A bankruptcy judge has signed off on a $26 million fee requrested by lawyers and consultants advising Dana Corp. in its chapter 11 proceedings, after a compromise was reached with the U.S. Trustee involved the case, Bankruptcy Law360 reported on Friday. Concerned about Dana’s rising restructuring costs, U.S. Trustee Diana G. Adams last week objected to the fee request and asked the court to temporarily withhold 20 percent of the sum. In a hearing Wednesday in the Manhattan bankruptcy court, Judge Burton Lifland signed off on the interim fee applications for professional services performed for the auto parts supplier between Nov. 1, 2006 and Feb. 28, but authorized Dana to hold back 10 percent. In documents filed April 20 with the bankruptcy court, Adams said a “holdback” was appropriate while the final results of work performed by the multitude of professionals remained unknown.

The Securities and Exchange Commission (SEC) is considering recommending a civil enforcement action against a unit of Britain’s Barclays PLC for debt trading that was done while employees served on bankruptcy creditors’ committees, according to a March securities filing by Barclays and a lawsuit filed in federal court in New York, the Wall Street Journal reported today. The SEC filing says the focus of its inquiry is trading in 2002 and 2003. Barclays said it conducted its own inquiry into practices and policies, and indicated that employees who participated in the trading no longer work at the bank. A lawsuit filed in federal court in New York also says the SEC has been conducting an investigation into how a unit of Barclays allegedly gained nonpublic information by joining bankruptcy creditors’ committees. The lawsuit was filed last month by Michael Econn, a former investment analyst who worked for Barclays Capital’s debt-trading desk in New York. That desk held and traded loans made to companies that had filed or were likely to file for bankruptcy.

When a reaffirmation agreement is filed with the court, the clerk will indicate to the sitting judge as to whether or not a presumption of undue hardship exists in that reaffirmation agreement.  If a presumption of undue hardship exists, the judge will make a decision as to whether he will approve the agreement or whether or not he would like to set a reaffirmation agreement hearing on the matter.  A hearing on the matter is an opportunity for the judge to question the debtor, to determine whether or not that agreement should be made effective.  If there is an extreme hardship on the debtor, for example, the debtor’s budget is completely upside down to the point where there’s no way they can afford that vehicle, the judge may deny that reaffirmation.  In most cases, the reaffirmation agreement hearings have been successful.  Debtors, with the advice of counsel, have been able to explain to the court, to the satisfaction of the court, that he or she can make the required payments on a reaffirmation agreement.  In many cases, the vehicle in question is what the debtor needs to get to work.  Without the vehicle, the debtor may be under more of an undue hardship than the reaffirmation agreement.  Lastly, the reaffirmation agreement, hearing, is pretty much a non-event.

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