Weil Gotshal & Manges’ central role in Enron’s mammoth bankruptcy is set to net the New York leader $157.4m (£90m) as a key fee body last week agreed a final adviser bill of nearly $700m (£402m). Enron’s fee committee recommended (8 November) a final total of $689.5m (£396m) for advisers, including lawyers, accountants and consultants, as the long-running bankruptcy draws to a close.
Law firms are set to receive the biggest share with Enron’s main legal adviser in the bankruptcy, Weil Gotshal, in line to get a 22% slice of the fees — $157.4m — of which the firm has already received more than 80%.
Other advisers to benefit include Alston & Bird, whose partner Neal Batson was the court-appointed examiner for Enron. The firm is in line for a $87.3m (£50m) payout, while Milbank Tweed Hadley & McCloy, which advised the official committee of unsecured creditors, is in line to receive $61.8m (£35m).
The final recommendations on advisers’ costs, which will need to be agreed by Enron bankruptcy Judge Arthur Gonzalez, look set to draw a line under one of the US’ most controversial insolvencies.
At one stage it was estimated that the insolvency and litigation related to the US energy giant’s collapse, bankruptcy and criminal proceedings generated roles for half of America’s top 200 law firms.
Weil Gotshal picked up the instruction in November 2001 and, at its peak, had 340 lawyers working on Enron-related matters, nearly a third of the firm’s fee earners.
Weil Gotshal restructuring co-chair and leader of the firm’s Enron team, Martin Bienenstock, told Legal Week that the firm had helped prevent the break-up of Enron, preserving around $14bn (£8bn) for creditors and saving 24,000 jobs.
"We resolved cases with 177 Enron debtors in two-and-a-half years, bringing over $2bn (£1.14bn) of new value into Enron through bankruptcy-avoidance actions and other remedies," he added.
Bienenstock pointed to the scale of the task, notably that 50,000 claims had to be resolved before Enron’s total liability could be established and creditors paid.
"To accomplish that in our lifetimes and to save more than $1bn (£574m) of legal fees, we established a novel claims resolution method. Each side had to condense its case into 10 pages, followed by 30 minutes of court hearings unless the judge allowed more time. This ignited a stampede to settle claims, and the estate is now distributing cash to creditors," he continued.
Enron emerged from Chapter 11 bankruptcy in July 2004.
The case also signals the end of the run of major fraud-led bankruptcies including Global Crossing and WorldCom that drove the lucrative US insolvency market in the years following Enron’s collapse.
Even with the upturn in the US economy over the last two years, insolvency has remained a substantial source of business with unionised industries frequently filing for bankruptcy protection.
The final picture of Enron’s bankruptcy costs makes a sharp contrast with the UK, which is far less lucrative for bankruptcies because of the lower levels of related litigation.
Clifford Chance’s London-based head of insolvency, Mark Hyde, commented: "The US is light years ahead of the UK in recognising bankruptcy as a way of rescuing a company.
"In the UK, most restructurings are effected without a formal insolvency process because such processes are still perceived to signal the commercial end of a company’s life."
European companies also fight to avoid bankruptcy proceedings for fear creditors will enforce complete liquidation. In addition, US icon General Motors is now viewed as a potential candidate for Chapter 11.