Before Filing for Bankruptcy, Pay Your In House $100K
Word to the wise: before filing for bankruptcy, pay your In House Counsel $100,000 for a job well done. Although financial services company Ambac cited a whopping $1.7 billion in debt in their recently-filed Chapter 11 bankruptcy, the company managed to settle up with their In House Counsel Kevin Doyle shortly before filing the petition.
Kevin Doyle was paid $100,000 in "recognition of his efforts to maximize the company's cash position, thereby assisting the company in its efforts to emerge successfully from Chapter 11 bankruptcy proceedings." Generous? Yes.
The right thing to do? Questionable.
Ambac did not comment on the timing of the bonus. Ambac initially sought to renegotiate a prepacked settlement plan with its biggest creditors. After realizing that the settlement package was going to fall devastatingly short of their liabilities, the Chapter 11 bankruptcy petition was filed in New York.
Ultimately, Ambac was just not able to recover from the collapse of the real estate market but hopes to successfully emerge from Chapter 11 protection. Thanks to the help of their general counsel, of course.
The Chapter 11 bankruptcy process is both expensive and time-consuming and is only successful in certain scenarios. In Ambac's case, this type of debt restructuring became the company's only viable option. Of course, most attorneys will have no qualms about the company paying attorneys fees.
Related Resources:
- Ambac Files For Bankruptcy (NY Times)
- Chapter 11 Bankruptcy (FindLaw's LawBrain)