A New York bankruptcy judge has approved millions of dollars in fees and expenses charged to Hawker Beechcraft for legal and other professional services related to its bankruptcy case, but the judge did knock some money off the legal bills.
Fees from 12 firms were approved, less than a 10 percent “holdback” to be retained by Hawker Beechcraft until the court authorizes the difference to be paid, according to a court document filed Tuesday.
The order was signed by Judge Stuart Bernstein on Nov. 29, the filing said.
Hawker Beechcraft filed for Chapter 11 bankruptcy May 3.
Some of the fees charged by law firm Kirkland & Ellis and Hawker Beechcraft’s restructuring adviser Alvarez & Marsal North America were subject to an objection in October by the court and are not part of the ruling, the document said.
The court objected to fees the two firms charged for services related to a Key Employee Incentive Plan, or KEIP, that would have given up to $5.3 million in bonuses to eight top executives.
The court shot down the bonuses, calling it a disguised retention plan that violated bankruptcy code.
Objections to the incentive plan were filed by the federal agency that oversees pension obligations of retirement plans that aren’t financially viable and the Machinists union.
The court had called the $408,078 in fees charged by the two firms related to the incentive plan “excessive” and greater than most of their other fees charged.
“Although a debtor’s professionals may be entitled to compensation under appropriate circumstances for litigating a matter unsuccessfully, in this case, the KEIP motion fell so far short of the standards for approval that the services associated with that motion did not provide, and could not have provided, a benefit to the estate,” the judge said in the October ruling.
In the filing on Tuesday, Bernstein ruled that Hawker Beechcraft could pay $4.338 million of the $5.12 million charged by Kirkland & Ellis for legal services from May 3 through July 31 and $198,510 in expenses.
The court also ruled it could pay $3.152 million of $3.604 million charged by Alvarez & Marsal North America for the same period plus $270,486 in expenses.
Locally, Martin, Pringle, Oliver, Wallace & Bauer may receive $96,097 of the $106,775 charged for legal services related to the bankruptcy during that time along with $11,772 in expenses.
In all the court approved payment of a total $10.668 million of $12.255 million in fees charged by the dozen firms.
It also approved payment of $642,224 in expenses incurred by the firms.
Hawker Beechcraft has said it hopes to emerge from bankruptcy in early 2013 as a smaller company.