It’s easy to see why a ruling last week on fees in the GSC Group Inc. Chapter 11 caused a stir in the New York bankruptcy bar: The 126-page decision, issued Dec. 12, paints a disturbing picture of missteps and failures by firms advising GSC and by the asset management company’s largest creditor. And while former GSC Group adviser Kaye Scholer says its own conduct was vindicated by the ruling, the judge warned that “big firm-itis” contributed to carelessness in the case.
U.S. Bankruptcy Judge Shelley Chapman hacked $1.5 million off of the $5.9 million in fees requested by Capstone Advisory Group LLC, citing the advisory firm’s failure to disclose its true relationship with a consultant overseeing GSC’s restructuring. She also disparaged Capstone’s request last year for a 50 percent bonus for its work on the case.
