EFI judge slashes lawyer fees
April 23, 2009
By KAREN VELIE
A federal bankruptcy judge slashed fee requests and ordered professionals working on the Estate Financial Inc. (EFI) bankruptcy to practice frugality in an attempt to protect assets for EFI investors at a hearing on Wednesday in Santa Barbara Federal Bankruptcy Court.
“I don’t want to see money frittered away on fees,” Judge Robin Riblet said. “No one should be surprised; I took a cleaver to the fees.”
Riblet capped hourly professional fees for accountants and attorneys at $500 an hour, and paralegal fees at $150 per hour.
In addition, associates charging the estate to chat to one another may only charge fees for one. Riblet also than canceled reimbursement for meals related to working late hours, ordered trustees representative Samuel Maizel to cut three associates from the case, and asked for a reduction in professionals paid for court appearances.
Accountants and attorneys working for the bankruptcy court were seeking a total of almost $4 million representing seven months of poring over EFI records, analyzing investments, and selling assets. They were awarded approximately $3.3 million.
“I will allow these fees let out in drips and drabs as it comes in,” Riblet added.
In June, creditors forced EFI into Chapter 11 bankruptcy and asked the court to appoint a receiver in an attempt to protect their investments. About a week later, EFI owners Karen Guth and Joshua Yaguda voluntarily placed EFI Mortgage Fund into Chapter 11.
On October 16, Guth and Yaguda were arrested and accused of 26 felonies. They remain in county jail with bail set at $5 million each.