The Receiver Fees in the Kirk Wright Bankruptcy - $830K and Counting
According to documents filed by the Receiver in the Bankruptcy of Kirk Wright and his companies, the total bill to the bankrupt's estate, as of the end of July was $830,000 more or less. The dockets for the Kilapatrick Law Firm can be read here.
Now recall that a) Kirk Wright and his companies have no representation in the bankruptcy, b) the receiver had no role to play in securing Kirk Wright's physical custody, and c) the main assets of the estate are real estate located in Georgia and California. There has been an auction for the property in Georgia, which returned approximately $2 million to the estate, of which $1.7 remains for the investors, once the lawyers and receiver have been paid.
What concerns me, on behalf of the investors, is that there appears to be no effective mechanism for the creditors of the estate to challenge the value of what their $830,000 actually bought in legal services. It is of course the creditor's money that is paying for the receiver and the receiver's lawyers. How do they effectively challenge what they paid for?
What makes this a timely concern is the recent reports of law firms padding their legal bills. Of course, I am not saying that I have any knowledge of whether the receiver's interim demand for fees is reasonable or not. Nor do I have any knowledge about the dockets.
But, what I can say is, that the practice of law works only when the adversarial system is fully engaged. And I am concerned that the adversarial system is not engaged fully in the receiverships and bankruptcies.
Technorati Tags: bankruptcy, investors, georgia, physical custody, bankrupt, creditors, lawyers, auction
Comments
What exactly is the difference between a chapter 11 and chapter 7 filing? In either instance, are IRA or 401K losses tax deductable?
Posted by: Anonymous | October 5, 2006 6:30 PM
A chapter 11 bankruptcy is a reorganization in which the creditors all give up some of their claims in order to allow the business to continue to operate.
A chapter 7 bankruptcy is simply the selling off of the assets as the business is not sustainable at any level of debt.
You would have to talk with an accountant to know about the tax implications of the losses.
Posted by: Michael Webster | October 6, 2006 7:21 AM