Burlington’s Unsecured Creditors Reject Advisors

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Burlington’s Unsecured Creditors Reject Advisors
Greensboro, NC, April 30--Burlington Industries' unsecured creditors and the U.S. trustee appointed in the firm's Chapter 11 case objected to the company's plan for compensating investment bankers. According to court papers, the company wanted to pay certain fees to retain the two firms Miller Buckfire Lewis & Co. and Dresdner Kleinwort Wasserstein to advise on a possible sale of the company. The official committee of Burlington's unsecured creditors feels the $250,000 a month fee for the bankers for the first four months "is not reasonable," according to its objection filed last Thursday with the U.S. Bankruptcy Court in Wilmington, Delaware. The company is also seeking approval to pay the bankers $150,000 every month after the fourth month. If a deal is struck between a bidder contacted by the bankers and Burlington, the bankers would receive a transaction fee of $2 million, besides 2.5% of any bid over $579 million. Of the fees, 60% would go to Miller Buckfire and 40% to Dresdner Kleinwort. The creditors' committee said in its objection that the terms virtually guarantee the advisers a transaction fee. Burlington said the fee structure agreed to is typically applied in hiring financial advisers and bankers in Chapter 11 cases. The U.S. trustee in the case also objected to the payment terms wanted by Burlington, saying determination of the terms should wait until the closing of the transaction. The objection stated, "this is especially true where, as in this case, the advisers themselves state that it is not possible to estimate the amount of time that will be required to perform the services for which they were hired.” The bankruptcy court overseeing Burlington's case extended the bidding deadline for the company to July 10 after Berkshire Hathaway Inc. withdrew its $579 million offer following a breakup fee dispute. An auction is scheduled for July 21. Burlington filed for bankruptcy protection in November 2001, listing assets of $1.2 billion and liabilities of $1.1 billion.


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