GenOn’s U.S. trustee says fees for note sale must be reviewed

New York, Aug. 2 – GenOn Energy, Inc.’s U.S. trustee said that the U.S. Bankruptcy Court for the Southern District of Texas should deny a request for the payment of fees to professionals for a planned offering of up to $900 million of notes because there is no provision for reviewing the reasonableness of the amounts.

Trustee Judy Robbins said in an objection filed Wednesday that the company’s motion “seeks to short-circuit” bankruptcy court requirements by providing pre-approval of fees and expenses.

The company’s request covers payments to Ropes & Gray LLP, Ducera Partners LLC, Carmen L. Gentile, PLLC, Quinn Emanuel Urquhart & Sullivan, LLP, Richards, Layton & Finger, PA, Porter Hedges, LLP and one additional local bankruptcy counsel in Texas. The firms worked as advisers to three committees of creditors.

No statement of the amount of fees and expenses has been given, the trustee said, and there is no provision for the court to review them.

Some of the fees are pre-bankruptcy costs, the trustee added, which therefore cannot be allowed as administrative expenses.

“The court cannot disregard its duty under the Bankruptcy Code and pre-approve all the fees, no matter what they may be, and without a showing that the party made a substantial contribution,” the trustee said.

GenOn, a Princeton, N.J.-based power producer, filed for bankruptcy on June 14. The Chapter 11 case number is 17-33695.

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