By Count Friedrich von Olsen
For those of you who may or may not have been paying attention, the City of San Bernardino has at last structured its way out of bankruptcy almost five years after filing for Chapter 9 protection. It was able to do this by saving $350 million through the bankruptcy process. One might ask: How did this work? It worked this way: a whole bunch of the city’ creditors, vendors, investors and bondholders, people who in good faith worked for the city or provided goods and materials, got stiffed. Some were stiffed more than others. Some got 50 cents on the dollar of what they were owed. A significant number were provided 40 percent. Some were given one percent. Yes, one percent, one penny on the dollar. This included individuals injured by the city who filed suit and attained judgments against the city in a court of law. Others who lost a whole lot of money were the purchasers of certain types of securities that were backed by what was formerly the city’s good name. Did I fail to mention that many of those who will get paid won’t be paid in full for 20 years?
This foray into Chapter 9 and not paying people what they are owed, but apparently owed no more, was expensive. How expensive? Let’s see: $25,193,340 and counting. That is how much the city is paying or scheduled to pay various consultants in the bankruptcy assistance business who lent – well not exactly lent but sold – San Bernardino a hand. Bartel Associates, LLC was paid $214,050; Bienert Miller & Katzman PLC took in $441,340; The Law Office of Linda Daube received $644,317; Management Partners Inc. got off with $1,466,190; Rust Omni pulled down $284,646; Stradling Yocca Carlson & Rauth hit the jackpot for $19,470,878; Urban Futures, Inc. did alright for itself at $2,327,665; and McDermott Will and Emery cashed in for $283,103. Cha-Ching!
Is it too late for me to sign on as a consultant with San Bernardino? I’ll work for free! I have a plan to save the city not just $350 million but $374,941,406.60. Here is how I propose to do it: The city will merely add Bartel Associates, Bienert Miller & Katzman, Linda Daube, Management Partners, Rust Omni, Stradling Yocca Carlson & Rauth, Urban Futures, and McDermott Will and Emery to the list of creditors to get stiffed, at, let’s say, the aforementioned generous once cent on the dollar rate. That means that instead of paying out the full $25,193,340 in bankruptcy assistance consulting fees these guys and gals say they are due, the city will lay out $251,933.40, a further net savings of $24,941,406.60. I am sure that if it is explained to them that they need to make this demonstration of cooperation to ensure that the solution they have drawn up is fairly employed, they will understand and go along. After all, what is good for the goose, is also good for the gander…
Forum… Or Against ’em
By Count Friedrich von Olsen