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Enron bankruptcy case - Skadden Arps Application for Attorney Fees (Main)
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John Wm. Butler, Jr.Timothy P. OlsonSKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)333 West Wacker DriveChicago, Illinois 60606(312) 407-0700
- and -
D. J. Baker (DB 0085)SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPFour Times SquareNew York, New York 10036(212) 735-3000
Special Counsel for Debtors and Debtors in Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------
In re
ENRON CORP., et al.,
Debtors.
---------------------------------------------------
x:::::::x
Chapter 11
Case No. 01-16034 (AJG)
Jointly Administered
FIRST APPLICATION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP AND ITS AFFILIATED LAW PRACTICES,
SPECIAL COUNSEL FOR ENRON CORP. AND CERTAIN OF ITS SUBSIDIARIES, SEEKING ALLOWANCE OF INTERIM COMPENSATIONAND REIMBURSEMENT OF EXPENSES UNDER 11 U.S.C. §§ 330 AND 331 FOR THE PERIOD DECEMBER 2, 2001 THROUGH MARCH 31, 2002
2
Name of Applicant: Skadden, Arps, Slate, Meagher & FlomLLP and Its Affiliate Law Practices
Authorized to Provide Professional Services To: Enron Corp. and certain of its
subsidiaries and affiliates
Date of Retention Order: February 8, 2002
Period for which compensation and reimbursement is sought: December 2, 2001 through March 31, 2002
Amount of Voluntary Reduction inCompensation and Reimbursementof Charges and Disbursements: $787,361
Amount of Compensation sought asactual, reasonable and necessary: $6,082,477
Amount of Expense Reimbursementsought as actual, reasonable andnecessary: $496,121
This is an: X interim final application.
1 The blended rates set forth for certain professionals reflect the average billingrate for the entire Application Period and incorporate a reduced billing ratefor nonworking travel time.
3
TIME SUMMARY TO FIRST INTERIM FEE APPLICATION OFSKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
AND ITS AFFILIATED LAW PRACTICES DECEMBER 2, 2001 - MARCH 31, 20021
NameYear
of Ad-mis-sion
Rate1 Hours Amount
PARTNERS
Robert S. Bennett 1965 $680 579.0 $ 393,926
Carl S. Rauh 1965 $682 537.6 $ 366,856
Peter A. Atkins 1968 $695 422.2 $ 293,429
Saul M. Pilchen 1983 $522 539.3 $ 281,411
J. Phillip Adams 1972 $674 315.3 $ 212,601
Mark R. Filip 1991 $470 433.9 $ 203,742
Lynn R. Coleman 1964 $580 290.3 $ 168,374
Martin Klepper 1973 $610 178.4 $ 108,745
John Wm. Butler, Jr. 1980 $680 142.4 $ 96,814
Keith D. Krakaur 1984 $542 145.6 $ 78,967
Fred T. Goldberg, Jr. 1973 $695 111.3 $ 77,354
Alan G. Schiffman 1984 $650 99.6 $ 64,740
Kenneth A. Gross 1975 $626 100.4 $ 62,843
Alan Kriegel 1977 $608 96.0 $ 58,338
4
Stuart N. Alperin 1976 $695 80.0 $ 55,600
D. Jan Baker 1973 $695 71.0 $ 49,345
Lance T. Brasher 1990 $503 94.2 $ 47,355
Jonathan J. Lerner 1973 $695 35.5 $ 24,673
Jerome S. Hirsch 1974 $643 38.2 $ 24,569
Jeffrey S. Christie 1979 $580 27.7 $ 16,066
Robert J. Del Tufo 1958 $675 20.8 $ 14,040
Eric L. Cochran 1986 $630 15.5 $ 9,765
John C. Quale 1971 $650 10.1 $ 6,560
Jonathan B. Stone 1990 $545 11.9 $ 6,486
Total Partners 4,396.2 $ 2,722,599
COUNSEL
Nancy J. McGlynn 1988 $463 529.9 $ 245,129
Ivan A. Schlager 1989 $470 336.6 $ 158,202
Philip McBride Johnson 1962 $695 99.4 $ 69,083
Erich T. Schwartz 1983 $470 54.1 $ 25,427
Ki P. Hong 1992 $470 30.7 $ 14,429
Total Counsel 1,050.7 $ 512,270
ASSOCIATES
David J. Goldstone 1994 $404 761.5 $ 307,644
Vincent P. Schmeltz, III 1997 $357 622.2 $ 222,072
Susan K. Declercq 1999 $302 639.0 $ 193,100
Lee P. Garner 1995 $400 405.5 $ 162,079
Timothy P. Olson 1996 $384 418.9 $ 161,042
5
Michael R. Bergmann 1992 $441 345.3 $ 152,283
Suzanne D. Strater 1994 $341 401.9 $ 136,743
Erik Elsea 1998 $344 378.7 $ 130,433
Steven J. Cleveland 1998 $334 296.0 $ 98,879
Maria E. Douvas 1998 $351 274.8 $ 96,360
Martin Ziessler Foreign $378 232.6 $ 88,026
Anand S. Raman 1995 $373 197.6 $ 73,725
Armando Gomez 1994 $414 153.4 $ 63,454
George H. Windecker, Jr. 1993 $430 129.9 $ 55,857
Randall G. Reese 2001 $230 228.2 $ 52,458
Douglas W. Swalina 1997 $322 158.9 $ 51,228
Jessica A. Hough 1997 $380 103.4 $ 39,292
Justin L. Heather 2001 $213 179.4 $ 38,261
Amr Razzak 1998 $395 85.6 $ 33,812
Ingo Scholz Foreign $355 93.5 $ 33,215
Romina Weiss 1991 $460 54.3 $ 24,978
David E. Carney 1999 $330 72.5 $ 23,925
Ralph L Stengren 1997 $380 62.2 $ 23,636
Lanelle K. Meidan 1999 $330 69.8 $ 23,034
Scott D. Musoff 1994 $430 41.1 $ 17,673
Beverly A. Farrell 2001 $230 69.8 $ 16,054
John M. Beahn 1998 $365 41.2 $ 15,038
Ferdinand Von Rom Foreign $395 33.8 $ 13,351
Keith A. Simon 1999 $330 40.4 $ 13,332
6
Troy L. Olsen 1998 $365 32.9 $ 12,009
James Hope Foreign $430 27.2 $ 11,696
Ralph L. Stengren 1997 $380 30.7 $ 11,666
Gary W. Katz 1994 $415 26.0 $ 10,790
Jena Q. Bridges 1997 $380 23.5 $ 8,930
Rahman J. Harrison 1997 $295 21.3 $ 6,284
Melissa F. Levine 1997 $380 15.2 $ 5,776
Thomans W. Greenberg 1994 $430 11.7 $ 5,031
Total Associates 6,779.9 $ 2,433,166
PARAPROFESSIONALS
John McVicker N/A $160 632.8 $ 101,248
Brian D. Flynn N/A $185 479.7 $ 88,745
Maria Soto N/A $136 319.9 $ 43,523
Michael B. McClellan N/A $110 348.5 $ 38,335
Rose M. Rama N/A $141 149.5 $ 21,040
Daniel S. Carlton N/A $110 182.5 $ 20,075
Jeannette O. Shim N/A $150 124.1 $ 18,615
Angeline M. Negron N/A $80 169.3 $ 13,544
Daniel A. Mayer N/A $104 128.4 $ 13,360
Neda Bolourchi N/A $150 71.2 $ 10,680
Ruth Hassan N/A $130 77.5 $ 10,075
Sarah E. Barr N/A $130 76.4 $ 9,932
David J. Young N/A $150 42.5 $ 6,375
Mark Ward N/A $185 39.4 $ 7,289
7
Rebecca L. Anderson N/A $146 42.0 $ 6,146
Gabrielle N. Biffar N/A $150 36.4 $ 5,460
Total Paraprofessionals 2,920.1 $ 414,442
TOTAL ALL PROFESSIONALS 15,146.9 $ 6,082,477
SUMMARY OF SERVICES RENDERED BYSKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
AND ITS AFFILIATED LAW PRACTICES DECEMBER 2, 2001 - MARCH 31, 2002
Activity Hours Fees
Regulatory/Investigative Matters (Congressional) 7,228.3 $2,778,134
Regulatory/Investigative Matters (Federal – Non-FERC) 2,911.6 $1,282,443
Asset Dispositions (Power) 1,086.8 $ 472,191
Advice – General Corporate and Board of Directors 604.1 $ 347,868
Retention/Fee Matters (SASM&F) 802.5 $ 329,907
Tax Matters 401.2 $ 228,403
Nonworking Travel Time 1,040.0 $ 207,919
Project Advice/Transactions (Non-Debtor Businesses) 327.2 $ 161,623
Case Coord./Admin. with General Bankruptcy Counsel 339.4 $ 87,260
Litigation Matters/Coordination (General) 169.3 $ 73,785
Regulatory/Investigative Matters (State and Local) 72.9 $ 44,812
Litigation Matters/Coordination (Non-Debtor Businesses) 105.3 $ 38,671
Financing Matters (Debtor Entities) 23.5 $ 8,930
Employee/Labor Matters 14.8 $ 8,830
Asset Dispositions (General) 8.9 $ 6,141
Regulatory/Investigative Matters (Non-Debtor Businesses) 11.1 $ 5,560
TOTAL 15,146.9 $6,082,477
2
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------
In re
ENRON CORP., et al.,
Debtors.
---------------------------------------------------
x:::::::x
Chapter 11
Case Nos. 01-16034 (AJG)
Jointly Administered
FIRST APPLICATION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP AND ITS AFFILIATED LAW PRACTICES,
SPECIAL COUNSEL FOR ENRON CORP. AND CERTAIN OF ITS SUBSIDIARIES, SEEKING ALLOWANCE OF INTERIM COMPENSATIONAND REIMBURSEMENT OF EXPENSES UNDER 11 U.S.C. §§ 330 AND 331 FOR THE PERIOD DECEMBER 2, 2001 THROUGH MARCH 31, 2002
Skadden, Arps, Slate, Meagher and Flom LLP and its affiliated law
practices (collectively, “Skadden, Arps” or the “Firm”), special counsel for Enron
Corp. (“Enron”) and certain of its affiliated debtor entities (the “Affiliate Debtors”),
debtors and debtors-in-possession (Enron and the Affiliate Debtors collectively, the
“Debtors”) in the above-captioned cases (the “Reorganization Cases”), as well as for
certain of the non-Debtor subsidiaries and affiliates of the Debtors, equity of which is
held by the Debtors, submit this application (the “Application”) seeking allowance of
compensation and reimbursement of expenses pursuant to 11 U.S.C. §§ 330 and 331
for the period from December 2, 2001 through March 31, 2002 (the “Application
3
Period”). Skadden, Arps submits this Application for (a) allowance of reasonable
compensation for professional services rendered by Skadden, Arps to the Debtors in
their Reorganization Cases and (b) reimbursement of actual and necessary charges
and disbursements incurred by Skadden, Arps in the rendition of required profes-
sional services on behalf of the Debtors. In support of this Application, Skadden,
Arps represents as follows:
BACKGROUND
1. Commencing on December 2, 2001 (the “Petition Date”) and,
in some instances, periodically thereafter, Enron and the Affiliate Debtors filed
voluntary petitions in this Court for reorganization relief under chapter 11 of title 11
of the United States Code, 11 U.S.C. §§ 101-1330, as amended (the “Bankruptcy
Code”). The Debtors continue to operate their business and manage their properties
as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code. On December 3, 2001 and, in some cases, periodically thereafter, this Court
entered an order providing for the joint administration of the Reorganization Cases,
and these cases have been consolidated for procedural purposes only.
2. Pursuant to its authority under section 1102 of the Bankruptcy
Code, (a) on December 12, 2001, the United States Trustee for the Southern District
of New York (the “Trustee”) appointed an official committee of unsecured creditors
4
(the “Committee”), and (b) on March 29, 2002, the Trustee appointed the Official
Employment Related Issues Committee.
3. This Court has jurisdiction over this Application pursuant to
28 U.S.C. §§ 157 and 1334. This is a core proceeding within the meaning of 28
U.S.C. § 157(b)(2). Venue of these cases in this district is proper pursuant to 28
U.S.C. §§ 1408 and 1409. The statutory predicates for the relief sought herein are
sections 330 and 331 of the Bankruptcy Code.
4. This Application has been prepared in accordance with the
Amended Guidelines for Fees and Disbursements for Professionals in Southern
District of New York Bankruptcy Cases, adopted by the Court on April 19, 1995 (the
“Local Guidelines”) and the United States Trustee Guidelines for Reviewing
Applications for Compensation and Reimbursement of Expenses Filed Under 11
U.S.C. § 330, adopted on January 30, 1996 (the “UST Guidelines” and, together with
the Local Guidelines, the “Guidelines”). Pursuant to the Local Guidelines, a
certification regarding compliance with the Guidelines is attached hereto as
Exhibit A.
5. On April 26, 2002, this Court established the Enron Fee and
Expense Review Committee (the “Fee Committee”) to work with the professionals
retained by the Debtors’ estates to review and monitor the fees, charges and disburse-
ments incurred by such professionals and develop procedures concerning the
5
establishment of professional budgets for these cases. Subsequently the Fee Com-
mittee has met formally with the professionals concerning the fee review and
budgeting procedures, which currently are scheduled for implementation no later
than July 1, 2002.
RETENTION OF SKADDEN, ARPS
6. In December 2001, the Debtors applied (the “Retention
Application”) to the Court for an order approving the retention of Skadden, Arps, as
their special counsel, to perform legal services that were necessary to assist the
Debtors and their primary bankruptcy counsel, Weil, Gotshal & Manges LLP
(“Section 327(a) General Counsel”) in connection with certain corporate, financing,
litigation and arbitration, securities, tax, and other significant matters, including
assistance with energy projects throughout the world. Specifically, the Retention
Application provided that Skadden, Arps would provide the following professional
services to the Debtors:
(a) advising the Company and assisting Section 327(a)General Counsel in connection with any contemplated sales of assets or businesscombinations as shall arise from time to time assigned by the Company to, andaccepted by, Skadden, Arps, including the negotiation of asset, stock purchase,merger or joint venture agreements, the formulation and implementation of biddingprocedures, the evaluation of competing offers, the drafting of appropriate corporatedocuments with respect to the proposed sales, and counseling the Company inconnection with the closing of such sales;
(b) advising the Company on matters relating to therenegotiation of the business affairs, contracts and relationships of Enron Corp.’s
6
affiliates and/or subsidiaries with particular attention to affiliate relationships, projectcontracts and the restructuring of various financing arrangements relating to foreignenergy projects and other advice related thereto;
(c) advising the Company and assisting Section 327(a)General Counsel in drafting a disclosure statement accompanying a plan of reorgani-zation with respect to the Engagement matters;
(d) providing non-bankruptcy advice to the Company: (i)with respect to foreign energy projects; (ii) through its Board of Directors andexecutive management in coordination with Section 327(a) General Counsel, withrespect to legal matters arising in or relating to the Company’s ordinary course ofbusiness including attendance at senior management meetings, meetings with theCompany’s financial and turnaround advisors, and meetings of the Board of Direc-tors; and (iii) with respect to such other matters as the Company and Section 327(a)General Counsel deem appropriate under the circumstances;
(e) representing the Company in connection with specificinvestigations or regulatory matters involving branches and/or agencies of the UnitedStates Government (including by way of illustration only, hearings and/or investiga-tions initiated by the United States Congress, the Federal Energy Regulatory Com-mission, the Securities and Exchange Commission, and the Department of Justice),as well as such matters involving any foreign or domestic state or local governmentalentity;
(f) representing the Company in any litigation or arbitra-tion matters in which Skadden, Arps has appeared as of the commencement of thechapter 11 cases, and such other matters as shall arise from time to time assigned bythe Company to, and accepted by, Skadden, Arps;
(g) attending meetings with third parties and participatingin negotiations with respect to the above matters;
(h) appearing before the Bankruptcy Court, any district orappellate courts, and the U.S. Trustee with respect to the matters referred to above;and
(i) performing the full range of services normally associ-ated with matters such as those identified above as the Company’s special counsel
7
which the Firm is in a position to provide in connection with the matters referred toabove.
7. The scope of such services was clarified pursuant to a protocol
for allocation of legal work among Enron law firms, a portion of which relating to
Skadden, Arps was read into record at the February 8, 2002, hearing concerning
approval of the retention of Skadden, Arps. As read into the record, Skadden, Arps
disclosed to the Court that its services would be subject to the protocol, which
provided that Skadden, Arps would:
“represent Enron, as requested by it (but not providing bankruptcyservices, except consistent with this protocol), with respect to: salesof assets/businesses; restructuring of affiliate relationships andfinancings, particularly foreign affiliates; Congressional and othergovernmental investigations and regulatory matters; foreign energyprojects; through the Board of Directors and senior management andin coordination with Weil Gotshal & Manges, legal matters relating toordinary course of business (including meetings with senior manage-ment and the Board of Directors); and corporate governance issues,litigation/arbitration, and disclosure, coordinating with Weil Gotshal& Manges to avoid duplication.”
8. On February 8, 2002, the Court entered an order (the “Reten-
tion Order”) authorizing the Debtors to employ Skadden, Arps as their special
counsel under the terms set forth in the Retention Application. On February 25,
2002, the Court entered an amended order (the “Amended Retention Order”),
2 A copy of the Retention Order, the Amended Retention Order, the RetentionApplication and affidavit in support of the Retention Application are attachedhereto as Exhibit B. The Retention Order incorporated the terms of a retaineragreement dated November 30, 2001 (the “Retainer Agreement”) betweenSkadden, Arps and the Debtors, a copy of which is attached to the affidavitsupporting the Retention Application found in Exhibit B.
8
clarifying certain terms of the Retention Order.2 The Retention Order and the
Amended Retention Order each provided that the retention of Skadden, Arps was
subject to the protocol read into the record at the February 8, 2002, hearing.
THE RETAINER AGREEMENT
9. As set forth more fully in the Retention Application, the
Debtors entered into the Retainer Agreement with Skadden, Arps. Pursuant to the
Retainer Agreement, the Debtors retained Skadden, Arps as special counsel to
consult with and assist Section 327(a) General Counsel in connection with, among
other things, corporate transactions, litigation matters and governmental regulatory
and investigative matters of the kind for which Skadden, Arps has represented the
Debtors and on which Section 327(a) General Counsel will require assistance.
10. Skadden, Arps has not drawn on the funds held in the retainer
account since December 2, 2001 (except as permitted by the Amended Retention
Order with respect to the payment of certain prepetition fees, charges and disburse-
ments incurred on or prior to December 2, 2001) and continues to hold the remaining
balance of the funds to be applied to fees, charges and disbursements which remain
3 In the affidavit in support of the Retention Application, Skadden, Arpsdisclosed that the balance in the Debtors’ account was $56,988 after satisfac-tion of statements rendered by Skadden, Arps for professional servicesrendered and charges and disbursements incurred during the month ofNovember 2001. However, the actual amount of such statements was$17,129 less than estimated at the time of filing of the Retention Applicationand the affidavit in support thereof. Accordingly, the amount held in theDebtors’ account currently is $74,117.
9
unpaid as of the conclusion of the Reorganization Cases. As of June 13, 2002, the
amount in the Debtors’ account was $74,117.3
11. In the Retention Application, the Debtors disclosed that
Skadden, Arps’ fees for professional services are based on its guideline hourly rates,
which are periodically adjusted. The Debtors also disclosed in the Retention
Application that Skadden, Arps’ charges and disbursements are invoiced pursuant to
Skadden, Arps’ Policy Statement Concerning Charges and Disbursements, a copy of
which is attached to the Retainer Agreement provided in Exhibit B hereto. Certain
charges and disbursements are not separately charged for under the bundled rate
structure as described in the Retention Application.
12. Other than an arrangement between Skadden, Arps, Slate,
Meagher & Flom LLP and its affiliated law practices and their members, there is no
agreement or understanding between Skadden, Arps and any person for the sharing
of compensation to be received for services rendered in this case.
4 Administrative Order Pursuant to Sections 105(a) and 331 of the BankruptcyCode Establishing Procedures for Interim Compensation and Reimbursementof Expenses of Professionals (Docket No. 981) (the “Fee Procedures Order”),a copy of which is attached hereto as Exhibit C.
5 Order Supplementing Administrative Order Dated January 17, 2002 Estab-lishing Procedures for Interim Compensation and Reimbursement of Ex-penses of Professionals By Establishing Fee Committee, Directing Prepara-tion of Professional Budgets and Formatting for Presentation of BillingStatements (Docket No. 3395) (the “Supplemental Fee Procedures Order”), acopy of which is also attached hereto as Exhibit C.
6 Second Supplemental Order Regarding (A) Procedures for Interim Compen-sation and Reimbursement of Expenses and (B) Preparation of ProfessionalBudgets and Formatting for Presentation of Billing Statements (Docket No.4010) (the “Second Supplemental Fee Procedures Order” and, collectivelywith the Fee Procedures Order and the Supplemental Fee Procedures Orderthe “Fee Procedures Orders”), a copy of which is also attached hereto asExhibit C.
10
FEE PROCEDURES ORDERS
13. On January 17, 2002, this Court entered the Fee Procedures
Order,4 on April 26, 2002, this Court entered the Supplemental Fee Procedures
Order,5 which, among other relief, supplemented the Fee Procedures Order and
established a fee review committee, and on May 24, 2002, this Court entered the
Second Supplemental Fee Procedures Order6 further supplementing and clarifying
the terms of the prior Fee Procedures Orders. Pursuant to the Fee Procedures Orders
and Section B.3 of the Local Guidelines, Skadden, Arps is submitting this Applica-
tion to (a) the Debtors, (b) counsel for the Debtors, (c) the Office of the United States
Trustee for this district, (d) counsel to the Committee, (e) counsel to the co-adminis-
7 As indicated in the 10-Q, the numbers set forth above are unaudited.
11
trative agents for the Debtors’ secured lenders under the postpetition Revolving
Credit and Guaranty Agreement (the “Postpetition Secured Lenders”), and (f) the Fee
Review Committee.
OVERVIEW OF THE CASES
14. Enron and the Affiliate Debtors, as well as their approximately
3,500 other direct and indirect subsidiaries that are not chapter 11 debtors (collec-
tively, the “Enron Companies”), building upon knowledge gained in over 70 years of
experience in the energy business, have grown into a worldwide leader in products
and services related to the sale and delivery of natural gas, electricity and communi-
cations to wholesale and retail customers. As of the Petition Date, the Enron
Companies employed approximately 25,000 individuals throughout the world and
were recently ranked fifth on the Fortune 500 list of the largest U.S. corporations.
15. For the fiscal year ended December 31, 2000, the Enron
Companies generated $101 billion in annual revenues on a consolidated basis. Based
on information set forth in the Form 10-Q filed on November 19, 2001 (the “10-Q”)
for the quarter ended on September 30, 2001, the Enron Companies’ consolidated
books and records reflected assets totaling approximately $61 billion and liabilities
totaling approximately $52 billion.7
12
16. The Enron Companies divide their business operations into
four primary business units: Enron Wholesale Services, Enron Retail Services,
Enron Transportation Services, and Enron Global Services. The units comprise
wholesale and retail commodities trading, gas pipeline businesses and other global
services, including engineering, operation and construction of power facilities.
17. The commencement of these Reorganization Cases was
precipitated by several events that occurred in the months leading up to the Petition
Date. On October 16, 2001, Enron announced its third quarter 2001 earnings results,
reporting a net loss for the quarter and significantly reducing shareholders’ equity.
This announcement caused a marked decrease in the share price of Enron common
stock and led to subsequent decreases in the Debtors’ credit ratings for long-term
debt. These events had the further effect of eroding investor confidence which, in
turn, created additional pressure upon the Debtors’ credit ratings and significantly
diminished the Debtors’ ability to raise capital.
18. The situation was further exacerbated on October 22, 2001
when Enron announced that the Securities and Exchange Commission (the “SEC”)
had requested information relating to certain related-party transactions. The Debtors
subsequently undertook numerous actions as part of a strategic plan to restructure
and rehabilitate their financial condition.
8 Skadden, Arps is one member of the team of skilled professionals retained bythe Debtors to assist in their reorganization effort. Reference in this Applica-tion to Skadden, Arps’ assistance to the Debtors during the ApplicationPeriod generally was part of a collaborative effort with the Debtors’ otherretained professionals, including Weil, Gotshal & Manges LLP; Andrews &Kurth L.L.P.; Arnold & Porter; Batchelder & Partners, Inc.; The BlackstoneGroup, L.P.; Brobeck, Phleger & Harrison LLP; Cadwalader, Wickersham &
(continued...)
13
19. The cornerstone of that plan was a merger agreement by and
among Enron, Dynegy, Inc. (“Dynegy”) and certain related parties, dated November
9, 2001 (the “Merger Agreement”). The Merger Agreement was intended to assure
Enron’s trading counterparties and the debt rating agencies that Enron was still an
investment grade credit risk because of its prospective merger with Dynegy.
However, Dynegy terminated the Merger Agreement, at which time Enron was
facing a severe liquidity crisis and faced the downgrade of its long-term debt rating
to below investment grade. Such a downgrade would have significantly undermined
one of Enron’s core businesses. At such time, the Debtors concluded that the
commencement of these Reorganization Cases was in the best interests of all
stakeholders.
20. The primary purpose of these Reorganization Cases has been
to provide the Debtors with protection from creditor action and to develop and
implement a comprehensive restructuring of the Debtors’ businesses, allowing the
Debtors’ to realign their capital structure and reposition their business.8
8 (...continued)Taft; Fergus, a law firm and Gary S. Fergus; Goodin, MacBride, Squeri,Ritchie & Day, LLP; Kelley Drye & Warren LLP; LeBoeuf, Lamb, Greene &Bacrae, LLP; Miller Thomson LLP; PricewaterhouseCoopers LLP; SusmanGodfrey L.L.P.; Togut, Segal & Segal LLP; and Wilmer, Cutler & Pickering.
14
21. During the Application Period, the Debtors have accomplished
numerous objectives as part of their overall restructuring strategy. Among other
things, the Debtors have obtained financing to fund the Reorganization Cases and
have taken significant steps, with the assistance of their professional advisors, to
identify non-essential core assets and pursue the disposition of such assets. For
example, during the Application Period, the Debtors entered into an agreement with
UBS Warburg, the investment banking group of UBS AG, regarding Enron’s North
American gas and electric trading operation and entered into an agreement to sell the
wind turbine manufacturing assets of Enron Wind Corp. to the Power Systems
business of General Electric Company, as well as rejecting numerous executory
contracts, disposing of certain other non-core assets, and taking other significant
steps in their restructuring process.
REQUESTED FEES AND REIMBURSEMENT OF DISBURSEMENTS
22. As discussed herein, Skadden, Arps has played an important
role in assisting the Debtors with various transactional matters related to the Debtors’
activities, including their efforts regarding the disposition of certain non-core assets,
9 Skadden, Arps believes that the amounts requested in this Application arereasonable in relation to the services rendered. The amounts requested arealready reduced to reflect the client accommodations described herein. To
(continued...)
15
and numerous investigations and regulatory matters involving branches and agencies
of the United States Government. As a result of its efforts during the Application
Period, Skadden, Arps now seeks interim allowance of (a) $6,082,477 in fees
calculated at the applicable guideline hourly billing rates of the Firm’s personnel
who have worked on the Reorganization Cases and (b) $496,121 in charges and
disbursements actually and necessarily incurred by Skadden, Arps while providing
services to the Debtors during the Application Period.
23. This Application reflects a voluntary reduction by Skadden,
Arps in connection with each monthly statement in the aggregate amount of
$666,250, and an additional voluntary reduction in connection with this Application
in the amount of $121,111 to reflect, among other things, the elimination of all fees
related to most timekeepers billing less than $5,000 during the Application Period.
Accordingly, including the voluntary client accommodations in connection with each
monthly statement, Skadden, Arps is voluntarily reducing its fees by $750,156, or
approximately 10.9%, and its charges and disbursements by $37,205, or approxi-
mately 7.0%, for a total reduction of $787,361 for items Skadden, Arps normally
would bill its clients.9
9 (...continued)the extent that a party objects to this Application, Skadden, Arps reserves theright to recapture such client accommodations and seek up to the full amountof fees actually incurred in connection with this engagement.
10 Exhibit D contains a table of all matter numbers used in these cases, as wellas a description of certain business statistics of Skadden, Arps in these cases.
16
SUMMARY OF SERVICES RENDERED BYSKADDEN, ARPS DURING THE APPLICATION PERIOD
24. During the Application Period, Skadden, Arps worked closely
with the Debtors, Section 327(a) General Counsel, and the Debtors’ other profes-
sional advisors to implement the strategies described above to maximize the value of
the Debtors’ estates. As discussed herein, these services have been directed toward
the myriad tasks necessary to achieve this result.
25. The amounts requested by this Application compare favorably
to fees, charges and disbursements incurred by other chapter 11 debtors in cases of
similar size, complexity and duration.
26. At the commencement of the Reorganization Cases, Skadden,
Arps created twenty-eight (28) different matter numbers or subject matter categories,
which are in accordance with the Guidelines, to which its professionals assigned the
time billed by them, all of which are related to the tasks performed by Skadden, Arps
on behalf of the Debtors.10 All Skadden, Arps professionals kept a contemporaneous
record of time spent rendering such services and, consistent with the Guidelines,
11 Pursuant to the Fee Procedures Order, Skadden, Arps’ monthly statements forthe months of December 2001 and January 2002 are combined in onemonthly statement. Additionally, pursuant to a request of the Office of theUnited States Trustee in another large chapter 11 case pending in this district,Skadden, Arps has reformatted its Monthly Statements attached to thisApplication as Exhibit E to organize each matter chronologically, rather thanorganizing each matter chronologically by timekeeper.
17
separated tasks in billing increments of one-tenth (0.10) hour. The December
through March Monthly Statements,11 separated by matter number, are attached
hereto as Exhibit E. All of the services performed by Skadden, Arps have been legal
in nature and necessary for the proper administration of the Reorganization Cases.
27. During the Application Period, Skadden, Arps devoted
approximately 67% of its time to the following two matters and incurred in excess of
$500,000 for each such matter: Regulatory/Investigative Matters (Congressional)
and Regulatory/Investigative Matters (Federal – Non-FERC).
28. Skadden, Arps devoted approximately 28% of its time during
the Application Period to the following six matters and incurred between $100,000
and $500,000 for each such matter: Asset Dispositions (Power); Advice – General
Corporate and Board of Directors; Retention/Fee Matters (SASM&F); Tax Matters;
Nonworking Travel Time; and Project Advice/Transactions (Non-Debtor Busi-
nesses).
18
29. Skadden, Arps devoted the remainder of its time to the
following eight matters and incurred less than $100,000 for each such matter: Case
Coordination/Administration with General Bankruptcy Counsel; Litigation Mat-
ters/Coordination (General); Regulatory/Investigative Matters (State and Local);
Litigation Matters/Coordination (Non-Debtor Businesses); Financing Matters
(Debtor Entities); Employee/Labor Matters; Asset Dispositions (General); and
Regulatory/Investigative Matters (Non-Debtor Businesses).
MATTERS OVER $500,000
A. Regulatory/Investigative Matters (Congressional)
30. During the Application Period, Skadden, Arps has devoted
substantial time and effort to providing advice and guidance to the Debtors with
respect to numerous investigations (the “Congressional Investigations”) by the One
Hundred and Seventh Congress of the United States (the “Congress”). Skadden,
Arps has been the Debtors’ primary advisor with respect to the Congressional
Investigations and the Firm has provided significant assistance to the Debtors in
understanding and responding to such investigations.
31. Skadden, Arps’ work under this matter has encompassed a
broad range of activities to aid the Debtors in responding to the ever-expanding
number of Congressional Investigations. In the early stages of the Reorganization
Cases, Skadden, Arps attorneys closely monitored the developments of many
19
Congressional committees, frequently by attending hearings of relevant committees
and meeting with Congressional staff. Skadden, Arps attorneys also assisted the
Debtors’ in-house attorneys in analyzing the early Congressional document requests
and providing initial responses. Throughout the Application Period, Skadden, Arps
attorneys also advised the Debtors concerning public relations issues related to the
Congressional Investigations.
32. Skadden, Arps’ involvement in the management of the
Debtors’ in-house document production process has been significant. As such,
Skadden, Arps aided in the organization of and has provided extensive support to the
Debtors’ document Response and Production Team (the “RAP Team”), which is
directly responsible for producing documents to Congress, Congressional commit-
tees and the many other federal agencies that are investigating the Debtors.
33. Skadden, Arps also has worked closely with the RAP Team to
assist them in producing documents to governmental entities in a timely manner. In
order to handle the significant document production needs created by the many
Congressional and other investigations progressing concurrently, Skadden, Arps
personnel have aided the RAP Team in streamlining their document review processes
and optimizing their use of relevant computer systems. These efforts have assisted
the Debtors in developing an efficient and cost-effective process for producing
documents to the various requesting entities on a timely basis.
20
34. Attorneys from Skadden, Arps also have assisted the Debtors
with respect to other aspects of the Congressional Investigations. For example,
Skadden, Arps attorneys have represented the Debtors in connection with various
interviews of current and former employees of the Debtors by several different
Congressional staff members relating to benefits, compensation and retirement plan
issues. Skadden, Arps also has prepared witnesses for and attended Congressional
hearings involving testimony by current and former employees on those and other
issues.
35. In addition, Skadden, Arps has dedicated significant time and
effort assisting the Debtors regarding tax investigations being conducted by the
Senate Committee on Finance and the Joint Committee on Taxation (collectively, the
“Congressional Committees”). The Congressional Committees seek to review
federal tax returns and related information and employee benefit and compensation
programs of the Debtors and related non-Debtor entities. As part of their investiga-
tion, the Congressional Committees have made requests to the Debtors for the
production of voluminous documents.
36. In response, Skadden, Arps attorneys researched numerous
issues and entered into extensive negotiations with the Congressional Committees
regarding disclosure of the documents and information that they desired. These
negotiations culminated in a disclosure agreement between the Congressional
21
Committees and Enron which was executed on March 7, 2002 (the “Disclosure
Agreement”).
37. The Congressional Committees have made various inquiries
and document requests under the Disclosure Agreement, and Skadden, Arps has
provided significant assistance to the Debtors in identifying and producing relevant
documents in response to such inquiries and requests. The initial group of docu-
ments requested pursuant to the Disclosure Agreement was produced to the Congres-
sional Committees on April 5, 2002. The compilation and production of further
responsive documents by the Debtors, with the assistance of Skadden, Arps, is
ongoing.
38. In addition, paraprofessionals at Skadden, Arps were responsi-
ble for obtaining information and monitoring all developments involving the
Congressional Investigations. On a daily basis, Skadden, Arps personnel monitored
all Enron-related actions, announcements, public hearings, statements and legislation
by various committees of the United States House of Representatives, including the
following: Agriculture; Education and Workforce; Energy and Commerce; Financial
Services; Government Reform; Judiciary; Resources; Transportation and Infrastruc-
ture; and Ways and Means. Paraprofessionals also monitored similar developments
with respect to several committees of the United States Senate, including the
following: Agriculture; Banking; Housing and Urban Affairs; Commerce; Science
22
and Transportation; Energy and Natural Resources; Finance; Governmental Affairs;
Health, Education, Labor and Pensions; and Judiciary.
39. Further, Skadden, Arps paraprofessionals were responsible for
obtaining testimony and transcripts from hearings on the Congressional Investiga-
tions, maintaining calendars of relevant dates regarding the Congressional Investiga-
tions and maintaining files of materials relating to the Debtors issued by members of
Congress or Congressional committees. Briefing materials regarding Congressional
developments were prepared and distributed on a frequent basis in order to keep
Skadden, Arps attorneys informed about the progress of recent developments.
40. In connection with the foregoing services, Skadden, Arps
professionals expended 7,228.3 hours for which Skadden, Arps seeks compensation
of $2,778,134. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-1. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Robert S. Bennett 446.6 $310,387
Carl S. Rauh 420.4 $292,178
David J. Goldstone 479.6 $206,228
Nancy J. McGlynn 362.7 $170,469
Ivan A. Schlager 336.6 $158,202
Lynn R. Coleman 263.1 $152,598
Saul M. Pilchen 272.2 $148,349
23
Susan K. Declercq 440.1 $145,233
Vincent P. Schmeltz, III 344.1 $130,758
Mark R. Filip 224.9 $111,326
Peter A. Atkins 154.8 $107,586
Lee P. Garner 212.4 $88,146
J. Phillip Adams 102.8 $71,446
Erik Elsea 181.8 $66,357
Fred T. Goldberg, Jr. 80.6 $56,017
Armando Gomez 126.2 $52,373
Douglas W. Swalina 98.8 $36,062
Suzanne D. Strater 92.0 $34,960
Steven J. Cleveland 82.0 $29,930
John M. Beahn 41.2 $15,038
Justin L. Heather 50.3 $11,569
Randall G. Reese 33.9 $7,797
Rahman J. Harrison 21.3 $6,284
Martin Klepper 6.7 $4,355
Kenneth A. Gross 5.8 $3,654
David E. Carney 10.7 $3,531
Jessica A. Hough 7.1 $2,698
Troy L. Olsen 7.1 $2,592
Timothy P. Olson 5.6 $2,212
John Wm. Butler, Jr. 1.4 $973
24
Paraprofessionals 2,315.5 $348,827
TOTAL 7,228.3 $2,778,134
B. Regulatory/Investigative Matters (Federal – Non-FERC)
41. During the Application Period, the Debtors required Skadden,
Arps’ assistance in monitoring and responding to various regulatory and investiga-
tive matters related to various federal governmental entities. Time spent on such
matters which was not related to investigations or regulatory inquiries by the
Congress or the Federal Energy Regulatory Commission was billed to this matter.
The work completed during the Application Period has been in response to a number
of different investigations, the most significant of which are detailed below.
42. Skadden, Arps has devoted substantial time to advising the
Debtors with respect to matters relating to governmental investigations of its tax-
qualified retirement and savings plans (the “Tax-Qualified Plans”) and other benefit
arrangements (collectively with the Tax-Qualified Plans, the “Benefit Plans”). At the
outset of the Reorganization Cases, Skadden, Arps devoted considerable effort to the
development and investigation of the relevant facts. As part of this process,
Skadden, Arps professionals reviewed applicable documentation and interviewed
numerous witnesses. Skadden, Arps attorneys also devoted significant time and
effort to the negotiation of separate agreements with the DOL and State Street Bank
and Trust Company (“State Street”). These agreements, including proposed amend-
25
ments thereto, related to the terms and conditions under which the Debtors consented
to the removal of the existing fiduciaries responsible for Tax-Qualified Plans and the
appointment of State Street in their place. The agreements also required the comple-
tion of additional subsidiary projects, such as the preparation of plan amendments
and communications to affected parties.
43. Skadden, Arps’ work with respect to the Debtors’ Benefit
Plans also required the completion of a variety of other related assignments. The
most significant of the myriad tasks included preparing witnesses for testimony
before governmental bodies, monitoring other testimony relating to the Benefit
Plans, coordinating document production in response to subpoenas from the DOL
and other governmental entities and responding to numerous requests from the
Debtors’ legal and human resources employees for information and advice relating to
the operation of the Benefit Plans in light of the pending governmental investiga-
tions. As part of these services, Skadden, Arps also assisted the Debtors by coordi-
nating and overseeing on-site visits by representatives of the DOL in connection with
document production to the DOL.
44. Skadden, Arps also provided the Debtors with significant
assistance in investigating and responding to allegations made by former employees.
For example, Skadden, Arps attorneys researched certain allegations made regarding
the business practices of Enron Energy Services (“EES”). In the process, attorneys
26
from Skadden, Arps completed extensive interviews of relevant current and former
employees of EES and the Debtors and other factual due diligence.
45. Skadden, Arps also has provided the Debtors with a great deal
of support in coordinating an investigation into alleged document shredding occur-
ring at the Debtors’ headquarters. This assistance culminated in an FBI search of the
Debtors’ headquarters. Skadden, Arps professionals aided the Debtors by facilitating
the FBI in conducting their search as quickly and with as little disruption to the
Debtors’ business operations as possible. Skadden, Arps also advised the Debtors
regarding issues such as providing guidance to employees, preserving documents and
responding to numerous FBI document requests. Attorneys from Skadden, Arps
worked in conjunction with FBI personnel during their search to protect the Debtors’
interests by avoiding any direct review of privileged documents.
46. Skadden, Arps also has assisted the Debtors in responding to
document requests from the Commodity Futures Trading Commission (the “CFTC”)
and the Department of Justice (the “DOJ”). Skadden, Arps attorneys have assisted
the Debtors’ employees in locating, reviewing and producing responsive documents
to the CFTC’s and the DOJ’s subpoenas and document requests. Such assistance has
required Skadden, Arps to provide extensive advice to the Debtors’ in-house legal
counsel with respect to investigatory processes.
27
47. At the Debtors’ request, Skadden, Arps also assisted the
Debtors with respect to due diligence focusing on several matters related to one of
their non-Debtor subsidiaries. These matters primarily dealt with such subsidiary’s
business operations, the amendment of certain contracts with significant customers,
and certain human resources issues.
48. Skadden, Arps personnel devoted significant time and effort to
conducting an extensive review of the issues referenced above, necessitating travel
by certain Skadden, Arps professionals to the non-Debtor subsidiary’s corporate
headquarters. As part of the due diligence, Skadden, Arps attorneys conducted
interviews of more than fifteen current and former employees of the non-Debtor
subsidiary and reviewed numerous documents.
49. Finally, during the Application Period, Skadden, Arps
attorneys also assisted and advised the Debtors concerning inquiries made and
investigations or proceedings initiated by various other governmental agencies,
including the SEC, the Federal Communications Commission, the Internal Revenue
Service and the Pension Benefit Guaranty Corporation. In connection with these
matters, Skadden, Arps has assisted the Debtors with responding to subpoenas,
producing documents responsive to the inquiries, and providing testimony before
certain of such agencies.
28
50. In connection with the foregoing services, Skadden, Arps
professionals expended 2,911.6 hours for which Skadden, Arps seeks compensation
of $1,282,443. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-2. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Michael R. Bergman 280.1 $128,846
Saul M. Pilchen 212.8 $115,976
Maria E. Douvas 251.5 $91,798
Suzanne D. Strater 224.6 $85,348
David J. Goldstone 184.1 $79,163
Vincent P. Schmeltz, III 202.5 $76,950
Mark R. Filip 143.3 $70,934
Phillip McBride Johnson 97.9 $68,041
Keith D. Krakaur 116.5 $67,570
Nancy J. McGlynn 139.9 $65,753
Steven J. Cleveland 163.8 $59,787
Lee P. Garner 139.0 $57,685
Carl S. Rauh 72.9 $50,666
Stuart N. Alperin 63.8 $44,341
Susan K. Declercq 80.7 $26,631
Robert S. Bennett 37.6 $26,132
John Wm. Butler, Jr. 34.6 $24,047
Justin L. Heather 103.0 $23,690
29
Jerome S. Hirsch 32.5 $22,588
David E. Carney 61.8 $20,394
Peter A. Atkins 21.8 $15,151
Troy L. Olsen 25.8 $9,417
Erich T. Schwartz 18.9 $8,883
Douglas W. Swalina 19.7 $7,191
John C. Quale 10.1 $6,565
Kenneth A. Gross 7.6 $4,788
Alan Kriegel 3.8 $2,394
Martin Klepper 1.2 $780
Paraprofessionals 159.8 $20,937
TOTAL 2,911.6 $1,282,443
MATTERS OVER BETWEEN $100,000 AND $500,000
C. Asset Dispositions (Power)
51. During the Application Period, Skadden, Arps professionals
devoted time to assisting the Debtors in addressing and resolving certain issues
relating to the exit of certain of the Debtors’ businesses and sales of non-core assets.
Time spent working on the sale of assets relating to the Debtors’ power businesses
was billed to this matter. Skadden, Arps represented the Debtors with respect to
assets in three primary locales – Germany, Guam and the Philippines.
52. Skadden, Arps has spent a substantial amount of time during
the Application Period inquiring into certain issues arising out of sales transactions
30
entered into one of the Debtors’ indirect subsidiaries, at the request of the Board of
Directors of Enron. Skadden, Arps attorneys have conducted a comprehensive
review with respect to those issues in the context of matters under governmental
investigation, which has included an examination of significant transactional
documents and numerous interviews with key personnel.
53. Skadden, Arps attorneys also directed their attention to a
review of certain transactional opportunities with respect to business operations and
assets located in Guam. Skadden, Arps provided advice with respect to a contem-
plated transactions with respect to the Debtors’ interest in a limited liability com-
pany, which required Skadden, Arps attorneys to complete due diligence and
research regarding certain issues arising in the negotiation of those possible deals.
54. Finally, Skadden, Arps also advised the Debtors and certain of
their non-Debtor affiliates with respect to a potential transfer of two power stations
located in the Philippines (the “Philippine Transaction”). In that process, Skadden,
Arps attorneys coordinated closely with the relevant Enron entities, their other
professionals and third parties to evaluate the Philippine Transaction and conducted
extensive diligence of the business operations and researched numerous issues
related to, among others, securities and corporate law questions. Further, Skadden,
Arps negotiated the terms of and drafted documents necessary for the consummation
of the Philippine Transaction. In addition, Skadden, Arps also advised the Debtors
31
on strategies for the repayment of certain loans and notes related to these two power
stations.
55. In connection with the foregoing services, Skadden, Arps
professionals expended 1,086.8 hours for which Skadden, Arps seeks compensation
of $472,191. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-3. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Martin Ziessler 213.1 $84,175
Anand S. Raman 157.7 $65,444
Alan G. Schiffman 92.0 $59,800
Erik Elsea 147.8 $53,947
Alan Kriegel 85.4 $53,802
Ralph L. Stengren 92.9 $35,302
Amr Razzak 85.6 $33,812
Ingo Scholz 88.5 $32,302
Martin Klepper 42.3 $27,495
Ferdinand Von Rom 33.8 $13,351
Jonathan B. Stone 11.9 $6,486
Robert S. Bennett 2.7 $1,877
Erich T. Schwartz 2.1 $987
Paraprofessionals 31.0 $3,410
TOTAL 1,086.8 $472,191
32
D. Advice – General Corporate and Board of Directors
56. During the Application Period, attorneys at Skadden, Arps
have been intimately involved in numerous issues relating to the operation and
management of the Debtors’ business and corporate governance issues the Debtors
faced. Skadden, Arps also facilitated the prompt resolution by the Debtors of a
number of general corporate issues surrounding the commencement of the Debtors’
chapter 11 cases and the financial and business strategies associated therewith.
57. In connection with the filing of the Reorganization Cases,
Skadden, Arps provided advice to the Debtors and their boards of directors concern-
ing various regulatory filings and financial reporting obligations with the SEC,
including the preparation of various public filings.
58. Skadden, Arps professionals also assisted the Debtors and
Enron’s Board of Directors with addressing various corporate governance matters.
Such assistance included (a) attending several Board of Directors meetings and
drafting minutes with respect thereto, (b) providing advice to the compensation,
executive and restructuring committees of Enron’s Board of Directors with respect to
various issues, and (c) advising the Debtors on various other corporate governance
planning matters.
59. Skadden, Arps also advised the Debtors concerning the
Debtors’ development of a director selection protocol to be utilized in connection
33
with the Debtors’ selection of new members for Enron’s Board of Directors. Finally,
Skadden, Arps advised the Debtors and Enron’s Board of Directors concerning the
Debtors’ consideration and selection of a turnaround candidate to guide the Debtors
through their restructuring.
60. In connection with the foregoing services, Skadden, Arps
professionals expended 604.1 hours for which Skadden, Arps seeks compensation of
$347,868. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-4. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Peter A. Atkins 216.0 $150,120
Kenneth A. Gross 46.4 $29,232
D. Jan Baker 30.3 $21,059
Robert S. Bennett 25.7 $17,862
Michael R. Bergmann 36.7 $16,882
Lynn R. Coleman 27.2 $15,776
Erich T. Schwartz 33.1 $15,557
KI P. Hong 30.7 $14,429
Eric L. Cochran 15.5 $9,765
Carl S. Rauh 12.3 $8,549
John Wm. Butler, Jr. 9.5 $6,603
Melissa F. Levine 15.2 $5,776
Thomans W. Greenberg 11.7 $5,031
34
Nancy J. McGlynn 10.6 $4,982
Stuart N. Alperin 6.6 $4,587
Susan K. Declercq 10.5 $3,465
Jonathan J. Lerner 3.9 $2,711
Saul M. Pilchen 4.8 $2,616
Erik Elsea 6.4 $2,336
Timothy P. Olson 1.7 $672
Maria E. Douvas 1.7 $621
David J. Goldstone 1.2 $516
Suzanne D. Strater 1.2 $452
Paraprofessionals 45.2 $8,269
TOTAL 604.1 $347,868
E. Retention/Fee Matters SASM&F
61. At the commencement of the Reorganization Cases, the
Debtors retained various professionals to advise the Debtors and their non-Debtor
affiliates during the Reorganization Cases. Skadden, Arps assisted with the prepara-
tion of appropriate documentation and pleadings to assist the Debtors with their
retention of Skadden, Arps. Skadden, Arps also prepared a response to the limited
objection by the Wiser Oil Company to Skadden, Arps’ retention as counsel to Enron
North America Corp.
62. In connection with its retention by the Debtors, Skadden, Arps
disclosed that it is currently representing various clients in matters related to the
35
Debtors (the “Other Matters”), but unrelated to the matters for which Skadden, Arps
is retained as special counsel in the Reorganization Cases (the “Special Counsel
Matters”). After consultation with the United States Trustee, Skadden, Arps devoted
time to establishing formal screening procedures to ensure that there are no commu-
nications or exchanges of confidences, secrets or material non-public knowledge
concerning such matters. Information regarding these formal screening procedures
was subsequently distributed to all Skadden, Arps personnel working on either the
Other Matters or the Special Counsel Matters.
63. Also in connection with its retention as special counsel to the
Debtors, Skadden, Arps conducted an extensive relationship search prior to being
retained. After being retained, Skadden, Arps supplemented its initial search results
as additional relevant entities were identified to Skadden, Arps by the Debtors or
Section 327(a) General Counsel and as additional entities filed notices of appearance
in the Reorganization Cases. To date, Skadden, Arps has searched its client data-
bases with respect to over 1,900 entities related to the Reorganization Cases. During
the Application Period, Skadden, Arps also supplemented its initial search results
through the distribution of a questionnaire to the Firm’s approximately 1,700
attorneys worldwide. Based on the results of the supplemental relationship searches
and the distribution of the questionnaire, Skadden, Arps prepared and filed two
supplemental affidavits disclosing such results during the Application Period.
36
64. In connection with the foregoing services, Skadden, Arps
professionals expended 802.5 hours for which Skadden, Arps seeks compensation of
$329,907. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-5. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Timothy P. Olson 319.4 $126,163
John Wm. Butler, Jr. 75.1 $52,195
Martin Klepper 70.8 $46,020
Randall G. Reese 192.4 $44,252
D. Jan Baker 36.7 $25,507
Keith A. Simon 39.4 $13,002
Gary W. Katz 20.8 $8,632
Peter A. Atkins 10.8 $7,506
Carl S. Rauh 3.2 $2,224
Paraprofessionals 33.9 $4,407
TOTAL 802.5 $329,907
F. Tax Matters
65. Skadden, Arps has provided the Debtors with assistance in
responding to issues arising with the Internal Revenue Service (the “IRS”) during the
Application Period. Early in the Application Period, Skadden, Arps advised the
Debtors in developing a strategic plan for responding to the IRS and issues related to
37
IRS audits of the Debtors. This process required Skadden, Arps to coordinate with
appropriate personnel of the Debtors and to review those transactions and operations
of the Debtors in question.
66. In addition, the IRS has made numerous information docu-
ment requests to the Debtors. Skadden, Arps has assisted the Debtors in reviewing
such requests and locating responsive documents and researching legal issues related
thereto. Skadden, Arps and the Debtors have provided the IRS with responses to
certain of the requests and continue to work on responding to the remaining requests.
67. In connection with the foregoing services, Skadden, Arps
professionals expended 401.2 hours for which Skadden, Arps seeks compensation of
$228,403. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-6. A general breakdown of these services is as follows:
NAMES HOURS VALUE
J. Phillip Adams 193.7 $134,622
Jessica A. Hough 96.3 $36,594
Romina Weiss 54.3 $24,978
Fed T. Goldberg, Jr. 30.7 $21,337
Armando Gomez 26.2 $10,873
TOTAL 401.2 $228,403
38
G. Nonworking Travel Time
68. During the Application Period, Skadden, Arps professionals
were required to travel to attend meetings with the Debtors’ senior management and
to represent the Debtors with respect to witness testimony in connection with various
governmental investigations. Skadden, Arps professionals also were required to
travel to provide assistance to the Debtors as requested in other locations throughout
the United States and abroad, including at the Debtors’ corporate headquarters in
Houston, Texas. Skadden, Arps professionals allocated time spent traveling but not
otherwise working to a separate billing matter.
69. In connection with the foregoing services, Skadden, Arps
professionals expended 1,040.0 hours for which Skadden, Arps seeks compensation
of $207,919, which amount reflects a fifty percent (50%) reduction from Skadden,
Arps’ guideline hourly rates. An itemized breakdown of the services rendered to the
Debtors is attached as Exhibit E-7. A general breakdown of these services is as
follows:
NAMES HOURS VALUE
David J. Goldstone 92.1 $19,801
Susan K. Declercq 107.7 $17,771
Suzanne D. Strater 84.1 $15,979
Vincent P. Schmeltz, III 75.6 $14,364
39
Saul M. Pilchen 45.9 $12,508
Mark R. Filip 44.6 $11,039
Steven J. Cleveland 50.2 $9,162
Robert S. Bennett 24.4 $8,479
Anand S. Raman 39.9 $8,279
Erik Elsea 42.7 $7,793
Martin Klepper 22.2 $7,215
Carl S. Rauh 19.5 $6,776
Douglas W. Swalina 37.1 $6,771
Michael R. Bergman 28.5 $6,555
J. Phillip Adams 18.8 $6,533
Lee P. Garner 29.9 $6,204
Keith D. Krakaur 18.9 $5,481
Timothy P. Olson 22.4 $4,424
Maria E. Douvas 21.6 $3,942
Nancy J. McGlynn 16.7 $3,925
Martin Ziessler 19.5 $3,851
Justin L. Heather 26.1 $3,002
John Wm. Butler, Jr. 6.2 $2,155
Alan Kriegel 6.8 $2,142
Jerome S. Hirsch 5.7 $1,981
Lance T. Brasher 4.5 $1,159
Ingo Scholz 5.0 $913
Kenneth A. Gross 1.3 $410
40
Armando Gomez 1.0 $208
Paraprofessionals 121.1 $9,102
TOTAL 1,040.0 $207,919
H. Project Advice/Transactions (Non-Debtor Businesses)
70. Skadden, Arps devoted significant time during the Application
Period to advising the Debtors with respect to issues and transactions involving
certain non-Debtor affiliates of Enron. Timekeepers recording time to this matter
separately allocated their time among various sub-matters, including: Dabhol Power
Company; DPC Political Risk Insurance; TGS Political Risk Insurance; and Vengas.
71. One such non-Debtor affiliate was Dabhol Power Company
(“Dabhol”). Skadden, Arps attorneys provided advice regarding various issues under
certain financing documents and a proposed transaction involving Dabhol. This
included advice regarding securities and other issues, including assisting the Debtors
with responses to certain court orders obtained by those secured lenders which
enjoined Dabhol from filing for bankruptcy protection and appointed a receiver for
Dabhol’s assets. These issues required Skadden, Arps attorneys to draft and review
numerous documents, conduct due diligence and participate in daily conference calls,
involving other legal counsel and personnel of Dabhol, during the Application
Period.
41
72. Skadden, Arps also advised the Debtors regarding certain
insurance policies held by their non-Debtor affiliates. In particular, Skadden, Arps
was asked to provide guidance regarding the ability of Enron or its affiliates to make
a claim under any of multiple political risk insurance policies due to certain events
arising in Argentina. In response, Skadden, Arps attorneys in multiple offices
reviewed the relevant insurance policies and researched appropriate foreign legal
provisions governing the terms of those policies to provide advice to the Debtors.
Finally, Skadden, Arps advised the Debtors concerning an investigation in Venezuela
involving a non-Debtor subsidiary.
73. In connection with the foregoing services, Skadden, Arps
professionals expended 327.2 hours for which Skadden, Arps seeks compensation of
$161,623. An itemized breakdown of the services rendered to the Debtors is
attached as Exhibit E-8. A general breakdown of these services is as follows:
NAMES HOURS VALUE
George H. Windecker, Jr. 129.9 $55,857
Lance T. Brasher 89.7 $46,196
Martin Klepper 30.4 $19,760
Jeffrey S. Christie 27.7 $16,066
James Hope 27.2 $11,696
Keith D. Krakaur 10.2 $5,916
Alan G. Schiffman 7.6 $4,940
42
Saul M. Pilchen 1.0 $545
Paraprofessionals 3.5 $647
TOTAL 327.2 $161,623
MATTERS LESS THAN $100,000
I. Case Coord./Admin. with General Bankruptcy Counsel
74. Skadden, Arps also devoted resources to the efficient and
expeditious administration of these Reorganization Cases and to coordination with
Section 327(a) General Counsel and other counsel to the Debtors during the Applica-
tion Period. Work performed under this category generally may be grouped as
follows: (a) coordination with other professionals; (b) advice with respect to the
administration of the Reorganization Cases; and (c) general case administration.
75. Skadden, Arps attorneys have consistently strived to coordi-
nate their efforts and, more generally, the efforts of the Firm on behalf of the Debtors
with the Debtors’ other professionals. In particular, Skadden, Arps has worked
closely with Section 327(a) General Counsel to harmonize our joint representation of
the Debtors, including participation in periodic status conferences with Section
327(a) General Counsel and other of the Debtors’ professionals to coordinate the
efforts of all estate professionals in providing advice and assistance to the Debtors.
Where appropriate, Skadden, Arps and the Debtors’ other professionals have divided
tasks to avoid unnecessary duplication of our efforts. In so doing, Skadden, Arps has
43
attempted to ensure that these highly-complex cases are administered as efficiently
and economically as possible.
76. Furthermore, Skadden, Arps attorneys have performed other
case management functions. Skadden, Arps attorneys have reviewed various public
documents and pleadings to remain current on the status of the Reorganization Cases
in order to be best able to coordinate Skadden, Arps’ representation of the Debtors.
In addition, Skadden, Arps attorneys have attended meetings with and had various
other contacts with the Debtors’ management and the Committee with regards to
Skadden, Arps’ representation of the Debtors, as it relates to the Debtors’ other
professionals. Skadden, Arps attorneys also have advised the Debtors and Section
327(a) General Counsel as to the retention of other professionals, both in the
ordinary course and in direct relation to the Reorganization Cases.
77. Additionally, Skadden, Arps paraprofessionals maintained, on
a daily basis, various files critical to enable Skadden, Arps to promptly address
numerous issues that arose during the Application Period. Skadden, Arps kept an
index of and docketed all pleadings and orders filed in the Reorganization Cases and
kept detailed calendars of future events in both the Reorganization Cases and other
relevant litigation. The efficient management of administrative matters in a paper-
intensive case of this size is a significant task, as the Debtors are inundated with
numerous items of correspondence, documents, requests, pleadings and other papers.
44
Skadden, Arps has devised and implemented the policies detailed above to cost-
effectively manage and coordinate their involvement in the cases on behalf of the
Debtors.
78. In connection with the foregoing services, Skadden, Arps
professionals expended 339.4 hours for which Skadden, Arps seeks compensation of
$87,260. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-9. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Timothy P. Olson 66.6 $26,307
Robert S. Bennett 22.3 $15,499
John Wm. Butler, Jr. 12.9 $8,966
Carl S. Rauh 9.3 $6,464
Peter A. Atkins 8.5 $5,908
D. Jan Baker 4.0 $2,780
Phillip McBride Johnson 1.5 $1,043
Saul M. Pilchen 1.3 $709
Randall G. Reese 1.9 $409
Keith A. Simon 1.0 $330
Paraprofessionals 210.1 $18,848
TOTAL 339.4 $87,260
45
J. Litigation Matters/Coordination (General)
79. The Debtors face significant actual and potential litigation on
a variety of fronts. To that end, Skadden, Arps created several matters relating to
such litigation. Time spent working on issues related to actual or threatened litiga-
tion which did not relate to insurance coverage matters or the Debtors’ non-Debtor
affiliates was billed to this matter.
80. Early in the Application Period, substantial time was devoted
to the development of a general litigation and investigation strategy. Skadden, Arps
attorneys participated in numerous meetings and teleconferences in order to develop
a coherent strategy in concert with the Debtors’ management and the Debtors’ other
professionals generally and Section 327(a) General Counsel in particular. Due to the
extreme notoriety of these Reorganization Cases and certain litigation issues related
to the Reorganization Cases, the Debtors and Skadden, Arps were inundated with
requests by various parties-in-interest and the media. This necessitated certain of
Skadden, Arps’ attorneys to devote time to coordinating a public relations strategy
with the Debtors and responding to media inquiries.
81. Skadden, Arps attorneys also devoted time to researching
numerous issues at the request of the Debtors. The majority of the issues revolved
around or were in response to: (a) Enron’s complaint against Dynegy, filed with this
Court on the Petition Date; (b) complaints brought against Enron under the Em-
46
ployee Retirement Income Security Act (“ERISA”); and (c) certain corporate
governance issues. These issues included, without limitation, issues related to the
fiduciary duty of directors as it relates to ERISA, removal of litigation filed in other
venues to the Bankruptcy Court for the Southern District of New York, and potential
defenses to ERISA litigation. Skadden, Arps professionals also drafted numerous
memoranda and other necessary documents concerning the various of the issues
researched during the Application Period.
82. In connection with the foregoing services, Skadden, Arps
professionals expended 169.3 hours for which Skadden, Arps seeks compensation of
$73,785. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-10. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Jonathan J. Lerner 31.6 $21,962
Scott D. Musoff 41.1 $17,673
Beverly A. Farrell 69.8 $16,054
Robert S. Bennett 19.7 $13,692
Peter A. Atkins 5.1 $3,545
David J. Gladstone 2.0 $860
TOTAL 169.3 $73,785
47
K. Regulatory/Investigative Matters (State and Local)
83. Prior to the Petition Date, Skadden, Arps provided the Debtors
with assistance in responding to various investigations by state and local governmen-
tal entities. This assistance continued during the Application Period. In particular,
Skadden, Arps professionals provided legal services to the Debtors with respect to
inquiries made by certain state or local governmental agencies. In connection
therewith, Skadden, Arps attorneys participated in frequent conferences with
members of the Debtors’ management, other counsel of the Debtors, and representa-
tives of the governmental agencies, undertook legal research on various issues of
state and federal law relating to the inquiries and assisted the Debtors with producing
documents regarding the inquiries.
84. In connection with the foregoing services, Skadden, Arps
professionals expended 72.9 hours for which Skadden, Arps seeks compensation of
$44,812. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-11. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Kenneth A. Gross 39.3 $24,759
Robert J. Del Tufo 20.8 $14,040
Martin Klepper 3.8 $2,470
Timothy P. Olson 3.2 $1,264
48
Douglas W. Swalina 3.3 $1,205
David J. Goldstone 2.5 $1,074
TOTAL 72.9 $44,812
L. Litigation Matters/Coordination (Non-Debtor Businesses)
85. Skadden, Arps devoted time and resources during the Applica-
tion Period to defending claims raised in litigation related to certain non-Debtor
affiliates of Enron. The work billed under this matter principally relates to a suit
involving Enron Power Corporation (“EPC”). Skadden, Arps attorneys, at the
Debtors’ request, gathered factual information relating to the substance of the
relevant transactions at issue in the lawsuit and completed extensive interviews with
current and former employees and legal counsel of EPC. In addition, Skadden, Arps
attorneys researched various legal issues concerning the lawsuit and drafted a motion
to dismiss the complaint during the Application Period, which was filed on or about
April 23, 2002.
86. In connection with the foregoing services, Skadden, Arps
professionals expended 105.3 hours for which Skadden, Arps seeks compensation of
$38,671. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-12. A general breakdown of these services is as follows:
49
NAMES HOURS VALUE
Lanelle K Meidan 69.8 $23,034
Lee P. Garner 24.2 $10,043
Mark R. Filip 11.3 $5,594
TOTAL 105.3 $38,671
M. Financing Matters (Debtor Entities)
87. Skadden, Arps has assisted the Debtors in their efforts to
procure postpetition financing. At the request of the Debtors, Skadden, Arps worked
with the Debtors’ senior management, Section 327(a) General Counsel and certain of
the Debtors’ prepetition lenders to structure and negotiate the terms of a financing
arrangement to fund the Reorganization Cases and the Debtors’ ongoing operations.
88. In connection with the foregoing services, Skadden, Arps
professionals expended 23.5 hours for which Skadden, Arps seeks compensation of
$8,930. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-13. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Jena Q. Bridges 23.5 $8,930
TOTAL 23.5 $8,930
50
N. Employee/Labor Matters
89. During the Application Period, Skadden, Arps worked with
the Debtors to help them address issues affecting the Debtors’ employees. Skadden,
Arps professionals assisted the Debtors in reviewing a fiduciary agreement and
researched issues relating to the affect of certain provisions of the Bankruptcy Code
on claims arising under ERISA.
90. In connection with the foregoing services, Skadden, Arps
professionals expended 14.8 hours for which Skadden, Arps seeks compensation of
$8,830. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-14. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Stuart N. Alperin 9.6 $6,672
Gary W. Katz 5.2 $2,158
TOTAL 14.8 $8,830
O. Asset Dispositions (General)
91. During the Application Period, Skadden, Arps professionals
devoted time to assisting the Debtors in addressing and resolving certain general
issues relating to the exit of certain of the Debtors’ businesses and sales of non-core
assets. Time spent working on asset dispositions outside of the Debtors’ broadband,
51
energy services or power businesses or the Debtors’ partnership and venture interests
was billed to this matter.
92. Skadden, Arps attorneys focused on various issues relating to
the Debtors’ wholesale trading operations and international matters and asset sales.
Additional efforts were directed toward the Debtors’ broader asset disposition plans.
To these ends, Skadden, Arps professionals attended meetings and court hearings
relating to asset dispositions and advised the Debtors’ management and the Debtors’
other professionals on related issues.
93. In connection with the foregoing services, Skadden, Arps
professionals expended 8.9 hours for which Skadden, Arps seeks compensation of
$6,141. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-15. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Peter A. Atkins 5.2 $3,614
John Wm. Butler, Jr. 2.7 $1,877
Martin Klepper 1.0 $650
TOTAL 8.9 $6,141
P. Regulatory/Investigative Matters (Non-Debtor Businesses)
94. During the Application Period, Skadden, Arps assisted the
Debtors with respect to certain investigations concerning non-Debtor businesses,
52
including developing strategy with the Debtors for addressing such investigations
and conducting interviews of personnel from such businesses concerning various
matters.
95. In connection with the foregoing services, Skadden, Arps
professionals expended 11.1 hours for which Skadden, Arps seeks compensation of
$5,560. An itemized breakdown of the services rendered to the Debtors is attached
as Exhibit E-16. A general breakdown of these services is as follows:
NAMES HOURS VALUE
Mark R. Filip 9.8 $4,851
Saul M. Pilchen 1.3 $709
TOTAL 11.1 $5,560
RELIEF REQUESTED
96. In accordance with the Fee Procedures Order, Skadden, Arps
has submitted its December 2001 through March 2002 monthly statements, and
Skadden, Arps now submits this Application. Based on the Firm’s customary billing
practices, the Debtors ordinarily would be billed a total of $6,832,633 for fees and
$533,326 for charges and disbursements. In keeping with Skadden Arps’ commit-
ment to self-policing its fees, charges and disbursements, and based on various
accommodations to the Debtors, however, Skadden, Arps voluntarily reduced, as
part of its monthly fee statements, its fees by $629,045, or approximately 9.2%, and
53
its charges and disbursements by $37,205, or approximately 7.0%. As a result, the
actual amount billed to the Debtors was $6,203,588 for fees and $496,121 for
charges and disbursements. Moreover, as an additional accommodation, Skadden,
Arps has voluntarily reduced the amount sought in this Application by $121,111 to
reflect, among other things, the elimination of all fees related to any timekeeper
billing less than $5,000 during the Application Period. As a result, the actual amount
sought herein is $6,082,477 for fees and $496,121 for charges and disbursements.
This represents a total reduction of $750,156 (approximately 10.9%) for fees and
$37,205 (approximately 7.0%) for charges and disbursements from those amounts
that Skadden, Arps would customarily charge its clients.
97. The Fee Procedures Orders provide that to seek interim
compensation, professionals must submit monthly fee statements to the Debtors,
counsel for the Debtors, the United States Trustee, counsel for the Committee,
counsel to the Postpetition Secured Lenders, and the fee review committee. If no
objection to a monthly statement is made within fifteen (15) days after service, the
Debtors are authorized to pay eighty percent (80%) of the fees requested (with the
remaining twenty percent (20%) of the fees requested referred to herein as the
“Holdback”) and one-hundred percent (100%) of the charges and disbursements
requested. In accordance with the Fee Procedures Order, Skadden, Arps has submit-
ted monthly statements for each of the months covered by the Application Period.
12 Skadden, Arps maintains records of the time it expended in the rendition ofall professional services, which time records are made concurrently with therendition of professional services.
54
Accordingly, with respect to the monthly statements covering the Application
Period, after payment of the monthly statements, Skadden, Arps will have received
$4,962,871 on account of billed fees and $496,121 on account of billed charges and
disbursements and will have accrued a Holdback in the amount of $1,240,717. After
application of the additional client accommodations described in this Application in
the amount of $121,111 for, among other things, fees related to timekeepers that
billed less than $5,000 during the Application Period, Skadden, Arps is requesting
$1,119,606 in full settlement of the Holdback accrued through March 31, 2002.
98. Allowance of Professional Fees. During the Application
Period, attorneys and paraprofessionals at Skadden, Arps billed an aggregate of
15,146.9 hours reflected in this Application working on matters concerning the
Debtors’ reorganization case.12 Of such time spent, 4,396.2 hours were spent by
partners, 1,050.7 hours were spent by counsel, 6,779.9 hours were spent by associ-
ates and 2,920.1 hours were spent by paraprofessionals. A summary showing the
name and position of each such partner, counsel, associate and paraprofessional,
together with that person’s date of admission to the bar (as applicable), net hours
13 In addition, Exhibit D hereto sets forth the blended hourly rate and certainother business statistics associated with the Reorganization Cases.
55
during the Application Period and hourly billing rate, is provided at the front of this
Application.13
99. Reimbursement of Charges and Disbursements. As disclosed
in the Retention Application that the Court approved, it is Skadden, Arps’ standard
policy to charge its clients in all areas of practice for certain charges and disburse-
ments incurred in connection with such clients’ cases. However, under the bundled
rate structure as described in the Retainer Agreement, certain charges and disburse-
ments are not separately charged to clients. The charges and disbursements charged
to clients under the bundled rate structure include, among others, charges for
messenger services, photocopying, court fees, travel expenses, postage for large
mailings, long distance telephone, computerized legal research, investigative
searches, and other charges customarily billed by law firms.
100. During the Application Period, Skadden, Arps disbursed the
following sums for actual and necessary charges and disbursements in the rendition
56
of professional services in the Reorganization Cases, and requests that it be reim-
bursed therefor:
Charges and Disbursements Incurred
Travel Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $342,936Computer Legal Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $58,811Reproduction and Document Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . $36,203Courier, Express Delivery and Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,676Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,665Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,296Outside Research Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,811Filing/Court Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,306Court Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $299UCC Research/Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $118
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $496,121
101. Exhibit F attached hereto provides documentation regarding
charges and disbursements incurred during the Application Period. The above
charges and disbursements are reasonable and are consistent with those incurred by
other bankruptcy practitioners in other large, complex chapter 11 reorganization
cases in this and other districts.
REASONABLENESS OF FEES, CHARGES AND DISBURSEMENTS
102. In accordance with the factors enumerated in 11 U.S.C. § 330
and applicable case law, the amount requested herein by Skadden, Arps is fair and
reasonable, given: (i) the nature of the Reorganization Cases, (ii) the novelty and
complexity of the Reorganization Cases, (iii) the time and labor required to represent
57
the Debtors effectively, (iv) the time limitations imposed by the Reorganization
Cases, (v) the nature and extent of the services rendered, (vi) Skadden, Arps’
experience, reputation and ability, (vii) the value of Skadden, Arps’ services and
(viii) the cost of comparable services other than in a case under title 11 of the United
States Code.
103. Nature, complexity and duration of the case. Skadden, Arps
has assisted the Debtors by employing a streamlined case management structure that
consisted of small, core teams and assigned various attorneys to other discrete tasks
to avoid the performance of duplicative or unnecessary work.
104. Experience of Skadden, Arps. The experience of Skadden,
Arps’ attorneys also has benefitted the estates. Skadden, Arps is among the largest
firms and has one of the largest restructuring groups in the country. As more fully
set forth in the Retention Application, Skadden, Arps’ restructuring attorneys and
attorneys from other practice areas have extensive knowledge and experience in
dealing with the multitude of fast-paced issues that arise in similar chapter 11
proceedings. Accordingly, Skadden, Arps’ depth of experience in chapter 11 matters
has insured that a number of pressing matters could be addressed promptly.
105. In addition, Skadden, Arps’ commitment to monitoring the
administrative expenses of the estates, including its own legal fees, has been a
constant element of its representation of the Debtors. Indeed, this emphasis has been
58
manifested in Skadden, Arps, careful review of its fees, charges and disbursements
and a voluntary client accommodation of nearly $790,000.
106. Comparable services. Skadden, Arps’ rates are consistent
with rates charged to other clients in non-bankruptcy matters. Moreover, its rate
structure was disclosed clearly in its Retention Application, which the Court ap-
proved and to which none of the major constituents objected.
107. The amounts sought by Skadden, Arps compare favorably to
fees, charges and disbursements incurred by other chapter 11 debtors in cases of
similar size, complexity and duration. Accordingly, the cost of comparable services
supports the Application, and the services performed during the Application Period
more than warrant the allowance of compensation, particularly in view of the results
achieved.
108. Compliance with Guidelines. Skadden, Arps believes that this
Application, together with the attachments hereto, substantially complies in all mate-
rial respects with the Guidelines. To the extent this Application does not comply in
every respect with the requirements of such guidelines, Skadden, Arps respectfully
requests a waiver for any such technical non-compliance.
109. Skadden, Arps requests that this Court deem the contents of
this Application to be sufficient for the purposes of satisfying the memorandum of
law requirement in Rule 9013-1(b) of the Local Rules for the United States Bank-
ruptcy Court for the Southern District of New York. The relief requested in this
Application presents no novel issues of law.
WHEREFORE, Skadden, Arps respectfully requests that the Court (a)
grant it an interim allowance of $6,082,477 as compensation for professional
services rendered as attorneys for the Debtors during the Application Period, plus
reimbursement of actual and necessary charges and disbursements incurred in the
sum of $496,121; (b) authorize and direct the Debtors to pay to Skadden, Arps the
amount of $1,119,606 in full settlement of the Holdback accrued through March 31,
2002; and (c) grant it such other and further relief as is just.
Dated: Chicago, IllinoisJune 14, 2002
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPSpecial Counsel for Debtors andDebtors-in-Possession
/s/ John Wm. Butler, Jr.John Wm. Butler, Jr.Timothy P. OlsonSKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)333 West Wacker DriveChicago, Illinois 60606(312) 407-0700
- and -
D. J. Baker (DB 0085)SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPFour Times SquareNew York, New York 10036(212) 735-3000
EXHIBIT AJohn Wm. Butler, Jr.Timothy P. OlsonSKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)333 West Wacker DriveChicago, Illinois 60606(312) 407-0700
- and -
D. J. Baker (DB 0085)SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPFour Times SquareNew York, New York 10036(212) 735-3000
Special Counsel for Debtors and Debtors in Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------
In re
ENRON CORP., et al.,
Debtors.
---------------------------------------------------
x:::::::x
Chapter 11
Case No. 01-16034 (AJG)
Jointly Administered
CERTIFICATION UNDER GUIDELINES FOR FEES ANDDISBURSEMENTS FOR PROFESSIONALS IN RESPECT OF
FIRST APPLICATION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOMLLP AND AFFILIATED LAW PRACTICE ENTITIES FOR
INTERIM COMPENSATION AND REIMBURSEMENT OF EXPENSES
2
I, John Wm. Butler, Jr., hereby certify that:
1. I am an attorney at law admitted to practice pro hac vice
before this Court and a member of the law firm of Skadden, Arps, Slate, Meagher &
Flom (Illinois), and its affiliated law practices (collectively, “Skadden, Arps”),
special counsel for Enron Corp. (“Enron” or the “Company”) and certain of its
affiliates (the “Affiliate Debtors”), debtors and debtors-in-possession in the
above-captioned cases (Enron and the Affiliate Debtors collectively, the “Debtors”).
I am the professional designated by Skadden, Arps in respect of compliance with the
Amended Guidelines for Fees and Disbursements of Professionals in Southern
District of New York Bankruptcy Cases adopted by the Court on April 19, 1995 (the
“Local Guidelines”), and the United States Trustee Guidelines for Reviewing
Applications for Compensation and Reimbursement of Expenses Filed Under 11
U.S.C. § 330, adopted on January 30, 1996 (the “UST Guidelines” and, together with
the Local Guidelines, the “Guidelines”).
2. I make this certification in support of the application of
Skadden, Arps, dated June 14, 2002 (the “Application”), for interim compensation
and reimbursement of expenses for the period beginning December 2, 2001 and
ending March 31, 2002 (the “Compensation Period”), in accordance with the Local
Guidelines.
3
3. In respect of section B.1 of the Local Guidelines, I certify that:
(a) I have read the Application.
(b) To the best of my knowledge, information and beliefformed after reasonable inquiry, the fees and disbursements sought fall within theLocal Guidelines.
(c) Except to the extent that fees or disbursements areprohibited by the Guidelines, the fees and disbursements sought are billed at rates inaccordance with practices customarily employed by Skadden, Arps and generallyaccepted by Skadden, Arps’ clients and disclosed and approved in the RetentionApplication, including the bundled rate structure.
(d) In providing a reimbursable service, Skadden, Arpsdoes not make a profit on that service, whether the service is performed by Skadden,Arps in-house or through a third party.
4. In respect of section B.2 of the Local Guidelines, I certify that
Skadden, Arps has provided monthly statements of Skadden, Arps’ fees and dis-
bursements accrued during the previous month, by serving monthly statements
pursuant to the Fee Procedures Order (as defined in the Application) for the Applica-
tion Period.
5. In respect of section B.3 of the Local Guidelines, pursuant to
the Fee Procedures Order, I certify that copies of the Application are being provided
to (a) the Debtors, (b) counsel for the Debtors, (c) the Office of the United
4
States Trustee for this district, (d) counsel to the Committee, (e) counsel to the co-
administrative agents for the Debtors’ postpetition secured lenders under the Revolv-
ing Credit and Guaranty Agreement, and (f) the fee review committee.
Dated: Chicago, IllinoisJune 14, 2002
/s/ John Wm. Butler, Jr. John Wm. Butler, Jr.
EXHIBIT D
Matter Name Matter Number
Advice – General Corporate and Board of Directors 0001Affiliate Restructurings 0002Asset Dispositions (General) 0003Asset Dispositions (Broadband) 0004Asset Dispositions (Energy Services) 0005Asset Dispositions (Partnership and Venture Interests) 0006Asset Dispositions (Power) 0007Business Operations (Debtor Entities) 0008Business Operations (Non-Debtor Businesses) 0009Case Coord./Admin with General Bankruptcy Counsel 0010Disclosure Statement re Plan of Reorganization 0011Employee/Labor Matters 0012Financing Matters (Debtor Entities) 0013Financing Matters (Non-Debtor Businesses) 0014Litigation Matters/Coordination (General) 0015Litigation Matters/Coordination (Insurance Recovery) 0016Litigation Matters/Coordination (Non-Debtor Businesses) 0017Nonworking Travel Time 0018Project Advice/Transactions (Debtor Entities) 0019Project Advice/Transactions (Non-Debtor Businesses) 0020Regulatory/Investigative Matters (Congressional) 0021Regulatory/Investigative Matters (Federal – FERC) 0022Regulatory/Investigative Matters (Federal – Non-FERC) 0023Regulatory/Investigative Matters (State and Local) 0024Regulatory/Investigative Matters (Foreign) 0025Regulatory/Investigative Matters (Non-Debtor Businesses) 0026Retention/Fee Matters (SASM&F) 0027Tax Matters 0028
SKADDEN, ARPS BUSINESS STATISTICSAND SUMMARY OF ATTORNEY TIME
FOR THE APPLICATION PERIODDecember 2, 2001 to March 31, 2002
Total Fees Recorded: $6,832,633
Actual Fees Requested: $6,082,477
Total Hours RecordedPartners: 4,686.8 (27.5%)Counsel: 1,115.9 (6.6%)Associates: 7,355.4 (43.2%)Paraprofessional: 3,874.1 (22.7%)Total Hours: 17,032.2
Total Hours Reflected in ApplicationPartners: 4,396.2 (29.0%)Counsel: 1,050.7 (6.9%)Associates: 6,779.9 (44.8%)Paraprofessional: 2,920.1 (19.3%)Total Hours: 15,146.9
Blended Hourly Rate: $357
Total Charges and Disbursements Recorded: $533,326
Actual Charges and Disbursements Requested: $496,121