Old GM Charged $23 Million by Consulting Firm
Want to make a lot of money quick? All you need to do isspend innumerable hours working on one of the largest corporate bankruptcy filings in U.S. history. AP Services, GM’s bankruptcy consulting firm, is charging the old GM $23 million for three months of work on the company’s bankruptcy filing.
AP Services repored the charges in a quarterly report filed last Thursday in U.S. Bankruptcy Court. The expenses included airfare, meals, hotels, rental cars, and various other expenses incurred while the firm was working on GM’s restructuring. The U.S. Bankruptcy Court records show such a detailed report of the costs associatedwith GM’s bankruptcy because it is preparing to help liquidate old GM, also known as Motors Liquidation Co.
To finish such a large restructuring in only three months, AP Services had a team of 153 people working on GM’s bankruptcy case. Some team members charged up to $835 an hour in June when the whole company was in bankruptcy. In July, however, the team’s hourly rates dropped as creditors and government officials complained there would not be enough money to cover all the claims. Al Koch, head of AP Services and was GM’s chief restructuring officer, alone mademore than$455,000 in the three-month period.
By comparison, the old GM got off relatively lightly. Lehman Brothers’ bankruptcy team charged $32.8 million for three months of work.
Motors Liquidation’s dismantling and liquidation will be financed by the $1.2 billion available to it as debtor in possession financing. AP Services’ payment will come from this money as will the additional charges incurred by the old GM as AP Services finishes winding down the company. AP Services asked U.S. Bankruptcy Judge Robert Gerber to approve the fees, but objections can be made until November 12. Additionally, a hearing is scheduled for this Wednesday during which the hiring of a second consulting firm, Evercore Group, to act as Motors Liquidation’s investment banker and financial advisor could be approved.
Source: The Detroit News