Dana to Pay $26 Million in Reorg Bills

U.S Trustee, concerned about the auto-parts maker's restructuring costs and the stability of its business, asks for a discounted rate from Dana's b...
Stephen TaubApril 27, 2007

Bankrupt auto-parts maker Dana Corp. will pay about $26 million in fees and expenses for 19 law firms, restructuring consultants, and financial advisers who are working on the company’s reorganization, reported the Associated Press.

Acting U.S. Trustee Diana G. Adams, who expressed concern about the company’s restructuring costs and the stability of its business, had asked the firms to forego 20 percent of their fees and expenses, according to the AP. The parties ultimately compromised on a 10 percent discount.

The just-approved sum represents four months’ worth of fees and expenses, the wire service reported. Through March, the total exceeds $100 and could surge to as much as $180 million by the end of the year, when Dana expects to exit bankruptcy, according to the AP.

Dana’s largest bill is from Jones Day, the company’s main law firm, which reportedly has charged more than $26 million in fees and expenses since the case began, $22 million of which remains unpaid. Ernst & Young has reportedly billed $13.2 million, of which $11.1 million remains unpaid. Adams ordered the company to pay Jones Day $8 million and Ernst & Young $5.5 million, the wire service reported.

Wages and benefits are a wild card in Dana’s reorganization. The AP noted that the company’s two biggest unions, the United Auto Workers and the United Steelworkers, have threatened to strike if the company carries out its plan to cut compensation.

Once that issue is resolved, Adams reportedly wrote in court papers, “the overall competitive cost structure the debtors ultimately are trying to achieve itself will start solidifying,” Dana’s “continuous losses might be reversed, and productive disclosure statement and plan proposals may follow.”