U.S. trustee objects to Ernst & Young's fees for Mirant

By Jeff Pines

Washington, Jan. 8 - Five months is too long a time to elapse to pay a consultant retroactively, says the U.S. trustee in the Mirant bankruptcy case.

William Neary, the U.S. trustee, filed an objection in the U.S. Bankruptcy Court for the Northern District of Texas to the bankruptcy case judge's interim approval to pay Ernst & Young "nunc pro tunc" (retroactively) for services it provided from July 15 through the company's Dec. 24 motion to retain the accounting firm and pay it for work done before the application. The judge approved the application Wednesday unless anyone objects.

The trustee previously made a similar objection after Mirant's creditors filed an application to pay Houlihan Lokey Howard & Zukin retroactively for financial advisory services provided from July 25 through the Dec. 12 application date.

Neary conceded the judge clearly has the authority to authorize payment, but legal precedent approves of retroactive payment only under "rare or exceptional circumstances." He believes no such circumstances exist in the Mirant case.

The company argues it took Ernst & Young nearly six months to be certain there were no conflicts of interest.

The trustee does not object to paying Ernst & Young as of Dec. 24.

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