York-based accounting firm Deloitte & Touche LLP. Another $14.7 million went to Giddens’s law firm, Hughes Hubbard & Reed LLP, and $12.2 million was paid to Barclays Plc, which bought real estate and Lehman’s North American brokerage operations for $1.45 billion in September.

Lehman filed the biggest bankruptcy in U.S. history with assets of $639 billion.

Weil Gotshal partners charge as much as $950 an hour, according to documents filed in the General Motors Corp. case on Friday. GM paid the law firm $54 million in the six months before it filed for bankruptcy on June 1, the documents showed.

GM gets cheaper legal advice from Detroit-based Honigman Miller Schwartz and Cohn LLP, where partners’ top rates are $710 an hour; the firm will bill GM at only 95 percent of those 2009 rates, according to court documents.

The Lehman case is In re Lehman Brothers Holdings Inc., 08- 13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter responsible for this story: Linda Sandler in New York at [e-mail]; Christopher Scinta in New York bankruptcy court at [e-mail].
Last Updated: June 15, 2009 16:06 EDT