Heller Judge to Lawyers: Your Plan is a Mess

Judge Dennis Montali is already asking the two main lawyers on the Heller bankruptcy to file a revised liquidation plan before the first hearing on it Nov. 9.

In a seven-page letter (.pdf) to John Fiero, who represents the estate, and Thomas Willoughby, who represents the creditors committee, the judge pointed out dozens of issues, some of them technical and even grammatical, but many of them substantive.

Montali schools 'em, after the jump.

For instance, Montali mentioned the creditors $58 million suit against Bank of America several times, wanting to know how the plan would work if the bank wins:

“How are the secured creditors’ attorneys fees and costs protected if they prevail?” the letter asks.

He also brings up the “rights of other parties to be heard” and reminded them their $5 million-per-year pace of mounting legal bills may not be sustainable:

“What happens when the Plan Administrator seeks approval of fees and expenses? … [T]here must be some recourse to the court for parties who want to complain about professional fees (and administrators’ and trustees’ fees) and the court must maintain some responsibility over, and authority to reduce, those fees when necessary,” the letter says.

This is “one of the great things” Montali does, said Ron Oliner, a bankruptcy partner at Duane Morris who is not involved in the case. The judge usually tries to give lawyers a heads up on the court’s concerns, he said, and it helps move the case along faster. But Oliner had never heard of Montali sending such a letter.

“It’s standard procedure for Dennis Montali on an early disclosure and plan to talk early on about the court’s concerns so the attorneys can make adjustments,” he said.

“He’s just doing his regular practice but he’s doing it in advance of the hearing instead of taking up an hour telling them all of these things at the hearing.”

— Amanda Royal
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Comments

[Observer]

I think Montali has sent such letters before, in other Ch. 11 cases.

[Thomas MacEntee]

Amanda

I disagree with the headline since it doesn't accurately reflect the content and the purpose of Judge Montali's letter. Most of those close to this bankruptcy case and those who know Judge Montali's history would not agree with the wording "Your Plan Is A Mess"

Much of the letter is comprised of "housekeeping" including correction of typos, etc. The areas that require "some work" pointed out by Judge Montali reflect the fact that this is a unique and complicated case and any plan of liquidation and/or settlement will have to be just as complex.