If automaker Chrysler goes into bankruptcy this week, as is expected by many, uncertainty about its future will abound. But one thing will be for sure: The case will be keeping lawyers busy for a long, long time.
Look no further than Nashville's U.S. Bankruptcy Court to see why. Have you given much thought lately to Service Merchandise Co.? How about Murray Inc.? Regal Cinemas, anyone?
They're all dead. The 10th anniversary of retailer Service Merchandise's March 1999 bankruptcy filing passed unnoticed last month. Lawnmower maker Murray filed under Chapter 11 in 2004 and got approval for a plan of liquidation in 2005. Theater chain Regal went under in 2001.
Yet those companies, and others long since passed from the scene, have continued to exist for years in bankruptcy court, providing an ongoing source of income for local attorneys. The case files of Service and Murray remain open and have each seen docket activity this month. Regal's bankruptcy case officially ended on March 30, 2009.
Those files include disclosures of the bills that lawyers submit to the court for payment out of the bankruptcy debtor's assets. Final billing of the bankruptcy estate is complete on all three cases, though various law firms continue to bill hours to creditors and other clients involved in the cases. Total fees and expenses for local law firms were as follows:
In more recent bankruptcies, the total billings have been similarly impressive. H3GM attorneys representing SouthEast Waffles Inc. in its sometimes bitterly contested Chapter 11 proceedings have billed more than $549,000 in fees and expenses. Its main attorneys on the case, Glenn B. Rose and Barbara Holmes, bill their time at $400 to $430 an hour as firm partners. Since the beginning of the year, according to a filing made last week, they have billed more than 157 hours between them, while associate Tracy Lujan has put in 108 more.
The billing amounts disclosed in court filings represent only a part of the work that firms these days are taking on in the midst of the economic crisis. According to Randal S. Mashburn, a veteran bankruptcy practitioner at Baker Donelson Bearman Caldwell & Berkowitz's Nashville office, there are plenty of billable hours to tally just fielding phone calls from anxious business clients.
"Nearly every day, in the last six to nine months, there's somebody new who is calling in and thinking they have got the crisis of the day — and sometimes they really do," Mashburn said. "What have increased in my practice, much more than actual bankruptcy filings, are all the what-if questions. Clients say 'I'm worried about my major customer filing bankruptcy.' Or 'I'm worried about what would happen if my sole supplier for a particular product files for bankruptcy.'
"Everybody seems to believe that everybody else is in financial trouble," Mashburn said.