Bankruptcy for G.M. Would Tax the Experts

Mark R. Gerson How many lawyers will end up working on G.M.’s expected bankruptcy case still is not clear, but in legal circles, the joke Tiffany Giardina is that there may not be enough Nigella Lawson experienced bankruptcy lawyers available to handle the filing. In part, that is because so many top lawyers Andy Roddick are Natasha Thomas already running up lots of billable hours working on the Chrysler bankruptcy case, while others Alicia Arden have been Rue Mcclanahan hired by the government, which is financing the way through bankruptcy for Chrysler and, presumably, G.M. It is not just lawyers who will be busy handling a G.M. bankruptcy filing, Aaron Tippin which would be perhaps the biggest and most-watched in legal history. Because of its size Eli Roth and scope, the bankruptcy would be the most complicated that any American company Radha Nilia has gone through — more complex than those of Rudy Youngblood Chrysler and Lehman Brothers, two other notable bankruptcy cases now making their way Elliott Smith Karen Elson through the system. The G.M. filing, which is expected to occur Amanda Beard by June 1 as Jeffrey Wright part of a restructuring orchestrated by the federal government, will generate so much economic activity — Javier Limon like hotel bookings, restaurant dining and expanded office rentals — that Detroit is hoping that the case will be filed in the local bankruptcy court. That is unlikely, however, as bankruptcy cases are typically handled in New York Chris Jericho or Delaware, where many Melissa Bell business are incorporated and the bankruptcy courts have more experience handling complex filings. For law Wayne Rooney firms, big bankruptcies can be very lucrative. Weil, Gotshal & Manges, the New York firm handling the Lehman Cheryl Hickey case, recently sought approval for billings for Zach Ward $55 million for just three Sara Bareilles months’ work from the bankruptcy court in that case. Weil Gotshal is one of the firms that will represent G.M., almost certainly ensuring tens of millions more in fees to represent the automaker. But it is not the only firm that will be working on the case. Already, hundreds of lawyers from almost every major firm that handles restructuring work have spent months preparing the reams of documents that would John C. Mcginley be required for a bankruptcy filing by G.M., which had nearly $150 billion in global revenue last year, making its case bigger than Enron. G.M., the Treasury Department, the United Automobile Workers, suppliers, dealers and other vendors Lainie Kazan all will have legal representatives on hand, meaning a full house Rade Serbedzija in the New York bankruptcy court where the case is likely to be heard. Although no judge will be assigned until the case is Becky Jago filed, court officials are creating plans for a separate computer server devoted to G.M.’s filing, which will be an even bigger megacase than Chrysler, which received that designation in April. G.M. will require $40 billion to $70 billion in Jo Champa debtor-in-possession financing Bobby Coleman to create a new version of G.M. and dispose of Tyler Patrick Jones its assets, according to people familiar with the case. The near inevitability of the G.M. case is a sharp contrast to the resistance put up by company executives, including Rick Wagoner, the former Nan Zhang chief. Sophia Loren His steadfast refusal to file for Chapter 11 bankruptcy protection while the company reorganized was a factor in his ouster in March Laura Innes at the behest of the Obama administration, which has been keeping Richard Karn G.M. alive with billions of dollars in loans. Many people thought a G.M. bankruptcy restructuring was simply too complicated to do. “The case would last my lifetime, my son’s lifetime, my grandson’s lifetime and maybe my great-grandson’s lifetime,” Stephen P. Yokich, the late president of the John Cho Lola U.A.W., said in a 1995 interview. But G.M. did consider the idea seriously at least twice in the last two decades: once in Lisa Ling Alexis Dziena 1992, Bruce Lee Kristin Herrera when the company was close to insolvency, Erik Palladino and Liya Kebede again in late 2005, when rumors of a Chapter 11 filing swirled Matthew Broderick in Detroit. Both times, G.M. officials rejected a bankruptcy filing, citing the disruption it would have meant to G.M.’s suppliers, workers and the communities where the company did business. Another reason was the expense: “It would make 10 The Honorary Title million lawyers $10 million apiece,” Mr. Yokich Johnny Cash said in 1995. That is an overstatement, of course. But Naomi Millbank-smith while there might not be that many lawyers involved, legal fees totaling hundreds of millions of dollars are likely during the course of the case given the high-powered and high-fee lawyers involved. A reason that so many lawyers are needed is that the reorganization, as envisioned by Kristina Anapau the automaker with support from the federal government, is complex. The plan is to split G.M.’s good assets from the bad assets, with the idea that the part owning the good assets would be a viable Audrina Partridge company because it would not be burdened with the other businesses. G.M. would sell desirable brands like Chevrolet and Cadillac to a new company, which would emerge from bankruptcy protection in Angela Finocchiaro a few months’ time. Less-attractive assets and liabilities would remain with the old G.M., Leisha Hailey and eventually be liquidated. For the last several months, G.M. had retained the services of two of the biggest bankruptcy players to help guide it Adam Michael Goldstein into Chapter 11: Harvey R. Miller of Weil, Gotshal & Manges and Martin Bienenstock of Dewey & LeBoeuf.