The High Cost Of Bankruptcy

Posted by Madeleine Brooks

It sure does cost a lot to go broke.

Fee watchers say Lehman Brothers’ massive bankruptcy could cost a staggering $1.4 billion by the time the case is completed, according to a story by Daily Bankruptcy Review’s David McLaughlin.

Lynn LoPucki, a law professor at the University of California, Los Angeles who has long studied bankruptcy fees, thinks total fees could hit $1.4 billion. Seton Hall University School of Law professor Stephen Lubben tells McLaughlin that he thinks fees could reach $800 million.

Lubben estimates that Weil, Gotshal & Manges, Lehman’s bankruptcy law firm, and Milbank, Tweed, Hadley & McCloy, which is representing Lehman’s unsecured creditors, will earn about $400 million. He expects most of the remaining $400 million to go to Alvarez & Marsal, the turnaround firm that’s winding down Lehman’s operations. Alvarez has already earned more than $30 million on the case.

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