In re Mirant Corp., 03-46590 DML-11.

CourtUnited States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Northern District of Texas
Citation354 B.R. 113
Docket NumberNo. 03-46590 DML-11.,03-46590 DML-11.
PartiesIn re MIRANT CORPORATION, et al., Debtors.
Decision Date21 November 2006
354 B.R. 113
In re MIRANT CORPORATION, et al., Debtors.
No. 03-46590 DML-11.
United States Bankruptcy Court, N.D. Texas, Fort Worth Division.
November 21, 2006.

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Allison Kirschner, Bryan A. Merryman, Charles C. Kline, Claudine Columbres, Daniel Ginsberg, Erika Ruiz, Erin L. Connolly, Felix L. Lopez, Forrest W. Hunter, Frank L. Eaton, Gerard Uzzi, Glenn Kurtz, Jack E. Pace, III, Jason D, Schauer, Jennifer M. Driscoll, Kathleen Pakenham, Linda M. Leali, Maria K. Pum, Robert A. Milne, Robert P. Sweeter, Scott A. Griffin, Stephen J. Vitola, Susan K. Chandler, Thomas E. Lauria, Timothy V. Mulvey, Tristram J. Mallett, Wayne A. Cross, White & Case LLP, Miami, FL; Alison S. Talbert, Eric N. Macey, Stephen J. Siegel, Novack and Macey LLP; Amy M. Walters, Frances Anne Smith, Jason B. Binford, Judith Elkin, Mark Joseph Elmore, Robin Eric Phelan, Haynes & Boone LLP, Dallas, TX; Benjamin D. Singer, Douglas P. Baumstein, Heather K. McDevitt, Howard S. Beltzer, Kara F. Headley, Melonie Jurgens, Paul B. Carberry, Thomas M. Biesty, Vincent R. FitzPatrick, Jr., White & Case, New York City; Brian K. Fielden, Alston & Bird, Atlanta, GA; Craig H. Averch, Kerri A. Lyman, Ronald Kevin Gorsich, White & Case, LLP, Los Angeles, CA; Dan Woods; Daniel A. Mullen, McDermott Will & Emery LLP, Chicago, IL; Elliot D Schuler, Baker and McKenzie, Dallas, TX; G. Larry Engel, White & Case, LLP, San Francisco, CA; Ian T. Peck, John David Penn, Haynes & Boone, LLP, Fort Worth, TX; J. Robert Forshey, Forshey & Prostok, LLP, Fort Worth, TX; Jeff P. Prostok, Forshey and Prostok, Ft. Worth, TX, John H. Sturc, Gibson, Dunn & Crutcher, Washington, DC; Kristina R. Juntunen; Maja Fabula; Michele C. Campbell, White & Case, Los Angeles, CA; Paul E. Godinez; Richard L. Miller, II, Novack and Macey; William H. Hughes, Jr., Alston & Bird LLP, Atlanta, GA., for Mirant Corporation, aka Southern Energy, Inc., aka SEI Holdings, Inc., Atlanta, GA, Debtor in Possession.

Marie Schmidt, William T. Neary, United States Trustee, Dallas, TX; George McElreath, Office of the United States Trustee, Dallas, TX, for UST U.S. Trustee, Dallas, TX.

Gregory M. Petrick, Cadwalader, Wickersham & Taft, New York City, Thomas Rice, Cox & Smith, San Antonio, TX, for MAGI Committee, Creditor Committee.

Andrew S. Dash, Danielle Bennett, Jeffrey L. Jonas, John P. Biedermann, Leslie

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Scharf, Robert L. Harris, Brown Rudnick Berlack Israels LLP, New York City, Brandon C. Recupero, William R. Baldiga, Brown Rudnick Berlack Israels LLP, Boston, MA, Eric J. Taube, Mark Taylor, Hohmann, Taube & Summers, LLP, Austin, TX., for Officials Committee of Equity Security Holders, Hohmann, Taube & Summers, LLP, Austin, TX, Creditor Committee.


DENNIS MICHAEL LYNN, Bankruptcy Judge.

The court today must rule on the compensation of professionals in these cases. Before the court are the final applications for compensation and reimbursement of expenses (each an "Application" made by an "Applicant") filed on behalf of professionals retained by Debtors, the Official Creditors' Committee for Mirant Corporation ("Mirant" and the "Corp Committee"), the Official Creditors' Committee for Mirant Americas Generation, LLC ("MAG" and the "MAG Committee"), the Official Committee of Equity Owners for Mirant Corporation (the "Equity Committee" and, together with the Corp Committee and the MAG Committee, the "Committees"), and the Examiner, as well as the Application filed by the Examiner on behalf of himself and his firm. Also pending are Applications filed pursuant section 503(b) of the Bankruptcy Code (the "Code")1 by Phoenix Partners, LP, Phoenix Partners, III, LP and Phoenix International (BVI) Ltd. (collectively "Phoenix"), the unofficial committee of MAG noteholders (the "MAG ad hoc Committee"), the unofficial committee of Mirant bondholders (the "Corp ad hoc Committee"), certain Mirant convenience class creditors identified below (the "Convenience Creditors") and Matt Wilson, on behalf of himself and other shareholders ("Wilson").

Finally, the court must consider enhancement requests pursuant to the "Motion of Mirant Corporation and Affiliated Debtors, the Official Committee of Unsecured Creditors of Mirant Corporation, the Official Committee of Unsecured Creditors of Mirant Americas, Generation, LLC and Counsel for Each of the Foregoing for a Fee Enhancement and Joint Reply to Response of the Official Committee of Equity Security Holders to the Statements of Positions with Respect to the Payment of Fee Enhancements in these Cases," (the "Pool Motion") and the "Application of Brown Rudnick Berlack Israels LLP and Hohmann, Taube & Summers, L.L.P. at Request of Official Committee of Equity Security Holders for Bonus Fee Enhancement To Be Awarded Pursuant to 11 U.S.C. § 330(A) [sic]" (the "Bonus Application"), and a request by the Examiner and his counsel for fee enhancements.2

The court received testimony, documentary evidence and argument concerning the Applications in hearings conducted June 5-7, 12, 13, and 16, 2006 (the "Hearing").3 Evidence considered by the court

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will be identified when appropriate below. Various parades have filed briefs in support of or opposed to certain of the Applications. Because the court must consider the entire course of these cases to dispose of the Applications, the court here incorporates the entire record of these cases (and their spawn of adversary proceedings) since their commencement.4

The Applications are subject to the court's core jurisdiction pursuant to 28 U.S.C. §§ 1334 and 157(b)(2). This memorandum opinion comprises the court's findings of fact and conclusions of law respecting the Applications, the Bonus Application, the Pool Motion, and the Examiner's enhancement request. Fed. R. Bankr.P. 9024 and, 7052.

I. Background

A. Introduction

Beginning on July 14, 2003, these chapter 11 cases were filed at various times by 84 Debtors.5 On July 25, 2003, the United States Trustee (the "UST") appointed the MAG Committee and the Corp Committee. On September 18, 2003, the UST appointed the Equity Committee. On April 7, 2004, the court directed appointment of an examiner and, on April 13, 2004, approved the UST's selection of William Snyder as the Examiner.

In late 2004, the Committees, Debtors and the court determined that assessment of the worth of Debtors' enterprise through a valuation hearing was a necessary step to establish whether Mirant's stockholders were entitled to participate in Debtors' reorganization. The Debtors filed the first version of the Plan on January 19, 2005, and a second version on March 25, 2005. The court commenced the hearing on valuation on April 18, 2005 (the "Valuation Hearing"). In addition to Debtors and the Committees, Phoenix and Wilson actively participated in the Valuation Hearing.

Following the Valuation Hearing the court issued two letter rulings on June 30 and July 26, 2005 (the "Letter Rulings"), in which it directed Curt Morgan, Mirant's Executive Vice President ("Morgan"), together with Tim Coleman, a representative of Blackstone Group ("Blackstone" and "Coleman"), and the Examiner to recalculate Debtors' total enterprise value ("TEV") based on certain changes to the models used by Debtors and Blackstone to determine, respectively, the cash flow of Debtors' enterprise and Debtors' TEV. The court also directed the Examiner to explore the possibility of a plan consensual among the parties.

As a result of negotiations among Debtors, the Committees, the MAG ad hoc Committee, the Corp ad hoc Committee and Phoenix, a term sheet for a consensual version of the Plan was signed on September 8, 2005, and recalculation of Debtors' TEV ceased at that time at the court's direction. The Plan in its final form resulted, and confirmation occurred on December

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9, 2005.6 Of the parties whose professional fees are now at issue, only Wilson opposed confirmation of the Plan.

B. Factual Background

The factual context of these cases has been fully described in numerous prior opinions.7 Suffice it to say at this point that Debtors' administratively consolidated chapter 11 cases rank among the largest bankruptcy proceedings in American history. To the court's knowledge, Debtors' cases are the largest ever to provide 100% satisfaction to all creditors and a substantial return (property worth roughly $1.50 per share as of the Plan's effective date) to public shareholders.

Debtors' chapter 11 cases are complicated on a series of levels. Debtors' business is complex. As an energy merchant active in a number of market-places, both nationally and internationally, Debtors generate and dispatch power and provide electric capacity through a complex, regulated market mechanism.8 Debtors also have actively traded in the commodities market. Though principally concerned with purchase and sale of commodities critical to their core business such as fuels, power and emission credits, Debtors, through Mirant Americas Energy Marketing, LP ("MAEM"), in the past bought and sold other commodities such as newsprint for profit.9

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Debtors are subject to regulation by, inter alia, the Federal Energy Regulatory Commission ("FERC"), state power authorities, federal and state environmental agencies, various independent system operators10 and government agencies in the Philippines and Caribbean. Owning numerous power plants, the Debtors or their affiliates are obligated to taxing authorities in more than a dozen states and several countries.

Debtors' corporate structure is best described as Byzantine. Debtors' business has been sliced and diced in a fashion hardly rational.11 Significant financing existed at, inter alia, the Mirant, Mirant Americas, Inc., MAG, Mirant Mid-Atlantic, LLC ("MIRMA"), MAEM, and foreign subsidiary levels.12 Unraveling intercompany...

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