Have Chapter 11 Restructurings Become Too Expensive?

It’s a new year, and The Examiners are back and are talking about the always-contentious issue of bankruptcy fees.

Massive bankruptcy cases, like those of Lehman Brothers and Energy Future Holdings—and now, the already-complicated Caesars Entertainment Corp.—tend to feature armies of professionals to deal with the complexities of the case, albeit at a high cost.

Last year was the first full year that the Office of the U.S. Trustee’s new attorney fee guidelines were in effect to combat what the watchdog said was a perception that bankruptcy can essentially be a billing bonanza. And at the end of 2014, the ABI Commission’s report pointed out ways to make bankruptcy cheaper.

Meanwhile, Chapter 11s have fallen dramatically, and while the recovering economy certainly is responsible,  many restructuring pros also attribute this drop in part to the significant cost of in-court restructurings.

Have Chapter 11 restructurings become so expensive that professionals are essentially pricing themselves out of business? 

Feel free to share your ideas in the comments, and come back to Bankruptcy Beat throughout the week as we post the Examiners’ responses, beginning Monday.

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