BANKRUPTCY COURT APPROVES SETTLEMENT
BETWEEN U.S. TRUSTEE AND JAY ALIX & ASSOCIATES
ON FEES AND EMPLOYMENT IN CH. 11 CASES
WASHINGTON, D.C. The
Bankruptcy Court for the District of Delaware yesterday approved
a settlement between the United States Trustee and Jay Alix
& Associates ("Jay Alix"), under which the turnaround
management company agreed to disgorge $3.25 million in fees
and to abide by certain guidelines in seeking to be retained
in future Chapter 11 bankruptcy cases, announced Martha Davis,
Acting Director of the Executive Office for U.S. Trustees.
The settlement resolves
objections made by U.S. Trustee Patricia Staiano to the employment
and compensation of Jay Alix in two Chapter 11 cases pending
before the Bankruptcy Court for the District of Delaware:
In re Harnischfeger Industries Inc., et al. (No. 99-2171)
and In re Safety-Kleen Corp., et al. (No. 00-2303).
The protocol for
retention in future bankruptcy cases provides:
- Jay Alix and its affiliates
agree to serve in a case in only one capacity, i.e., as crisis
manager, financial advisor, claims agent/claims administrator,
- Jay Alix will not seek
to be retained by a Chapter 11 debtor if Jay Alix serves on
the debtor's board of directors, nor will it accept a bankruptcy
engagement where a person affiliated with Jay Alix sat on
the board of directors within the preceding two years. In
addition, Jay Alix will not serve on a debtor's board of directors
while retained by that company in a bankruptcy case.
- If Jay Alix supplies
individuals who serve as officers of a Chapter 11 debtor company,
those individuals will be retained under 11 U.S.C. §
363, with detailed disclosures of any relationship between
Jay Alix and the debtor, creditor, lenders, or others, and
will be appointed by and accountable to an independent board
- If Jay Alix provides
non-management advisory services, the firm will apply for
retention as a professional under 11 U.S.C. § 327. Once
again, the firm will be allowed to serve in only one capacity
in any one case.
- Jay Alix's compensation
will be reviewed under a reasonableness standard at the end
of the case, whether the firm serves as part of management
or as a professional.
- Questor, an affiliate
of Jay Alix that invests in special situations and troubled
companies, will not invest in a debtor for which Jay Alix
is engaged while the case is pending and for three years afterward.
The U.S. Trustee
Program is a component of the Justice Department that oversees
the administration of bankruptcy cases nationwide and intervenes
in cases to enforce the bankruptcy laws.
Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees