Borders Hasn’t Shown It Can Pay for Bankruptcy, U.S. Says
April 29, 2011, 2:28 PM EDTBy Tiffany Kary
(Updates with lawyer’s response in second paragraph.)
April 29 (Bloomberg) -- Borders Group Inc. hasn’t shown that it can pay the costs of its bankruptcy case and should be denied requests to pay lawyers and other professionals, the U.S. said.
The U.S. Trustee, a bankruptcy watchdog for the Justice Department, today objected to monthly statements of compensation and expense reimbursements for 11 professionals working on the case. Andrew Glenn, a lawyer for Borders, said the company will file its financial report today and will pay fees owed to the U.S. Trustee, answering two of the concerns raised in papers filed in U.S. Bankruptcy Court in Manhattan.
“There was an issue with a reconciliation of the bill we received,” Glenn, a lawyer with Kasowitz, Benson, Torres & Friedman LLP, said in an e-mail.
The operating report for the period of Feb. 16 to March 31 hasn’t been filed, acting U.S. Trustee Tracy Hope Davis said in the filing. Kasowitz, Borders’s main bankruptcy counsel, has requested $1.27 million in fees for Feb. 16 through March 31. Financial adviser Jefferies & Co. has requested $250,000.
“It is impossible to determine if the debtors are paying their non-professional administrative expenses on a timely basis and have the financial wherewithal to pay the fees and expenses requested by their professionals,” lawyers for Davis wrote.
‘Vague and Lumped’
Kasowitz’s application contains “both vague and lumped time records,” the trustee said, questioning a request to reimburse $679 for cab and limousine services and $2,369 for meals. The firm also seeks fees for an “excessive” number of attorneys at 76 hours of court hearings, according to the trustee. Seven Kasowitz attorneys attended Borders’s first-day hearing and four or five were at others, the trustee said.
The trustee also seeks more information about Jeffries’s expense reimbursement requests. Mercer Inc., which seeks about $77,799 for work as a compensation consultant, needs to clarify some of its entries, the trustee said.
Borders, the second-largest book chain after Barnes & Noble Inc., filed for bankruptcy in February and has since begun closing about 225 stores, or a third of its total.
The case is In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--Editors: Stephen Farr, Glenn Holdcraft
To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.
