Liberty House
agent fees
approved

A bankruptcy judge tells
firms to keep better
hotel and restaurant records

By Peter Wagner
Star-Bulletin

U.S. Bankruptcy Judge Lloyd King today approved about $3.2 million in fee requests from 12 professional firms for services to Liberty House in the first seven months of its Chapter 11 reorganization.

But noting some questionable billings for hotel and restaurant accommodations, he ordered future expenses be detailed to show where traveling lawyers, accountants and consultants stay and eat.

With the Liberty House bankruptcy at midpoint, the $3,168,442.40 billed could eclipse the $5.4 million billed to Hawaiian Airlines during its 1993-94 bankruptcy, observers say. The Hawaiian Air case is the state's largest bankruptcy to date.

Topping the list of individual Liberty House billings is New York financial consulting firm Zolfo Cooper LLC asking $1,013,193.17 for its services between the March 19 bankruptcy filing and Sept. 30.

John Candon, the court-appointed fee administrator, asked Zolfo to trim nearly $10,000 in first class air fare, luxury hotel accommodations and other frills from its original billing.

Candon said he earlier trimmed more than $30,000 from billings of other firms.

Questioning the size of Zolfo's bill, Candon asked King to withhold 20 percent of the company's billing -- $174,530 -- pending completion of a reorganization plan for Liberty House. King today continued the matter until Jan. 19, giving the parties more time to work out their differences.

Zolfo's billing -- $872,652 in professional fees and $140,541.17 in personal expenses between the March 19 bankruptcy filing and Sept. 30 -- was followed in size by the $949,367.11 asked by Los Angeles law firm Hennigan, Mercer & Bennett, and $313,243.15 billed by Honolulu law firm Case, Bigelow & Lombardi.

Hennigan, Mercer is lead counsel for Liberty House with Case, Bigelow as co-counsel.

Most of the firms already have been paid 80 percent of their fees and 100 percent of expenses under an arrangement approved by the court. But the payments are tentative, pending the court's final approval at the close of the case.

Zolfo has objected to the proposed 20 percent holdback -- amounting to $174,530.40 -- saying the firm has worked diligently on the case and shouldn't be singled out.