Judge Denies $4.2M in Bonuses for Northwest Bankruptcy Lawyers

Bankruptcy lawyers for Northwest Airlines Corp. were denied $4.2 million in end-of-case bonuses Tuesday, with a judge saying their average rates of about $500 an hour had already provided adequate compensation.

U.S. Bankruptcy Judge Allan Gropper rejected a $3.5 million bonus for Northwest Airlines' lead law firm, Cadwalader, Wickersham & Taft, which ushered the airline out of bankruptcy in May. A law firm representing creditors, Otterbourg, Steindler, Houston & Rosen, was denied a $700,000 bonus.

Gropper said that for the attorneys to deserve a so-called fee enhancement, their work should have a remarkable result that couldn't be expected from lawyers being paid their regular fees.

A flight attendants union as well as the U.S. Trustee and a creditor-turned-shareholder objected to the bonuses, arguing they were unjustified. Those groups said Northwest's bankruptcy had not produced a remarkable result, since its share price has dropped 22 percent since the company emerged from court protection on May 31.

The Association of Flight Attendants also objected on the grounds that pilots and flight attendants took pay cuts and schedule changes to help the airline out of Chapter 11.

Details here from the AP via Law.com.