Lawyers, professionals reap over $50 million in GTAT bankruptcy
Price tag could make it the most expensive case in NH history
The bill has been tallied for GT Advanced Technologies’ bankruptcy proceedings, and it’s a whopper – over $50 million, an amount that could make it the most expensive bankruptcy case in state history.
That’s how much was awarded by a federal bankruptcy judge to lawyers and other professionals involved in the Merrimack-based solar and sapphire technologies firm’s bankruptcy proceedings, which began on Oct. 26, 2014, and ended on March 17, 2016.
Most of the fees have already been paid out on an interim basis and won’t have a serious impact on the $68 million in cash passed to the re-emerged entity, which is beginning to tout is latest innovations in developing the technology to bring down the cost of solar energy.
But it does indicate the increasing cost of bankruptcy and the bonanza for professionals involved.
GTAT filed for bankruptcy in 2014 after a disastrous deal with Apple Inc. The company previously had sold equipment to other manufacturers, first to make the material for solar arrays, and then the furnaces to produce sapphire boules to manufacture cellphone screens. But Apple wanted GTAT to make the materials themselves on a massive scale on land in Arizona, and when GTAT couldn’t do it to the technology giant’s satisfaction, GTAT filed for Chapter 11 reorganization.
With $1.5 billion in assets at the time of filing, GTAT’s was the second largest bankruptcy filing in state history. Public Service of NH’s proceedings, which ran from 1989 to 1991, was the largest, and it was more complicated.
“Apple was a lot easier to deal with in hindsight the Clamshell Alliance,” said Daniel Sklar, the local bankruptcy counsel for GTAT who was also involved in the PSNH bankruptcy. The Clamshell Alliance was one of the key groups protesting the Seabrook nuclear power plant, construction of which led to the electric utility’s bankruptcy.
While it was hard to determine the total cost of the PSNH, the first bill, which covered a six-month period, was roughly for $4 million. At that rate, the PSNH bankruptcy would be half as expensive as GTAT, though that doesn’t account for inflation.
11 firms are paid
The GTAT proceedings weren’t a cakewalk, however. There were more than 3,500 legal filings, involving everything from renegotiating a deal with Apple and settling more than $650 million in creditor claims to filings from disgruntled shareholders and class action shareholder suits alleging securities fraud.
GTAT used the proceedings to shed much of its debt and end its contract with Apple with the goal of returning to its legacy core business.
The 11 professional firms involved in the bankruptcy submitted their final bills in April, They totaled $51.7 million, including $1.28 million in expenses.
The court-appointed fee examiner has been scrutinizing the fee requests following each submission, but on the whole all amounts were approved, save for $323,000.
Leading the way was Paul Hastings, an international law firm based in New York City, which was awarded $14.8 million, including $313,000 in expenses. Attorneys there charge anywhere from $280 to $1,250 an hour, with an average rate of $793.50.
Ropes & Gray, a Boston law firm, was awarded $8.4 million, including $162,000 in expenses. Its blended hourly rate was $593.28 an hour.
Rothschild Inc., which handled the sale of the company, received $8.8 million, including $225,000 in fees. It wasn’t paid an hourly rate, but a monthly fee of $200,000, another $5 million upon confirmation, plus a percentage the two financing deals offset by previous payments and the fact that the buyers were existing investors. The company did report putting in some 15,744.5 hours of work, which comes out to $560 an hour.
The other compensated professionals were: Houlihan
Lokey Capital Inc. ($5.4 million); Kelley Drye and Warren, ($5.2 million); Alvarez & Marsal, ($4.7 million); and PricewaterhouseCoopers ($1.1 million).
In addition, Nixon Peabody was awarded $298,000 for the work done by the Manchester office, led by Sklar. Fees ranged from $185 to $875 per hour at the firm.