|After more than a year in bankruptcy court, WorldCom Inc. won a federal
judge's approval for its plan of reorganization earlier this month. Now it's
time to fight over the bill.
Ashburn-based WorldCom filed the biggest bankruptcy case on record in July
2002, and it has racked up legal and other professional fees ever since at
the rate of $10 million a month.
In addition to paying its own bankruptcy lawyers at the law firm of Weil,
Gotshal & Manges LLP as much as $3 million a month, WorldCom is also
required to foot the bills for its creditors' lawyers and financial
Included in the $150 million in fees it has paid during the past year is the
cost of an exhaustive investigation commissioned by the board of directors
into the company's massive accounting fraud. That investigation alone cost
in excess of $40 million, according to the company. ...
During the past 20 years, while the number of business
bankruptcies has declined, the number of bankruptcy lawyers has ballooned,
along with the fees they charge, said
John Toothman, president of the
Devil's Advocate, a fee-auditing firm based in Alexandria. Last
year there were 38,450 business bankruptcy filings, according to the
American Bankruptcy Institute.
The fees are particularly high in large bankruptcies such as WorldCom's, in
which companies have to rework billions of dollars in debt,
Toothman said. WorldCom,
which has $25 billion in revenue, filed for bankruptcy after it could not
make payments on its $30 billion in bank debt.
Large companies are focused on emerging from bankruptcy quickly and are not
likely to quibble over multimillion-dollar fees,
Toothman said. "It is not
going to spend a lot looking at the charges," he said. "They are looking at
much larger numbers." ...