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Mesirow: We'd Like a Cool Half Million From SCO, Please - Updated
Friday, December 21 2007 @ 10:00 AM EST

Mesirow Financial Consulting, having been approved [PDF] as one of the professionals SCO can retain to provide services, says it would like almost half a million for having done so for the past two and a half months. Hey. Me too! I'd like a cool half million. Where's the line? I want to get on it.

You'll recall that the U.S. Trustee's Office objected to their original application, because "it appears that MFI, Mesirow’s affiliated broker-dealer, believes that it may purchase and sell the Debtors’ securities for its own account without affecting Mesirow’s eligibility for professional employment in these cases." Also there were issues about indemnification, a clause about it being in the prepetition Engagement Letter, but which the court whittled down to manageable size. And Mesirow swore they wouldn't trade in any SCO shares, if they got retained. And indeed, from the bill it's plain on which side of the bread one might find the butter.

This is their first bill since being approved. Yessir. $449,702.30. For 1,263 hours of services rendered by 11 people, and that includes $48,702.11 for expenses. Love the 11 cents. They say it's "actual, reasonable and necessary". They nobly reduced the bill voluntarily from $535,626.00 down to $449,888.30. So the court doesn't have a heart attack, I'd surmise. In the motion, they say it happened like this:

Pursuant to our Employment Application and Retention Order, with respect to this engagement, all other services, as requested by the Company, and agreed to by MFC, shall be billed at MFS's normal and customary rates less a 10% discount as determined under the rate structure.

It may be in there, and I just missed it, but wasn't Mesirow already paid a retainer of $35,000 that the Order said should be used as an offset? So. Reasonable and necessary. Not to mention a bargain. Especially, a cynic might say, if the goal is to drain SCO of all possible assets before the trial in Utah finishes up. Or perhaps it's just natural to some to check a man's pockets and take what you can, when you find him battered and dying by the side of the road.

Yes, kidding around, but this is a lot of money, any way you look at it. If you look at the breakdown, a lot of it was about the failed York deal. At least half, I'd say of the hours, and a chunk of the expenses, in that the bill indicates someone had to go to New York City to negotiate and such with the proposed buyer. And there were trips to Utah too. Lots of them. They reduced their hourlies, I gather, for travel, but still you see on Exhibit C $27,687.95 for air fare and $6,569.42 for ground transportation. I guess rental cars in Utah and cabs in New York City. Exhibit E confirms but there were train rides too, like from NYC to Delaware. And parking fees and car service. So any time you see someone in court you can't identify, guess Mesirow. Heavens, but SCO surely has a lot of hand-holding going on as it sinks beneath the waves. No one seems to be pulling upward though.

Lodging is $19,875.01. That sounds like NYC, all right. And indeed you see a couple of employees spent three nights there. But poor Lyle Bauck spent 28 nights in Provo instead, apparently all alone. The meals are all breakfast or dinner. I can just imagine the memo: "We're having to bill 10 percent less than our usual. Skip lunch." I'm joking, but it is rather odd that Exhibit E doesn't show a single lunch, with so many flying here and there since mid-September. No phone charges either.

Exhibit D gives you the full breakdown of the hours spent by each employee, at a whopping 53 pages. They probably think no one will go through it all, item by item, but knowing you guys as I do, I'm guessing someone will do a spreadsheet to check if the Mesirow items correspond with previously itemized bills from others so as to verify if, when Mesirow says an employee met with Berger Singerman, Berger Singerman's bills agree. Uh oh. Now what have I done? They'll start billing for verification of truth next. They're already charging for checking PACER.

That failed York deal sure ended up costing an arm and a leg. As Mesirow economically explains in the section about actual and necessary expenses, the services rendered "were necessary and beneficial to the estates at the time such services were rendered." In light of the outcome, not so much, one might suggest. I guess that's how economic advisors says, "it seemed like a good idea at the time." Didn't even one of these experts, not just Mesirow but anybody, warn SCO that the odds of the deal being approved as submitted were somewhere between nil and not very likely? Remember I said, when I first read that emergency motion, that I didn't think it would fly?

How come all these fancy professionals couldn't see it and save the estate some money and effort? SCO should seriously hire me instead to give them some *real* advice. I don't know why none of them could see it, or maybe they did but were ignored, but it's the $64 thousand dollar question, as they used to say -- or now, with inflation, it's the half a million dollar question. I have to say, I love bankruptcy court, where money simply flows like wine, and the very best from the cellar. And 10 per cent off. What's not to love? And here I am tap tap tapping away morning, noon and night for nothing. Forsooth, there's an imbalance in the universe, m'lords. And yet, I'm the one that keeps calling it right.

Mesirow warns there might be *more* expenses bills coming in later, due to "delays caused by accounting and processing procedures." And if no one objects to this bill, which is likely, or unless the judge holds a hearing, which seems unlikely, this bill is home free. There doesn't seem to be a lot of "what were you thinking?" in bankruptcy court unless someone objects or intervenes.

The filings:

280 - Filed & Entered: 12/20/2007
Application for Compensation
Docket Text: Monthly Application for Compensation (First) and Reimbursement of Expenses as Financial Advisors to the Debtors for the Period from September 14, 2007 through November 30, 2007 Filed by Mesirow Financial Consulting, LLC. Objections due by 1/9/2008. (Attachments: # (1) Notice # (2) Exhibit A# (3) Exhibit B # (4) Exhibit C# (5) Exhibit D# (6) Exhibit E# (7) Certificate of Service and Service List) (Werkheiser, Rachel)

Update: As you see, no one objected to Dorsey & Whitney's bill:

281 - Filed & Entered: 12/21/2007
Certificate of No Objection
Docket Text: Certificate of No Objection Regarding First Interim Application of Dorsey & Whitney LLP for Period September 14, 2007 to October 31, 2007 (related document(s)[238] ) Filed by Dorsey & Whitney LLP. (Schnabel, Eric)


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