Our two cents this week: If you have a can of worms that very important people are willing to overlook, don’t ask a court to approve $1.3 million for your stinky critters when you should be burying them where no one will ever find them again.
Judge Marilyn Morgan of the Northern District Bankruptcy Court wants to dissect a can of worms reopened by O’Melveny & Myers last month when it asked for the rest of its fees for its work in the SonicBlue bankruptcy case. (It was $750,000 until negotiations with the creditors got them to cut it down to $250,000.)
Morgan ordered an evidentiary hearing for October to go over partner Suzzane Uhland’s “conduct” in the case.
That can’t be good. Slackjawed creditors, after the jump.
O’Melveny was special counsel to SonicBlue in a 2004 $15 million settlement with VIA and Intel. VIA held some of SonicBlue’s debt. Remember, this is the same settlement that got Pillsbury kicked off the bankruptcy for undisclosed conflicts of interest. That settled for $10 million earlier this year.
Apparently, the bankruptcy trustee considered suing OMM as well, but went after Pillsbury because it was the easiest fish to fry.
Then, O’Melveny pops up last month asking for the rest of its fees for its work, and disclosed that it also represented a SonicBlue creditor at the same time it was representing SonicBlue. [Those disclosures left creditors “slackjawed,” for their lateness and obviousness, according to a filing by their attorney, Ron Oliner (.pdf). O'Melveny's response: .pdf.]
Turns out, Morgan didn’t care about the disclosures, but all the other muck stirred up by the creditors over the fee request left her unsettled about O’Melveny’s role in the VIA case, and now she might not let them off the hook. She’ll be considering whether to disgorge all of its $1.3 million in fees ($1.1 it’s already been paid, plus the $250,000 it wants).
That’s quite a snag.
— Amanda Royal
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