Chrysler, which filed for Chapter 11 bankruptcy protection earlier this week, may pay an estimated $200 million to lawyers and other professionals helping it try to create a more viable automaker in partnership with Italian automaker Fiat SpA.
Chrysler, the 3ed largest automaker in the U.S., has already paid lawyers, from the firm, Jones Day $18.9 million in retainers since November to avoid (great job there, guys), and then prepare for, the company’s Chapter 11 proceeding, according to court documents. Ultimately, lawyers, bankers and accountants may reap more than 10 times that amount in court-approved fees by the time the case ends.
Chrysler has about 54,000 employees, and listed yearend assets of about $39.3 billion and liabilities totaling $55.2 billion in court documents for the year of 2008. Chrysler aims to sell its best assets -- which include its Jeep brand and Dodge Ram pickups -- to Fiat, using bankruptcy law to wind up its liabilities.
However, the fact that Chrysler is filing for bankruptcy protection has not deterred the lawyers at Jones Day from charging outrageous fees. In fact, Corinne Ball and David Heiman, the lead lawyers at Jones Day, will charge Chrysler $950/hr although their billing rates in 2009, as of April, were listed at $900/hr.
Stephen Lubben, who teaches bankruptcy- law at Seton Hall University School of Law in Newark, New Jersey, has suggested that based on Chrysler’s reported assets and liabilities (see above), it may take two years to wrap up the Chrysler bankruptcy case. This shapes up very nicely for the lawyers at Jones Day, as they will at the end of all their hard work reap enormous monetary rewards.
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