Enron Corp.'s interim chief executive has asked a federal bankruptcy judge to award his firm a $25 million "success fee" for stabilizing the fallen Houston energy giant.
Stephen F. Cooper, a turnaround expert who has headed Enron since a month after the company filed for bankruptcy protection in December 2001, cited the "extraordinary results" he and his colleagues had produced. Cooper said the fee is "well within the range of reasonableness," according to court papers filed late Thursday with U.S. Bankruptcy Judge Arthur J. Gonzalez.
Cooper and some three dozen associates with ties to the management firm he chairs, Kroll Zolfo Cooper LLC, have been negotiating with creditors, selling Enron's remaining assets and otherwise reorganizing Enron's far-flung operations. His company already had collected $63.4 million in fees from Enron as of June 30.
The fees that Enron has paid to of lawyers and accountants are expected to reach nearly $1 billion by year-end. The numbers have been closely watched by legal experts and Texas officials, who question whether professionals are getting money that should go back to creditors. Under a reorganization plan approved in July, most of Enron's creditors eventually will receive between 17 and 20 cents on the dollar.
Yesterday's court filing said that both Enron's board of directors and the creditors' committee support the $25 million payment to Cooper, based in part on the sale prices he won for assets such as the company's North American gas pipelines, which commanded more than $2 billion in an auction earlier this week.
"The board fully supports payment of this fee and believes Kroll Zolfo Cooper's leadership not only maximized the value delivered to Enron's creditors, but achieved results well in excess of initial expectations," Raymond S. Troubh, chairman of Enron's board, said in a prepared statement.
Lynn M. LoPucki, a University of California at Los Angeles law professor who studies bankruptcy fees, called the $25 million request "very bold." LoPucki said total fees requested by all the professionals working in a bankruptcy rarely top $25 million.
But, Cooper's supporters say, Enron is not the typical case. Scott Winn, managing director at Kroll Zolfo Cooper, said the Enron bankruptcy was "unprecedented in size, scope and complexity."
The company's new managers had to unravel scores of business partnerships used to hide debt and to work with the Justice Department, the Securities and Exchange Commission and other federal regulators investigating fraud at the company.
The bankruptcy judge has scheduled a Sept. 30 hearing to consider Cooper's motion, which was reported in yesterday's Wall Street Journal.