This earlier post (also see here) noted the wrangling that had developed in the Enron bankruptcy case in New York over former Enron chapter 11 CEO Stephen Cooper‘s $25 million “success fee” request. That success fee, mind you, was on top of over $100 million that Cooper’s firm had already made in providing debtor-in-possession management services to Enron.
Well, as the thorough Steve Jakubowski reports here, Cooper’s proposed compromise of a $12.5 million success fee was approved late last week by the Enron Bankruptcy Judge, Arthur Gonzalez.
Not bad work if you can get it. But still no word yet from Lynn LoPucki.
Houston's Clear Thinkers
Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
Tom,
What I’d really like to know is the bonus Cooper received from the sale of his company to Zolfo a few years ago, shortly after he took the Enron case.
For like the first five years of his contract with Zolfo, Cooper received serious stock bonuses if the Cooper unit of Zolfo met certain earnings targets. It was about this time that Cooper associates began being hired by Enron at $850,000, or therabouts, a year. In the end there were nearly 30 such Cooper directors working for Enron.
This always struck me as such a huge scam that it makes a $12.5 million bonus seem like chump change.
Eric
Eric, there is no question that Cooper arranged a good deal for himself in the sale of his company and in taking on the management of Enron. However, I’m not willing to go so far as to characterize it as a scam. At least not yet.
Enron’s bankruptcy was an “emergency” filing — i.e., it was largely unplanned. As a result, Enron suffered a serious brain drain in the upper management levels during its descent into bankruptcy. Consequently, there was a big demand for such management services at the outset of Enron’s chapter 11 case, and Cooper’s company benefitted from that demand.
Some may argue that Cooper over-charged the estate for those services, but his company’s fees were closely scrutinized by creditors, so my sense is that the amount is probably representative of what the market rate for the services (creditors would have put up much more opposition to them if they were not).
The bottom line is that big bankruptcy cases are lucrative business for insolvency professionals.
Grandpa’s Reflections on a Year of Bankruptcy Blogging
I suppose that moment comes in everyone’s life. The first time someone calls you a “grandfather” (or the geriatric equivalent thereof). I faced that first reality check yesterday from, of all places, The Daily Bankruptcy Review, which…