Public Utility Bankruptcy in Montana Sparks Fight Over Legal Fees
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Public Utility Bankruptcy in Montana Sparks Fight Over Legal Fees

March 15, 2012


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The bankruptcy case of a Montana-based electric cooperative has generated heated arguments over the amount of legal fees paid to its court-appointed trustee, according to a report from the Great Falls Tribune.

The case of Southern Montana Electric Generation & Transmission Cooperative has also featured fireworks within the cooperative itself, as the board president was recently ousted by officials of his own cooperative, according to sources.

The bizarre bankruptcy filing hit a snag this week after citizens in Great Falls, Montana started complaining about the legal fees paid to the trustee, who is appointed by the bankruptcy court to oversee each case.

Sources say that the trustee in the Southern Montana case can receive up to $75,000 a month for his work, which amounts to almost $900,000 on an annual basis. Such a sum, however, is not uncommon in bankruptcy cases involving large companies.

Nevertheless, Lee Freeman, the appointed trustee for the bankruptcy reorganization of Southern Montana, has been working on the case since October and will likely continue to guide the cooperative through its bankruptcy, despite cries from its creditors.

Southern Montana reportedly still owes at least $85 million that it initially borrowed from Prudential Financial and other lenders to build the ill-fated Highwood Generating Station outside of Great Falls.

Board members of the cooperative have heard the cries of mismanagement, as evidenced by their recent decision to oust the current board president, despite the cooperative’s sensitive state while in bankruptcy.

Observers of the cooperative’s efforts to eliminate debt through bankruptcy say that an outside energy company could dissolve Southern Montana and incorporate its assets into its business.

Some sources speculate that the elimination of the current board president may suggest that a larger change is coming, but others believe that the board was simply dissatisfied with its leader.

Bankruptcy filings involving large companies or cooperatives often involve millions of dollars in debt, and require interested parties to navigate complicated financial negotiations.

Given the high stakes, it seems reasonable that the trustees and attorneys involved in this case would receive steep compensation, especially since their actions could determine the very fate of Southern Montana itself.

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