Energy Future Holdings filed with the U.S. Bankruptcy Court an objection to Elliott Associates’ motion to appoint a representative of the majority creditors to the fee committee.
The objection asserts, “The Fee Committee, as an officer of the Court is tasked with maintain the delicate balance between maximizing value for the benefit of all of the Debtors’ stakeholders with one of the most basic tenets of section 330 of the bankruptcy Code: ensuring that the ability of retained professionals to provide services to chapter 11 debtors is preserved. Now, nearly four years into the Debtors’ chapter 11 cases, and with emergence at long last on the horizon, the Elliot Creditors (one of the Debtor’ newest constituencies), through the Motion to Appoint, have disputed such balance in at least three ways. First, the Motion to Appoint makes clear that, from the perspective of the Elliot Creditors, the purpose of a fee committee is to reduce fees and expenses to non-market levels.”
In addition, “This notion not only contravenes section 330 of the bankruptcy Code, but also harkens back to the now-defunct ‘efficiency of administration’ standard set forth in the former Bankruptcy Act. Second, Ms. Berger, the proposed Elliot-appointed Fee Committee representative, cannot serve on the Fee Committee, given that her firm (BraunHagey) represents the Elliot Creditors (and, therefore, cannot act as a fiduciary for all unsecured creditors) and given such firm’s refusal, to date, to provide any information regarding the compensation agreement between BraunHagey and the Elliot Creditors. Third, even assuming the Elliot Creditors offer to replace Ms Berger with a non-lawyer representative, there is no viable alternative. No ‘Elliott-directed’ representative can serve on the Fee Committee given the serious confidentiality, fiduciary, and abuse of process considerations.”
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