Court to consider Delphi's $98M bill
Thursday, November 30, 2006
Court to consider Delphi's $98M bill
Court to rule on legal, accounting fees supplier ran up in first eight months of Chapter 11.
David Shepardson / Detroit News Washington Bureau
WASHINGTON -- A federal bankruptcy judge in New York will consider today whether to approve most of $98 million in legal, accounting and consulting fees and expenses racked up by Delphi Corp. during its first eight months under Chapter 11 protection.
Through May 31, the firms want $92 million in fees and $6.1 million in expenses. At that rate, Delphi's bankruptcy could hit $200 million by the time it hopes to exit next year.
On Wednesday, Delphi said it would delay consideration of legal and accounting bills filed by two law firms and two accounting firms until March 22. But it will go forward with the bills for 28 outside firms.
Delphi has paid 80 percent of the fees and all of the expenses. Despite objections to some bills and expenses, Delphi's fee review committee asked that they be approved. The fee panel questioned whether continuing its review was worth the time and money.
U.S. Bankruptcy Judge Robert Drain will also be faced with several issues stemming from the civil complaint filed Oct. 30 by the Securities and Exchange Commission that found Delphi and nine former executives had committed accounting fraud in misleading investors and others about the company's financial shape, especially in 2000 and 2001.
Delphi settled the SEC's complaint without being required to pay a fine and a federal district court judge in Detroit approved in Nov. 14. Drain must decide whether to OK Delphi's settlement.
Drain must also decide whether to order Delphi's insurance carrier to continue to pay the legal bills of former executives accused of misconduct in the accounting fraud probe of the Troy-based auto parts supplier. The policy has a $5 million cap for advancements.
Five of the ex-executives have filed a request for legal payments.
Delphi, which objects to the requests, noted that on June 7 -- one day after The Detroit News reported that the SEC had formally notified former executives that they were likely to face civil charges -- Delphi's compensation committee halted the payment of legal bills to three former executives. In February, it had halted payment to seven others. Delphi board member John Opie denied that SEC or other governmental pressure was a factor in its decision.
Lawyers for some of the executives haven't been paid in more than a year and others checks from Delphi have bounced.
Without getting reimbursed by Delphi's insurance carrier, some former executives may be unable to retain their lawyers. They also face the ongoing criminal investigation; The News reported last week that a decision on whether a criminal case will be filed could come by January.
Delphi's legal bills have only been disclosed through May 31.
By the end of today, all of Delphi's law firms, accountants and consultants to Delphi must file bills for the third four-month period -- through Sept 30. One consultant, FTI, submitted its $8 million bill for that period early.
Two more controversial measures have been again delayed until Jan. 31. Delphi wants to implement a "key employee compensation program" that the UAW and others oppose. Separately, equity holders want to authorize the filing of claims against GM for alleged improper pressure against its former parts unit.
© Copyright 2006 The Detroit News. All rights reserved.
Court to consider Delphi's $98M bill
Court to rule on legal, accounting fees supplier ran up in first eight months of Chapter 11.
David Shepardson / Detroit News Washington Bureau
WASHINGTON -- A federal bankruptcy judge in New York will consider today whether to approve most of $98 million in legal, accounting and consulting fees and expenses racked up by Delphi Corp. during its first eight months under Chapter 11 protection.
Through May 31, the firms want $92 million in fees and $6.1 million in expenses. At that rate, Delphi's bankruptcy could hit $200 million by the time it hopes to exit next year.
On Wednesday, Delphi said it would delay consideration of legal and accounting bills filed by two law firms and two accounting firms until March 22. But it will go forward with the bills for 28 outside firms.
Delphi has paid 80 percent of the fees and all of the expenses. Despite objections to some bills and expenses, Delphi's fee review committee asked that they be approved. The fee panel questioned whether continuing its review was worth the time and money.
U.S. Bankruptcy Judge Robert Drain will also be faced with several issues stemming from the civil complaint filed Oct. 30 by the Securities and Exchange Commission that found Delphi and nine former executives had committed accounting fraud in misleading investors and others about the company's financial shape, especially in 2000 and 2001.
Delphi settled the SEC's complaint without being required to pay a fine and a federal district court judge in Detroit approved in Nov. 14. Drain must decide whether to OK Delphi's settlement.
Drain must also decide whether to order Delphi's insurance carrier to continue to pay the legal bills of former executives accused of misconduct in the accounting fraud probe of the Troy-based auto parts supplier. The policy has a $5 million cap for advancements.
Five of the ex-executives have filed a request for legal payments.
Delphi, which objects to the requests, noted that on June 7 -- one day after The Detroit News reported that the SEC had formally notified former executives that they were likely to face civil charges -- Delphi's compensation committee halted the payment of legal bills to three former executives. In February, it had halted payment to seven others. Delphi board member John Opie denied that SEC or other governmental pressure was a factor in its decision.
Lawyers for some of the executives haven't been paid in more than a year and others checks from Delphi have bounced.
Without getting reimbursed by Delphi's insurance carrier, some former executives may be unable to retain their lawyers. They also face the ongoing criminal investigation; The News reported last week that a decision on whether a criminal case will be filed could come by January.
Delphi's legal bills have only been disclosed through May 31.
By the end of today, all of Delphi's law firms, accountants and consultants to Delphi must file bills for the third four-month period -- through Sept 30. One consultant, FTI, submitted its $8 million bill for that period early.
Two more controversial measures have been again delayed until Jan. 31. Delphi wants to implement a "key employee compensation program" that the UAW and others oppose. Separately, equity holders want to authorize the filing of claims against GM for alleged improper pressure against its former parts unit.
© Copyright 2006 The Detroit News. All rights reserved.
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