Bankruptcy

Northwest Bankruptcy Lawyers Seek Bonus

Attorneys say they deserve a $3.5 million bonus from the airline because unsecured creditors got 74 cents on the dollar.
Stephen TaubAugust 2, 2007

The lead lawyers working on the Northwest Airlines bankruptcy case are asking for a $3.5 million bonus for helping the struggling company through the Chapter 11 process, says the Associated Press. Cadwalader, Wickersham & Taft LLP called the bonus a “fee enhancement” in court documents filed this week, according to the wire service.

The law firm said it deserves the extra money because unsecured creditors will get back an average of 74 percent of their claims, a larger recovery rate than other recent airline bankruptcies, according to the AP. The firm “as the leader of the Northwest bankruptcy legal team, was a critical player in the achievement of these extraordinary results,” it reportedly wrote in its filing. The requested bonus is equal to about 10 percent of the $35.4 million Cadwalader has billed for Northwest’s bankruptcy case.

In the filing, Cadwalader noted that lead attorney Bruce Zirinsky alone billed more than 4,100 hours at a rate of between $800 and $850, for an estimated $3.3 million. Meanwhile, attorneys for the Air Line Pilots Association asked for $1.6 million in fees and expenses, including $859,822 for the union’s lead attorneys, Cohen, Weiss and Simon LLP, with the rest going to consultants, according to the AP.

Northwest Airlines also announced that the company and its pilots have worked out their differences—problems that led to widespread flight cancellations earlier this week. Under the deal, pilots will be paid time-and-a-half for flying more than 80 hours in a month. In addition, all contract employees, including pilots, who achieve perfect attendance from August 4 through September 3, will receive incentive pay equal to 15 percent of eligible earnings up to $1,000. “We are committed to delivering a reliable, convenient product for our customers,” said Doug Steenland, Northwest Airlines president and CEO. “We believe these steps will provide additional support for our operation during the month of August and beyond.”

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