21 July 2014

Waiting for Good Cash in Milwaukee

You can read a short piece from the Wall Street Journal here about the attorneys for the creditors of the Archdiocese of Milwaukee who have been waiting for over a year to get paid. (Disclosure: Although not mentioned by name, my former firm is also waiting for its share, albeit far less than the the lead creditors firm.) For my previous comments on the bankruptcy of the Archdiocese of Milwaukee go here and here.

Professionals including attorneys in large Chapter 11 cases, such as that of the Archdiocese, ultimately get paid only what is approved by the bankruptcy court. In most cases, however, the court requires the debtor to pay a portion, typically 80%, on a monthly basis on the assumption that the 20% held back will be enough to cover anything the court ultimately disallows. In this case, the Archdiocese claimed over a year ago that it couldn't afford to pay even the reduced amount because it projected only a small positive cash flow for the near future. It turns out, at least according to the attorneys for the creditors, that the receipts of the Archdiocese have exceeded its expenses by more than what was projected.

The lead firm for the Archdiocese's creditors, Pachulski Stang Ziehl & Jones is owed $1.9 million, and so it's no surprise they're getting a bit antsy. The firm claims there's enough in the kitty to pay it and further suggests that the Archdiocese has indicated that it would pay if the law firm would drop the battle to get the cash held in a cemetery trust fund thrown in the pot for creditors. Lawyers for the Archdiocese deny creating any such implication.

Fun and games in the world of bankruptcy.

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