GM Bankruptcy Filing Runs Up Big Bills
When it comes to one of the largest corporate bankruptcies in history, one wouldn't expect the process to be cheap or easy. That was the case for the old GM, which filed for Chapter 11 bankruptcy in the summer of 2009.
Services rendered over a three-month period for their bankruptcy filing will total more than $23 million, according to The Detroit News.
The GM bankruptcy and reorganization has caused the company to shed thousands of jobs and dealerships around the country, and forced it to try and work out arrangements with stockholders, GM car owners, employees and GM brands.
Such a large company presents a very complicated bankruptcy case, and recent news of the expensive bankruptcy filings comes even as other high-profile companies face similar legal bills upon filing Chapter 11 relief.
Handling the details of the filing is AP Services, a crisis management firm. According to the News, AP Services billed for $23 million worth of work and expenses in only 90 days.
AP Services is led by Al Koch, who is also the old GM's chief restructuring officer. According to Bloomberg, Koch is a turnaround specialist. The highest ranking executive to come from outside the old company, Koch reports to GM Chief Executive Officer Frederick Henderson and to the GM board. Koch previously worked for Kmart Corp. and Champion Enterprises, Inc., a manufactured home builder.
AP Services has a team of 153 people working on the old GM bankruptcy case over. Some of those people charged up to $835 an hour for their services. All told, Koch himself earned 455,000 dollars working on the GM bankruptcy case.
The hourly rates decreased in July 2009 after U.S. Justice Department monitors and creditors logged complaints about the fees, and raised concerns that such rates would not leave sufficient funds to cover claims. There is still the option for concerned parties to file objections to the fees.
News of the bankruptcy costs for the old GM comes soon after the investment firm Lehman Brothers reported its bankruptcy filing and management costs as well. Another massive bankruptcy filing, Lehman Brothers restructuring team already charged $32.8 million in “services and expenses” in their first 90 days of work.