Professionals in Pioneer Case File Claims
The law firm that has represented Pioneer Mortgage in U.S. Bankruptcy Court in San Diego since January is seeking $1.3 million for fees and costs accumulated since the La Mesa-based company entered bankruptcy proceedings.
Accountants, a court-approved examiner and other law firms that have played key roles in the complex bankruptcy case are also seeking $939,883 in fees, according to papers filed in bankruptcy court.
Although lawyers, accountants and other professionals have been working on the controversial bankruptcy case since January, none of the firms has been paid.
The fee applications, which now must be approved by U.S. Bankruptcy Judge James Meyers, probably will ignite a storm of protest from Pioneer investors, who have not received monthly interest payments from Pioneer since the company encountered severe financial problems in late 1990.
Some investors fear that the professionals’ bills will reduce the supply of cash that Pioneer might otherwise use to reimburse 2,500 investors who invested about $200 million through Pioneer.
However, professionals associated with Pioneer have stressed that their fees can only be paid through “free funds,” cash that is not obligated to Pioneer investors. Right now, those professionals note, cash-strapped Pioneer does not have $2 million on hand to pay professional fees.
Investors were attracted to Pioneer by promised returns of 12% or more on their money. But the high returns were counterbalanced by the riskiness of the investments. When California’s real estate market soured, many of the real estate loans that Pioneer arranged for its investors ran into trouble.
More than half now are classified as non-performing, and most investors fear they will recoup very little of their money.
Meyers in September will rule on the first fee application submitted by Pioneer’s accountants and lawyers and the examiner. Meyers has the option of approving, reducing or setting aside the requests.
The fee applications were submitted to Meyers by the Los Angeles office of Jones, Day Reavis & Pogue, a law firm that has represented Pioneer in the bankruptcy proceedings. Jones Day is seeking $1.3 million for “interim” work completed by June 30.
Milberg & De Phillips, a San Diego-based law firm that also represents Pioneer in the bankruptcy proceedings, is seeking $134,253. Attorney Leon Vickman is seeking $32,892.
J. Cole Francis, the examiner, is seeking $84,803. Latham & Watkins, a law firm that represents Francis, is seeking $360,067. Jeffrey L. Owens, an accountant for the examiner, is seeking $5,200.
Baker & McKenzie, a law firm that represents Pioneer’s court-appointed creditor committee, is seeking $322,668.
