Understanding the current state of affairs & next steps in the Howrey bankruptcy

The estate of the venerable – and since March 15, 2011 defunct and bankrupt – global antitrust law firm Howrey LLP will likely not be paying out most, if any, of its unsecured creditors.

According to sources familiar with the current state of the bankruptcy proceedings – including the value of settlements to-date, claims made, and so on – the estate’s primary secured creditor, Citibank, is owed around $700,000.  General unsecured claims constitute the bulk of outstanding debt, amounting to about $94.5 million.  Then there are the administrative & priority claims, which technically lie in a gray zone between secured and unsecured claims: “Priority unsecured claims are claims that are not secured by collateral but that have priority over other debts under federal law. These debts have priority typically for public policy reasons — that is, the well-being of the public depends upon these debts being paid.” (Source.) The priority claims are $15 million.

The administrative claims (debts incurred, with court approval, after the March 2011 bankruptcy filing, including items such as  costs of preserving the estate, wages, salaries, court costs, lawyers’ fees, accountants’ fees, trustees’ expenses, etc.) amount to circa $11.3 million.

Prior to any distribution being made to creditors, the administrator will attempt to make further collections of estate assets and to resolve certain creditor claims.

A new status report should be issued by the trustee soon.  There are also public bankruptcy filings that may be consulted by anyone interested.