AP News

Trustee: Hawker Beechcraft attorney fees excessive


WICHITA, Kan. (AP) — The Justice Department's watchdog agency objected Thursday to more than $12 million in interim fees racked up during the first three months of Hawker Beechcraft's bankruptcy proceedings, criticizing what it called excessive and unreasonable fees lawyers billed for the company's failed bid for millions in executive bonuses.

U.S. Trustee Tracy Hope Davis asked the bankruptcy court to reject any fees sought in connection with the bonus plan for eight senior executives, and hold back an unspecified portion of payments on compensation for other professional services.

The government said Hawker Beechcraft's lawyers spent more time working on the executive bonus plan than on other projects. The company's attorney and its financial advisor together are seeking more than $402,000 for services connected to the bonuses.

Hawker Beechcraft's motion seeking the executive bonus plan "fell so far short of the standards for approval" that the services associated with that motion could not have provided a benefit to the estate," the trustee wrote.

Wichita-based Hawker Beechcraft had no immediate comment Thursday.

In August, U.S. Bankruptcy Judge Stuart Bernstein nixed the proposal to give eight top Hawker Beechcraft executives up to $5.3 million in bonuses, ruling at the time that the plan merely rewarded them for staying at their jobs.

In its filing, the trustee agreed, saying the proposed executive bonus plan set the minimum bar so low that that it was little more than a disguised retention program. Bonuses are allowed in bankruptcies, but must include more than a reward for staying with a company.

The trustee cited the testimony of Hawker Beechcraft's CEO Robert S. Miller, who said at a hearing that the financial targets in the bonus plan would be achieved if the company did not have any "whoopsies."

Hawker Beechcraft filed for bankruptcy protection in May. Talks to sell Hawker Beechcraft's operations to China's Superior Aviation Beijing Co collapsed last week and said it now plans to emerge from bankruptcy protection as a slimmed down company in the first quarter of 2013.

At issue now is the more than $12.2 million in compensation and $642,000 in expenses billed between May and July for professional services incurred during the bankruptcy proceeding, the biggest share of it billed by the company's lawyers — more than $5.1 million in fees and nearly $200,000 in expenses.

The company's restructuring advisors, Alvarez & Marsal North America, also submitted bills for interim services totaling $3.6 million in fees and almost $270,500 in expenses. They are among a dozen companies which filed claims for various professional services.

Hawker Beechcraft, which employs roughly 5,420 people worldwide, has factories in Little Rock, Ark., the United Kingdom and Mexico, as well as more than 100 service centers worldwide.


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