In a settlement aimed at resolving claims brought by the U.S. Trustee’s Office that it omitted key details when it applied—and was chosen—to work on the 2010 bankruptcy of investment firm GSC Group, Kaye Scholer agreed late last week to return nearly a third of the $5 million it earned for the assignment.
The U.S. Trustee’s Office, a branch of the U.S. Department of Justice that oversees the bankruptcy process, had argued in a January 4 motion that Kaye Scholer and GSC financial adviser Capstone Advisory Group should be terminated and forced to return all fees they had received from the bankrupt investment firm’s estate. In its filing, the trustee’s office argued that both Kaye Scholer and Capstone had failed to disclose that an employee listed on Capstone’s application was actually a contractor using a type of fee-sharing agreement barred by the bankruptcy code. The trustee’s office also faulted Kaye Scholer for failing to disclose that it had previously done work for other ventures owned by the contractor, Robert Manzo, who served as GSC’s chief restructuring officer.
