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Gibson Brands Retention Objection Filed

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The U.S. Trustee assigned to the Gibson Brands case filed with the U.S. Bankruptcy Court an objection to the application authorizing the retention and employment of KPMG LLP as Auditor; and to the employment and retention of Goodwin Procter as restructuring counsel.

The Trustee asserts, “The disclosures provided by KPMG and Goodwin are insufficient to determine whether there were preferential payments that disqualify them from being retained by the estate. The U.S. Trustee objects to the retention absent a sufficient factual record establishing disinterestedness or a waiver of any potential preference claim…. The Goodwin has not shown that it meets or satisfies any of the Insilco factors. On the contrary, given the fact that the Applicants (i) have a substantial prepetition retainer, (ii) have the benefit of the Carve-Out in the final order approving DIP financing; (iii) will have the benefits provided by approval of the Interim Compensation Motion; and (iv) there is an RSA supporting a financial restructuring of the Debtors, and this is not a ‘melting ice cube,’ there is little if any risk that the fees and expenses of Debtors’ counsel will not be paid. The multiple ‘risk minimization’ devices make the request for an evergreen retainer nothing more than an unnecessary encumbering and binding of estate funds and resources. The evergreen retainers in this case also provide greater security in payment to subset of administrative claimants, preferring them over others. General trade claims, employees’ claims, 503(b)(9) claims, and the fees of Committee’s professionals are not accorded the same preferred status. In this case, the prepetition retainers held by the Debtors’ professional’s prepetition are adequate and fair security for payment of their fees.”

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