Judge OKs $41M In Fees For Delta Lawyers

A New York bankruptcy judge Monday approved $41.4 million in expenses and fees for services provided by Delta Air Lines Inc. lawyers and advisers during the first 4 1/2 months of the company's Chapter 11 case.

The compensation excludes another $2.04 million requested by other firms and $195,000 the judge has held back from the Atlanta-based airline's auditor, Deloitte & Touche LLP, for work between Sept. 14, 2005 and Jan. 31, 2006.

The overall fees and expenses could reach $205.9 million if the bills continue at the same rate until Delta exits bankruptcy, which it expects to do by the summer of 2007. The total assumes Delta exits the first day of summer next year, June 21.

Also Monday, Judge Adlai Hardin denied a motion by the U.S. Trustee Program to appoint an independent financial adviser to examine the fees related to Delta's bankruptcy case.

Hardin ruled that the appointment of the examiner would be inappropriate and violate attorney-client privilege because of the inevitable communication between an examiner and the parties involved.

He said it also 'would add another layer of professional costs and it would be redundant.'

Assistant U.S. Trustee Elizabeth Austin argued during the hearing in New York that an examiner would be able to sit down with the parties involved and help work out differences regarding fees in an impartial manner.

But attorneys for the nation's third-largest carrier and its creditors countered that the fees can be adequately managed by a joint committee and said the appointment of an examiner would be an unnecessary cost.

Delta's lead bankruptcy attorney, Marshall Huebner, said after the initial compensation requests were filed in March that it's understandable that some people are perplexed by the size of the professional fees. But, he said, restructuring is expensive, especially in a complex case like Delta's.

Huebner predicted that Delta's fees will likely be much smaller in the middle of its case than at the beginning, which could lessen the total amount of fees and expenses once the case concludes. Whatever the final number, it will be big, he acknowledged, though he said it's necessary.

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