Objection Filed Over Payment to Counsel in Diamond’s Chapter 11 Due to Fear of Insolvency
For much of Diamond‘s chapter 11 process, lawyers, counsel, and more have submitted filings for payment for their work with little fanfare. The filings and payments are in the millions at this point over the 9 months of the process. Now, things are shifting as objections are being filed over the motions with one coming today.
The Consignment Group has submitted a limited objection over the final order for the third monthly fee application of Stephenson Harwood LLP, Special Counsel to Diamond.
In the motion, the Consignment Group makes it clear they don’t object to the compensation but the fact the payment would be immediate.
The Consignment group states “there exists a substantial risk of administrative insolvency in the Debtors’ cases.” In short, Diamond might run out of money and can’t pay anyone it owes.
Instead, the Consignment group feels the final award shouldn’t be paid immediately without protections in place “to ensure a ratable distribution among all similarly situated administrative claimants in the event of administrative insolvency.”
In short, they want to make sure that all of Diamond’s money doesn’t go to lawyers and consultants and the creditors, aka publishers, should be getting some of what they’re owed too. There has been a growing concern, even expressed by Diamond itself, that they won’t be able to make it through this process without running out of money.
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