IndyMac creditor objects to $7 million fee from special counsel

By Kali Hays

New York, March 27 - IndyMac Bancorp, Inc.'s largest creditor, HoldCo Advisors LP, objected to a roughly $7 million final payment request from Skadden, Arps, Slate, Meagher & Flom LLP, according to a Wednesday filing with the U.S. Bankruptcy Court for the Central District of California.

HoldCo maintains $165 million of trust-preferred securities issued by IndyMac's wholly owned subsidiary trusts in its position as manager and power of attorney for Financials Restructuring Partners, Ltd. and Financials Restructuring Partners III, Ltd, making it IndyMac's main creditor.

Skadden is seeking payment for fees and expenses it incurred while acting as special counsel for the company's Chapter 7 trustee, Alfred H. Siegel, from Aug. 12, 2008 through March 18, 2014, according to the filing.

HoldCo objected to the payment based on what it claimed were prior inflated payment requests from Skadden and compared previous payments to the firm exceeding $6 million to the $5 million in fees incurred by the estate's primary counsel, Klee Tuchin, throughout the entirety of the case.

HoldCo claimed that "this juxtaposition alone shows that Skadden's fees are excessive and unreasonable" and said "many of the same professionals from Skadden are still working on this case with Buckley Sandler and have incurred additional fees in the amount of approximately $8 million, meaning that the real aggregate compensation for the Skadden attorneys is in excess of $15 million, or three times what Klee Tuchin has charged to date," the filing stated.

HoldCo said that Skadden's "jaw-dropping" fee should be reduced, alleging mismanagement, overstaffing "despite its limited scope of retention [...] excessive fees and billing by partners and more experienced attorneys than the work required" and that Skadden has demonstrated a "general pattern of overbilling."

HoldCo also requested that the current April 9 hearing on Skadden's fee application be "continued by at least 30 days to allow further opportunity to review Skadden's 515 pages of invoices" and to "conduct a short discovery process to understand more fully Skadden's staffing and billing process," according to the filing.

IndyMac, a Pasadena, Calif., bank holding company, filed for bankruptcy on July 31, 2008. The Chapter 7 case number is 08-21752.

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