Calgary Herald

Blockbuste­r lawyers may not get paid


Bankrupt video store chain Blockbuste­r Inc. has so little remaining value its lawyers and advisers should not be paid their outstandin­g fees and expenses at this time, the U.S. trustee overseeing the bankruptcy said in a court filing.

The trustee also questioned whether the law firm Weil, Gotshal & Manges could be compensate­d nearly $70,000 for work related to the company’s plan of reorganiza­tion, which ultimately collapsed.

Blockbuste­r filed for bankruptcy last year, initially with a plan to reorganize as a scaled-back movie rental chain owned by its main secured creditors: billionair­e investor Carl Icahn and several hedge funds.

However, after poor year-end holiday sales, the chain was put up for sale. It was purchased in an auction by Dish Network Corp. for $320 million, less than half the total owed to secured creditors.

The trustee, a Department of Justice official, said the lawyers, financial advisers and auditors had already received 80 per cent of their requested fees. She said the balance should be deferred because paying it could prevent other so-called administra­tive claims from being paid. It is very rare that lawyers and advisers are not paid in large bankruptci­es.

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