Hawker Beechcraft spent $3 million on Chapter 11 fees in August
As Hawker Beechcraft reaches the end of its fifth month operating under Chapter 11 protection the cost of bankruptcy is becoming clear. In August, alone, it spent over $3 million on lawyers, advisers and accountants.
The largest bill came was from Alvarez & Marsal the company’s restructuring adviser. It charged almost $1.7 million for August alone. Karin-Joyce Tjon, Hawker Beechcraft’s CFO, is a former employee of the restructuring firm.
The costs are not unusual for a large company like Hawker Beechcraft and will not be a surprise to Steve Miller, Hawker Beechcraft’s CEO who specialises in restructuring companies.
Writing about his role in the restructuring of car part maker Federal-Mogul, in his 2008 book The Turnaround Kid, Miller said: “The outcome showed how the bankruptcy system can produce a relatively fair result. But it is far from perfect. The process requires that all of the key parties hire lawyers and advisers, who are paid out of the troubled company’s assets. Everyone who works in the turnaround field knows that these experts come from a relatively small pool, and you see the same folks whenever there’s a big case….In big case their combined billing tops $100 million per year, and they will be paid before anyone else.”
He added: “Is there an alternative to the costly process that makes bankruptcy a part for lawyers, accountants, bankers and advisers?” Certainly it’s better to avoid the process if you can or do a “pre-packaged” bankruptcy that is negotiated fully before a judge is approached. Otherwise you run the risk of paying for every delay, inquiry and objection, no matter who raises an issue or stands to benefit.”
When it filed in May, Hawker Beechcraft said that it hoped to leave bankruptcy protection by December.
|August fee |
|Alvarez & Marsal||$1,699,547||Hawker Beechcraft and DIP lenders||Restructuring Advisor|
|Akin Gump Strauss||$770,580||Unsecured creditors||Legal counsel|
|Perella Weinberg Partners||$140,000||Hawker Beechcraft and DIP lenders||Financial Advisor|
|Deloitte||$87,863||Hawker Beechcraft||Tax Advisory|
|Mercer||$87,247||Hawker Beechcraft and DIP lenders||Compensation and Benefits Consultant|
|Fried, Frank, Harris, Shriver & Jacobson||$52,954||Hawker Beechcraft and DIP lenders||Special Counsel|
|Martin, Pringle, Oliver, Wallace, & Bauer||$37,711||Hawker Beechcraft and DIP lenders||General Counsel|
|PricewaterhouseCoopers||$35,128||Hawker Beechcraft||Accounting Consultants and Independent Auditors|
|Epiq Bankruptcy Services||$7,695||Hawker Beechcraft||Administrative adviser|
|Crowe & Dunlevy||$5,698||Unsecured Creditors||Special FAA Counsel|
Source: Hawker Beechcraft and Corporate Jet Investor
Note: Some have been pro-rated