As Brazos Electric Cooperative edges closer to a solution in its $1.9 billion bankruptcy case, the Waco-based power retailer is discovering the cost of getting a resolution is not cheap.
The lawyers and financial advisors working on the Brazos restructuring for the past 15 months have already billed nearly $80 million for their services, according to court records.
The final price tag will likely exceed $100 million, according to lawyers involved in the case.
In all, more than 150 lawyers at a handful of law firms – Norton Rose Fulbright, O’Melveny & Myers, Porter Hedges, Foley, Eversheds Sutherland and Kramer Levin – have worked on the Brazos bankruptcy for rates ranging from $400 an hour to about $1,700. Each of those firms have already pocketed millions of dollars for their work on the bankruptcy.
The six law firms have filed for $53,515,954 in fees and expenses.
Two financial advisory firms, Berkeley Research Group and FTI Consulting, have hit Brazos with tabs that exceed $10 million each.
In total, the financial advisors fees and expenses have hit $25,950,951.
Two law firms playing key roles in the restructuring, Munsch Hardt and Kirkland & Ellis, have not yet filed fee requests with the bankruptcy court, though both are expected to have multimillion-dollar bills.
Brazos filed for bankruptcy protection March 1, 2021, after the Electric Reliability Council of Texas hit the power provider with a $1.9 billion bill for electricity sold to Brazos customers during Winter Storm Uri in February 2021.
In its bankruptcy petition, Brazos argued that ERCOT charged electric providers a staggering – and unreasonable – rate of $9,000 per megawatt-hour – hundreds of times the normal rate – during the storm. ERCOT argued the price was justified, given the extraordinary market conditions created by the storm. The agency also claims it had no choice but to impose the high rate because it was ordered to do so by the Texas Public Utility Commission.
Brazos initially asked U.S. Chief Bankruptcy Judge David Jones of Houston to slash $1.1 billion from the amount it must pay ERCOT.
To arm for battle, all sides hired big gun lawyers and firms.
Brazos chose Dallas bankruptcy expert Lou Strubeck to lead its charge. Strubeck, who has been involved in high profile restructurings including Boys Scouts of America, Chesapeake Energy, Sabine Oil and Gas, Gold’s Gym, Enron and WorldCom, was a partner at Norton Rose Fulbright when he first filed the bankruptcy.
In June 2021, he jumped to O’Melveny & Myers to open its Dallas office. Strubeck, whose hourly rate is $1,225, is working with O’Melveny counsel Nick Hendrix ($810 an hour), who made the move from Norton Rose Fulbright with Strubeck last year. Since last June, O’Melveny has billed $4.4 million for its work for Brazos.
Norton Rose Fulbright partners James Boland ($970 an hour) and James Copeland ($935 an hour) are co-leading the representation of Brazos. The firm has had a couple dozen lawyers working on the matter and has billed $17.4 million to Brazos during the first 15 months of the bankruptcy litigation. In addition, Brazos paid Norton Rose Fulbright $1.25 million for legal services during the 90 days prior to the March 1, 2021, filing.
Brazos hired Foley & Lardner as its special counsel on conflicts. Led by partner Holly O’Neil ($990 an hour), Foley has billed Brazos nearly $3.8 million through May 2022.
Eversheds Sutherland was also brought on as special counsel. The firm’s two lead lawyers on the matter are Austin partners Lino Mendiola III ($790 an hour) and Michael Boldt ($610 an hour). In total, Eversheds has billed Brazos nearly $6.2 million since March 1, 2021.
Two law firms and one financial advisor are representing the unsecured creditors. At $1,685, New York-based Kramer Levin Naftalis & Frankel partner Thomas Mayer has the highest hourly rate of the lawyers who have filed their bills with Judge Jones so far. His partners Ronald Greenberg ($1,425 an hour) and Jennifer Sharret ($1,215 an hour) are not far behind.
As of May 31, Kramer Levin had billed $16,756,168.
Porter Hedges serves as local counsel for the unsecured creditors. Led by partner John Higgins ($865 an hour), Porter Hedges has submitted nearly $5 million in fees and expenses so far.