Mirant creditors want court to approve paying Houlihan Lokey retroactively

By Jeff Pines

Washington, Jan. 13 - Mirant Americas Generation LLC's official unsecured creditors committee wants the U.S. Bankruptcy Court for the Northern District of Texas to overrule the U.S. trustee's protest and pay Houlihan Lokey Howard & Zukin retroactively to July 25.

In a filing with the court, the committee said the trustee's only objection to paying the firm was the start date.

The trustee wants the firm paid from Dec. 12. In his filing the trustee said the committee's delay in filing its application to employ Houlihan Lokey was "unconscionable" and payment should only be made from the filing date of Dec. 12.

According to the creditors committee's latest filing, the committee voted to retain Houlihan Lokey on July 25. A few days later, Houlihan Lokey submitted its terms, which was $175,000 a month for the first 24 months and $125,000 a month afterwards along with a fee based on the total consideration the creditors received and indemnification against certain losses and claims. In August, the committee began preparing the paperwork for retaining its professionals, but then further discussions came up over the terms, including a success fee. In an August hearing for another firm being retained, the court said it was reluctant to pre-approve success fees. So the committee requested a new proposal from Houlihan Lokey.

While the negotiations continued, the firm continued its work for the committee, which included negotiating the debtor-in-possession financing. Houlihan Lokey felt strongly about indemnification, but the court felt the advisors were already adequately covered, so the committee said it decided to "take the conservative approach" and await further clarification. More discussions over the court's position on other professionals retained by the committee followed until the committee finally filed its motion on Dec. 12 to retain Houlihan Lokey.

The committee's position is the court has the authority to approve retroactive pay. The U.S. trustee argues the situation must be exceptional and this case isn't.

The committee disagrees with the trustee's definition of exceptional. It cites a case, which defines exceptional as the ability to satisfactorily explain why the professionals didn't get prior judicial approval and that they have benefited the debtors, which the committee clearly believes Houlihan Lokey has.

Mirant filed for bankruptcy on July 17.

Case cited

Creditors committee cited:

Atkins v. Wain, Samuel & Co.

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