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A major creditor of auto-parts company Collins & Aikman has made ''troubling allegations'' about professional fees in connection with its bankruptcy, a U.S. Trustee determines.
Stephen Taub, CFO.com | US
February 27, 2007
The Department of Justice has agreed that a special examiner should look about $100 million in lawyers' and advisers' fees in the bankruptcy of auto-parts company Collins & Aikman, reported the Associated Press.
U.S. Trustee Saul Eisen determined that money manager Third Avenue Value Fund, which reportedly is owed $250 million by Collins & Aikman, had made "troubling allegations that merit an independent investigation," according to the AP.
Collins & Aikman filed for Chapter 11 in May 2005. In December 2006, Third Avenue reportedly called for the probe after the company decided to sell its assets rather than reorganize and emerge from bankruptcy. Third Avenue asserted that the company's lawyers and other advisers, including turnaround firm Kroll Zolfo Cooper, should have reduced their hours once it decided to liquidate rather than reorganize.
According to the AP, Collins & Aikman stated that an independent examiner is unnecessary and potentially costly at this late stage in the bankruptcy process, and that a committee that would include a company representative should look into the professional fees.
The United States Trustee Program is a component of the Justice Department intended to protect the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws, according to the DoJ.