John Wm. Butler, Jr. Timothy P. Olson Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive Chicago, Illinois 60606-1285 (312) 407-0700 J. Gregory St. Clair (JS-8344) Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-2000 Special Counsel for Debtors and Debtors-in-Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re THE WARNACO GROUP, INC., et al. , Debtors. Chapter 11 Case Nos.: 01-41643 (RLB) through 01-41680 (RLB) (Jointly Administered) FIFTH AND FINAL APPLICATION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP AND ITS AFFILIATED LAW PRACTICES, SPECIAL COUNSEL FOR THE WARNACO GROUP, INC. AND CERTAIN OF ITS SUBSIDIARIES, SEEKING FINAL ALLOWANCE OF COMPENSATION AND REIMBURSEMENT OF EXPENSES UNDER 11 U.S.C. §§ 330 AND 331 FOR THE PERIOD NOVEMBER 1, 2002 THROUGH FEBRUARY 4, 2003 AND FINAL APPROVAL OF THE FIRST THROUGH FOURTH INTERIM APPLICATIONS
Transcript
John Wm. Butler, Jr.Timothy P. OlsonSkadden, Arps, Slate, Meagher & Flom (Illinois)333 West Wacker DriveChicago, Illinois 60606-1285(312) 407-0700
J. Gregory St. Clair (JS-8344)Skadden, Arps, Slate, Meagher & Flom LLPFour Times SquareNew York, New York 10036(212) 735-2000
Special Counsel for Debtors and Debtors-in-Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
In re
THE WARNACO GROUP, INC., et al.,
Debtors.
Chapter 11
Case Nos.: 01-41643 (RLB) through 01-41680 (RLB)
(Jointly Administered)
FIFTH AND FINAL APPLICATION OF SKADDEN, ARPS,SLATE, MEAGHER & FLOM LLP AND ITS AFFILIATED
LAW PRACTICES, SPECIAL COUNSEL FOR THE WARNACOGROUP, INC. AND CERTAIN OF ITS SUBSIDIARIES, SEEKING
FINAL ALLOWANCE OF COMPENSATION AND REIMBURSEMENTOF EXPENSES UNDER 11 U.S.C. §§ 330 AND 331 FOR THE
PERIOD NOVEMBER 1, 2002 THROUGH FEBRUARY 4, 2003 AND FINAL APPROVAL OF THE FIRST THROUGH FOURTH INTERIM APPLICATIONS
ii
Name of Applicant: Skadden, Arps, Slate, Meagher &Flom LLP and Its Affiliate LawPractices
Authorized to Provide Professional Services To:
The Warnaco Group, Inc. and cer-tain of its subsidiaries and affili-ates
Date of Retention Order: June 11, 2001
Period for which compensation and reimbursement is sought: June 11, 2001 through February 4,
2003
Approximate Time Spent Preparing PriorFee Application: 58.6 hours
Approximate Dollar Value of Time SpentPreparing Prior Fee Application: $17,336
Is Time Spent in Preparing the Prior FeeApplication Included in the Total HoursDescribed in the Application? Yes
Fifth Period Final
Amount of Voluntary Reduction in Compensation and Reimbursement ofCharges and Disbursements: $187,066 $1,404,011
Amount of Compensation Sought As Actual, Reasonable and Necessary: $1,830,673 $9,853,740
Amount of Expense Reimbursement SoughtAs Actual, Reasonable and Necessary:
$42,433plus V.A.T. of$17,515
$564,233plus V.A.T. of$438,704
This is a: interim X final application.
1 Subsequent to filing certain of its prior fee applications, but prior to thehearings to consider such applications, Skadden agreed to further voluntaryreductions or deferrals in the aggregate amount of $724,190 with respect tocertain amounts set forth in the first and second interim fee applications (asdescribed in this Application). This amount represents the variance betweenthe amount requested and the amount awarded set forth in this summary chartand includes a voluntary reduction extended by Skadden with respect tocertain fees in the amount of $130,000 and a deferral of fees in the aggregateamount of $594,290 with respect to the Litigation (Insurance Recovery)matter included in the first and second interim fee applications. The Debtors’insurance carrier reimbursed Skadden for the fees incurred in connection withthe Litigation (Insurance Recovery) matter, and, in connection therewith,Skadden received duplicate payments from the Debtors and the insurancecarrier in the aggregate amount of $133,056. Such amount has been creditedto the Debtors’ retainer account held by Skadden.
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PRIOR FEE APPLICATIONS
Prior Fee
Application
Date
Filed
Period
Covered
Interim Fees
Requested
(Awarded)1
Interim
Expense
Reimbursement
Requested
(Awarded)1
Interim
Vat Ta xes
Requested
(Awarded)
First 12/21/01 6/11/01 -
10/31/02
$2,893,644
($2,564,652)
$197,464
($197,464)
$158,900
(158,900)
Second 4/20/02 11/1/01 -
2/28/02
$3,296,615
($2,901,438)
$174,823
($174,291)
$170,210
($170,210)
Third 8/20/02 3/1/02 -
6/30/02
$1,234,431
(1,234,431)
$80,879
($80,879)
$51,349
($51,349)
Fourth 12/20/02 7/1/02 -
10/31/02
$1,322,639
(1,322,639)
$69,166
($69,166)
$40,730
(40,730)
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
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TIME SUMMARY TO FIFTH AND FINAL FEE APPLICATION OFSKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
AND ITS AFFILIATED LAW PRACTICES JUNE 11, 2002 - FEBRUARY 4, 2003
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
PARTNERS
Alan C. Myers 1975 $702 166.9 $ 121,004 689.9 $ 484,574
Henry P. Wass erstein 1966 $659 – – 550.2 $ 362,686
Charles M. Fox 1983 $666 142.3 $ 98,900 323.1 $ 215,054
Christopher L. Baker 1983 $691 – – 232.8 $ 160,845
John Wm . Butler, Jr. 1980 $665 – – 216.0 $ 143,565
Kenn eth J. Bialk in 1953 $691 – – 180.0 $ 124,404
Thomas W . Greenberg 1994 $505 123.5 $ 64,220 211.3 $ 106,704
Michael A. Lawson 1978 $611 27.8 $ 17,792 164.6 $ 100,523
Alan G. Straus 1978 $655 68.5 $ 44,868 82.6 $ 54,104
John P. Furfaro 1980 $614 17.2 $ 11,266 75.6 $ 46,417
Peter E. Greene 1971 $687 36.5 $ 25,368 63.6 $ 43,701
J. Grego ry St. Clair 1990 $488 – – 40.5 $ 19,778
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
Jane E. Hood Foreign $416 18.7 $ 8,509 542.4 $ 225,845
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
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Nichola s J. Azis Foreign $470 – – 377.1 $ 177,237
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
Andrew Fowler 1998 $395 41.0 $ 16,195 41.0 $ 16,195
Thomas A. Ferree 2002 $240 66.1 $ 15,864 66.1 $ 15,864
Leon Shelley Foreign $265 – – 53.9 $ 14,284
Pablo Berbel Foreign $322 28.8 $ 9,648 41.9 $ 13,513
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
viii
Stuart C. Cawthorn Pending $240 56.1 $ 13,464 56.1 $ 13,464
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
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Nada M. Payne 2000 $375 10.1 $ 3,788 10.1 $ 3,788
Wolfgang Bergthaler Foreign $265 11.5 $ 3,048 11.5 $ 3,048
Total Associates 3,709.4 $ 1,316,336 18,833 .9 $ 6,582,745
PARAPROFESSIONALS
Kimberly A. Schoenbacher – $145 – – 713.5 $ 103,649
Julie B. Bond – $98 – – 928.4 $ 90,852
Lydia Hued – $168 170.8 $ 33,306 538.1 $ 90,597
Clark S. Taylor – $160 – – 516.8 $ 82,688
Jose Nevado – $128 12.3 $ 1,968 340.1 $ 43,542
Stephan ie C. Sm ith – $110 – – 361.0 $ 39,710
Sonet Khong – $87 54.1 $ 5,951 354.6 $ 30,687
Ashleigh Blaylock – $109 – – 273.0 $ 29,676
Marian A. Miller – $110 – – 260.3 $ 28,633
Molly M . Harsh – $138 – – 204.2 $ 28,117
Ani Koucheva – $150 – – 132.0 $ 19,800
Solon Phillips – $148 – – 130.0 $ 19,272
Carly Glover – $110 145.0 $ 15,950 145.0 $ 15,950
Elizabeth A. Burakowski – $130 – – 122.6 $ 15,938
Guilain H ippolyte – $110 – – 137.0 $ 15,070
Dean Dent, II – $110 136.9 $ 15,059 136.9 $ 15,059
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
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Vassili Ka rageorg is – $80 – – 176.6 $ 14,128
Valerie Schindler – $130 – – 102.3 $ 13,299
Christopher Ebe – $150 – – 86.4 $ 12,960
Thomas Leineweber – $104 11.9 $ 1,547 96.1 $ 9,967
Angelly Shahani – $151 43.2 $ 6,912 63.2 $ 9,512
Jonathan F. Kramer – $130 – – 65.7 $ 8,541
Shannon Lazzarini – $130 – – 59.5 $ 7,735
Anthony O. Humphrey – $80 – – 76.4 $ 6,112
Linda Robertson – $70 – – 78.1 $ 5,467
Albane Maillard-Gosset – $80 – – 67.3 $ 5,384
Peter M. Langland-Hassan – $130 – – 39.3 $ 5,109
Michael Quartararo – $160 – – 30.8 $ 4,928
Rose M. Rama – $160 – – 30.3 $ 4,848
Anderson Lank ford – $143 – – 33.3 $ 4,771
Daniel R. Friedman – $130 – – 35.6 $ 4,628
Craig J. D ershow itz – $150 – – 30.6 $ 4,590
Jennifer K. Lawrence – $150 – – 30.3 $ 4,545
Georgina King – $160 27.5 $ 4,400 27.5 $ 4,400
Erika N. Pont – $143 – – 30.7 $ 4,375
Brian D. Stuebner – $150 – – 25.7 $ 3,855
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
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Nicholas Gulan – $110 – – 32.6 $ 3,586
Cassaundra Boyd – $116 – – 28.1 $ 3,271
Michael J. Holder – $110 – – 29.2 $ 3,212
Abby Mollen – $130 – – 23.6 $ 3,068
Julie Gilchrist – $160 – – 18.0 $ 2,880
Gabrielle Biffar – $150 – – 18.2 $ 2,730
John Nowicki – $162 – – 16.8 $ 2,720
Keith Larock – $158 – – 17.0 $ 2,688
Daniel S. Carlton – $87 – – 29.1 $ 2,520
Joseph Drouillard, Jr. – $55 – – 45.1 $ 2,481
Omari Wa re – $110 21.7 $ 2,387 21.7 $ 2,387
Nicole Peart – $130 – – 18.0 $ 2,340
Sona Chung – $110 – – 20.5 $ 2,255
Valerie J. M artin – $130 – – 17.2 $ 2,236
Buzz Bovshow – $130 17.2 $ 2,236 17.2 $ 2,236
Nathale A uguste – $160 – – 13.4 $ 2,144
David J. Young – $130 – – 15.4 $ 2,001
Thinley Dorjee – $70 – – 28.5 $ 1,995
Rebecca Mayer – $110 17.2 $ 1,892 17.2 $ 1,892
Derek McKinney – $160 – – 11.7 $ 1,872
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
____________________* The blended rates set forth for certain professionals reflect the actual effective
average billing rate for the entire Case Period and incorporate a reducedbilling rate for nonworking travel time. The blended rate set forth within thefee application reflects the standard hourly rates for professionals under thebundled rate structure.
xii
Bella Burgos – $130 – – 14.0 $ 1,820
Mary Keogh – $150 11.9 $ 1,785 11.9 $ 1,785
Leila Afshar – $110 – – 16.0 $ 1,760
Lisa Winkler – $130 – – 13.4 $ 1,742
Susan Walker – $160 – – 10.7 $ 1,712
Kattie Kingsley – $80 – – 20.2 $ 1,616
Nathan D. Sm ith – $130 – – 12.0 $ 1,560
John Beaulieu – $130 11.6 $ 1,508 11.6 $ 1,508
Gisele M. Kotzer – $130 – – 11.2 $ 1,456
R.D. Rodenb urg – $70 – – 20.3 $ 1,421
Charles W. Reed – $80 – – 17.6 $ 1,408
Shawn M cClurg – $130 – – 10.5 $ 1,365
Lasalle Alcena – $130 10.2 $ 1,326 10.2 $ 1,326
Susan Cox – $70 – – 18.6 $ 1,302
Jason Karaffa – $80 – – 16.1 $ 1,288
Jennifer Law – $80 – – 15.0 $ 1,200
Marquea Rice – $80 – – 13.5 $ 1,080
Name
Year of
Admis-
sion Rate*
Fifth
Period
Hours
Fifth
Period
Amount
Case
Period
Hours
Case
Period
Amount
2 The total net fees requested in connection with this Application, $9,853,740,reflect accommodations extended by Skadden to the Debtors in the aggregateamount of $1,320,445 (which includes the $130,000 accommodation ex-tended by Skadden subsequent to the filing of the first interim fee applica-tion) and the reimbursement of Skadden by the Debtors’ insurance carriers inthe aggregate amount of $594,190 with respect to certain fees incurred inconnection with the Litigation (Insurance Recovery) matter. Thus, the grossfees incurred during the Case Period by Skadden total $11,768,375.
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Ashley Dobb in – $70 – – 11.6 $ 812
Anne Chap lin – $70 – – 10.5 $ 735
Total P arapro fessionals 691.5 $ 96,228 7,182.6 $ 885,810
TOTAL ALL PROFESSIONALS 5,041.9 $ 1,830,673 31,398 .4 $ 10,577,930
Disclosure Statement re: Plan of Reorg. 2.3 $ 1,001 113.0 $ 39,943
Litigation ( Genera l) – – 65.8 $ 18,512
Leases (Real Property) – – 35.8 $ 10,185
Business Operations – – 17.2 $ 6,700
Foreign Sub sidiaries (Non-V AT Service s) – – 14.1 $ 4,402
Tax Matters 2.4 $ 1,632 2.4 $ 1,632
TOTAL 5,039.5 $ 1,829,041 31,398 .4 $ 10,577,930
LESS PRIOR CARRIER REIMBURSEMENT $ (594,190)
LESS NET BILLED FEE ACCOMMODATION $ (130,000)
GRAND TOTAL $ 9,853,740
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
In re
THE WARNACO GROUP, INC., et al.,
Debtors.
Chapter 11
Case Nos.: 01-41643 (RLB) through 01-41680 (RLB)
(Jointly Administered)
FIFTH AND FINAL APPLICATION OF SKADDEN, ARPS,SLATE, MEAGHER & FLOM LLP AND ITS AFFILIATED
LAW PRACTICES, SPECIAL COUNSEL FOR THE WARNACOGROUP, INC. AND CERTAIN OF ITS SUBSIDIARIES, SEEKING
FINAL ALLOWANCE OF COMPENSATION AND REIMBURSEMENTOF EXPENSES UNDER 11 U.S.C. §§ 330 AND 331 FOR THE
PERIOD NOVEMBER 1, 2002 THROUGH FEBRUARY 4, 2003 AND FINAL APPROVAL OF THE FIRST THROUGH FOURTH INTERIM APPLICATIONS
Skadden, Arps, Slate, Meagher and Flom LLP and its affiliated law
practices (collectively, “Skadden”), special counsel for The Warnaco Group, Inc.
(“Warnaco”) and thirty-seven (37) of its affiliates (the “Affiliate Debtors”), debtors and
debtors-in-possession (Warnaco and the Affiliate Debtors collectively, the “Debtors” or
the “Company”) in the above-captioned cases (the “Reorganization Cases”), as well as
for certain of the non-Debtor subsidiaries and affiliates of the Debtors, equity of which
is held by the Debtors, submits this application (the “Application”) seeking final
allowance of compensation and reimbursement of expenses pursuant to 11 U.S.C.
§§ 330 and 331 for the period from November 1, 2002 through February 4, 2003 (the
2
“Fifth Period”) and for the entire period of these Reorganization Cases, June 11, 2001,
through February 4, 2003 (the “Case Period”). Skadden submits this Application for
(a) allowance of reasonable compensation for professional services rendered by
Skadden to the Debtors in their Reorganization Cases and (b) reimbursement of actual
and necessary charges and disbursements incurred by Skadden in the rendition of
required professional services on behalf of the Debtors. In support of this Application,
Skadden represents as follows:
BACKGROUND
1. On June 11, 2001 (the “Petition Date”), Warnaco and the
Affiliate Debtors filed voluntary petitions in this Court for reorganization relief under
chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1330, as amended
(the “Bankruptcy Code”). The Debtors continue to operate their business and manage
their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code. On June 11, 2001, this Court entered an order providing for the joint
administration of the Reorganization Cases, and these cases have been consolidated for
procedural purposes only.
2. An official committee of unsecured creditors (the “Committee”)
was appointed by the United States Trustee on June 20, 2001.
3. The Debtors filed their Joint Plan of Reorganization of the
Warnaco Group, Inc. and Its Affiliated Debtors and Debtors in Possession Under
3
Chapter 11 of the Bankruptcy Code (Docket No. 1429) (as subsequently amended, the
“Plan”) and the Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code
with Respect to the Joint Plan of Reorganization of the Warnaco Group, Inc. and Its
Affiliated Debtors and Debtors in Possession Under Chapter 11 of the Bankruptcy Code
(Docket No. 1430) (as subsequently amended, the “Disclosure Statement”).
4. On November 14, 2002, the Bankruptcy Court approved the
Disclosure Statement as containing adequate information in sufficient detail to enable
creditors to make an informed judgment about the Plan and set January 16, 2003 as the
date for the hearing to consider confirmation of the Plan. On January 16, 2003, the
Bankruptcy Court entered an order confirming the Plan, and the Effective Date of the
Plan occurred on February 4, 2003.
5. This Court has jurisdiction over this Application pursuant to 28
U.S.C. §§ 157 and 1334. This is a core proceeding within the meaning of 28 U.S.C.
§ 157(b)(2). Venue of these cases in this district is proper pursuant to 28 U.S.C.
§§ 1408 and 1409. The statutory predicates for the relief sought herein are sections 330
and 331 of the Bankruptcy Code.
6. This Application has been prepared in accordance with the
Amended Guidelines for Fees and Disbursements for Professionals in Southern District
of New York Bankruptcy Cases, adopted by the Court on April 19, 1995 (the “Local
Guidelines”) and the United States Trustee Guidelines for Reviewing Applications for
4
Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. § 330, adopted
on January 30, 1996 (the “UST Guidelines”; together with the Local Guidelines, the
“Guidelines”). Pursuant to the Local Guidelines, a certification regarding compliance
with the Guidelines is attached hereto as Exhibit A.
RETENTION OF SKADDEN
7. On the Petition Date, the Debtors applied (the “Retention
Application”) to the Court for an order approving the retention of Skadden, as their
special counsel, to perform legal services that were necessary to assist the Debtors and
their primary bankruptcy counsel, Sidley Austin Brown & Wood (the “General
Bankruptcy Counsel”) in connection with the Debtors’ corporate affairs. Specifically,
the Retention Application provided that Skadden would provide the following profes-
sional services to the Debtors:
(a) advise the Debtors and assisting General BankruptcyCounsel in connection with any contemplated sales of assets or business combinations,including the negotiation of asset, stock purchase, merger or joint venture agreements,the formulation and implementation of bidding procedures, the evaluation of competingoffers, the drafting of appropriate corporate documents with respect to the proposedsales, and counseling the Debtors in connection with the closing of such sales;
(b) advise the Debtors and assisting General BankruptcyCounsel in connection with the Debtors postpetition financing and cash collateralarrangements and negotiating and drafting documents relating thereto, providing adviceand counsel with respect to prepetition financing arrangements, and providing non-bankruptcy services and advice to the Debtors in connection with emergence financingand capital structure, and negotiating and drafting documents relating thereto;
5
(c) assist General Bankruptcy Counsel in advising theDebtors on matters relating to the evaluation of the assumption, rejection or assignmentof unexpired leases and executory contracts;
(d) advise the Debtors and assisting General BankruptcyCounsel in drafting a disclosure statement accompanying a plan of reorganization;
(e) provide non-bankruptcy advice to the Debtors andassisting General Bankruptcy Counsel with respect to legal issues arising in or relatingto the Debtors’ ordinary course of business including attendance at senior managementmeetings, meetings with the Debtors’ financial and turnaround advisors and meetings ofthe board of directors, and advising on employee, workers’ compensation, employeebenefits, labor, tax, environmental, banking, insurance, securities, corporate, businessoperation, contracts, joint ventures, real property, press/public affairs and regulatorymatters;
(f) continue to represent the Debtors (and, to the extent nodivergence of interest exists and at the Debtors’ request in connection with the Debtors’indemnification obligations and other corporate interests, the directors, employees andofficers thereof) in connection with specific matters involving the Securities andExchange Commission, all litigation matters in which Skadden has appeared as of thecommencement of the chapter 11 cases, and such other matters as shall arise from timeto time assigned by the Debtors to, and accepted by, Skadden;
(g) advise the Debtors and assisting General BankruptcyCounsel with respect to continuing disclosure and reporting obligations, if any, undersecurities laws;
(h) attend meetings with third parties and participating innegotiations with respect to the above matters;
(i) appear before the Bankruptcy Court, any district orappellate courts, and the U.S. Trustee with respect to the matters referred to above; and
(j) perform the full range of services normally associatedwith matters such as this as the Debtors’ Special Counsel which Skadden is in aposition to provide in connection with the matters referred to above.
3 A copy of the Retention Order, the Retention Application and supportingaffidavit are attached hereto as Exhibit B. The Retention Order incorporatedthe terms of a retainer agreement dated April 23, 2001 (the “Retainer Agree-ment”) between Skadden and the Debtors, a copy of which is attached to theaffidavit supporting the Retention Application found in Exhibit B.
4 Skadden is one member of the team of skilled professionals retained by theDebtors to assist in their reorganization effort. Reference to Skadden’sassistance to the Debtors during the Case Period generally was part of acollaborative effort with the Debtors’ other retained professionals, includingSidley Austin Brown & Wood LLP; BDO Seidman, LLP; Bear Stearns & Co.Inc.; Blake, Cassels & Graydon LLP; Deloitte & Touche LLP; DeweyBallantine LLP; Rosenman & Colin LLP; and Williams & Connolly LLP.
6
8. On July 9, 2001, the Court entered an order (the “Retention
Order”) authorizing the Debtors to employ Skadden as their special counsel under the
terms set forth in the Retention Application.3
THE RETAINER AGREEMENT
9. As set forth more fully in the Retention Application, the Debtors
entered into the Retainer Agreement with Skadden. Pursuant to the Retainer Agree-
ment, the Debtors retained Skadden as special counsel to consult with and assist
General Bankruptcy Counsel in connection with, among other things, corporate
transactions and litigation matters of the kind for which Skadden has represented the
Debtors and on which General Bankruptcy Counsel would require assistance.4
10. Skadden has not drawn on the funds held in the retainer account
since June 11, 2001 (except for the payment of certain prepetition fees, charges and
7
disbursements incurred on or prior to June 11, 2001 but posted in the firm’s books and
records thereafter in the amount of $117,014) and continues to hold the remaining
balance of the funds to be applied to fees, charges and disbursements which remain
unpaid as of the conclusion of the Reorganization Cases. In addition, the Debtors and
the Debtors’ insurance carriers made certain duplicate payments to Skadden in the
aggregate amount $133,056 with respect to the reimbursement of certain Litigation
(Insurance Recovery) fees incurred by Skadden. As a result of such duplicate payments,
as of March 3, 2003, the amount in the Debtors’ account was $757,963.
11. In the Retention Application, the Debtors disclosed that
Skadden’s fees for professional services are based on its guideline hourly rates, which
are periodically adjusted, and which were last adjusted as of October 1, 2002. The
Debtors also disclosed in the Retention Application that Skadden’s charges and
disbursements are invoiced pursuant to Skadden’s Policy Statement Concerning
Charges and Disbursements, a copy of which is attached to the Retainer Agreement
provided in Exhibit B hereto. Certain charges and disbursements are not separately
charged for under the bundled rate structure as described in the Retention Application.
12. Other than an arrangement between Skadden, Arps, Slate,
Meagher & Flom LLP and its affiliated law practices and their members, there is no
agreement or understanding between Skadden and any person for the sharing of
compensation to be received for services rendered in this case.
8
STANDING AT THE BAR AND EXPERIENCE
13. Skadden assembled a highly qualified team of attorneys to
provide services to the Debtors. The Skadden engagement was coordinated by Kenneth
J. Bialkin, John Wm. Butler, Jr., Charles M. Fox, and Alan C. Myers. Among other
senior Skadden attorneys with principal involvement in the Warnaco engagement were
partners Colleen P. Mahoney and Henry P. Wasserstein.
14. Mr. Bialkin is a corporate partner concentrating in a broad range
of corporate and securities law matters, including activity in U.S. and international
merger and acquisition and corporate finance transactions, and SEC enforcement
matters. Mr. Bialkin primarily was responsible for providing guidance and counseling
to the Debtors’ board and management on various corporate law matters. Mr. Butler is
the co-leader of Skadden’s worldwide corporate restructuring practice and had the
primary responsibility of coordinating the Firm’s engagement with the Bankruptcy
Court and the procedures of the Reorganization Cases and the Bankruptcy Code. He is
a Fellow of the American College of Bankruptcy, is currently a director of, and served
from 1995-97 as Chairman of, the Turnaround Management Association, is currently a
director of, and was President of the American Board of Certification from 1995-97,
was a director of the American Bankruptcy Institute from 1991-98, was Chairman of
the Governing Board of the Commercial Finance Association Education Foundation
from 1994-96 and was Associate General Counsel of the Commercial Finance Associa-
9
tion from 1996-2000. Mr. Fox is a partner that concentrates his practice in the area of
commercial lending and other private debt financings, working on acquisition
financings, private placements, debt restructurings, debtor-in-possession financings and
asset-based financings. Mr. Fox was primarily responsible for advising the Debtors
with respect to all financing matters, including the Debtors’ post-petition and exit
financing facilities. Mr. Myers is a corporate partner with diversified experience in
corporate matters, with a focus on corporate merger and acquisition transactions and
securities law matters. Mr. Myers was primarily responsible for assisting the Debtors
with respect to the sale of various “non-core” assets, as well as with advising the
Debtors with respect to general corporate governance matters and securities laws issues.
15. Ms. Mahoney is the head of Skadden’s securities enforcement
and compliance practice, representing corporations and their officers, directors and
employees in Securities and Exchange Commission (“the SEC”) and other law enforce-
ment investigations, as well as in federal court securities litigation. Ms. Mahoney
coordinated the representation of the Debtors in connection with the investigation being
conducted by the SEC. Finally, Mr. Wasserstein, a litigation partner with a wide-
ranging litigation practice, coordinated the representation of the Debtors in connection
with certain class action litigation and certain other litigation matters to which the
Debtors were a party.
5 Order Pursuant to 11 U.S.C. §§ 105(a) and 331 Establishing Procedures forMonthly Compensation and Reimbursement of Expenses of Professionals(Docket No. 79) (the “Fee Procedures Order”), a copy of which is attachedhereto as Exhibit C.
10
FEE PROCEDURES ORDER
16. On June 20, 2001, this Court entered the Fee Procedures Order.5
Pursuant to the Fee Procedures Order, and Section B.3 of the Local Guidelines,
Skadden is submitting this Application to (a) the Debtors, (b) counsel for the Debtors,
(c) the Office of the United States Trustee for this district, (d) counsel to the agent for
the Debtors’ prepetition secured lenders, (e) counsel to the agent for the Debtors’
postpetition secured lenders, and (f) counsel to the Committee.
OVERVIEW OF THE REORGANIZATION CASES
17. Warnaco is a global designer, manufacturer and marketer of a
broad line of women’s intimate apparel and men’s, women’s and juniors’ apparel,
active apparel and swimwear, all of which are sold under a variety of internationally-
recognized owned and licensed brand names. Warnaco traces its origins back over 125
years to a time when the Warner’s® intimate apparel line, which is owned by the
Warnaco, began its business. Through a series of acquisitions, mergers and joint
ventures, both domestic and foreign, Warnaco has grown to become a worldwide leader
in the apparel business.
11
18. The Debtors filed voluntary petitions in this Court for reorgani-
zation relief on June 11, 2001. During the Reorganization Cases, the Debtors have
implemented extensive cost-cutting programs and a comprehensive operational
restructuring, including (a) eliminating the financial drain of their retail store operations
by closing approximately 176 stores during the Reorganization Cases, leaving 45 stores
in which to sell product at retail or to liquidate excess inventory, (b) implementing
widespread new business controls resulting in vastly improved operating earnings, (c)
consolidating their warehousing and distribution functions, as well as their corporate
and administrative operations in New York, New York and Milford, Connecticut, and
(d) selling or liquidating certain of their non-core business units, and strengthening their
remaining intimate apparel, active apparel and swimwear business units. In addition,
pursuant to the Plan, the Debtors have accomplished a comprehensive financial
restructuring by converting the debt of Warnaco to equity in Reorganized Warnaco.
A. Description of the Debtors’ Business
19. The Debtors’ operations currently are conducted through eight
principal business lines: Authentic Fitness Swimwear; Calvin Klein Jeanswear; Calvin
Klein Underwear; Chaps by Ralph Lauren; Sportswear Licensing; Warner’s/Olga/
Bodyslimmers®; Lejaby and ABS by Allen B. Schwartz. The Company designs,
manufactures, imports and markets moderate to premium priced intimate apparel and
other products for women under the Warner’s®, Olga®, Calvin Klein®, Lejaby®,
12
Rasurel® and Bodyslimmers® brand names. In addition, Warnaco designs, manufac-
tures, imports and markets men’s underwear under the Calvin Klein® brand name.
Warnaco also licenses and provides design support for White Stag® and Catalina®
women’s sportswear. All of Warnaco’s continuing intimate apparel brands are owned.
Warnaco designs, manufactures, imports and markets (a) moderate to premium priced
men’s apparel and accessories under the Chaps by Ralph Lauren®, Calvin Klein® and
Catalina® brand names, (b) better to premium priced women’s and junior’s apparel
under the Calvin Klein® and A.B. S. by Allen Schwartz® brand names and (c) moderate
to better priced swimwear and activewear under the Speedo®, Speedo® Authentic
Fitness®, Catalina®, Anne Cole®, Cole of California®, Lauren/Ralph Lauren®,
Ralph®/Ralph Lauren®, Ralph Lauren®, Polo Sport Ralph Lauren®, Polo Sport-RLX®,
Sunset Beach® and Sandcastle® brand names. Warnaco sells certain of its products to
the general public through either outlet stores and full-price retail stores.
20. Warnaco engages in sourcing, sales, manufacturing, distribution
and marketing activities through North American subsidiaries in the United States,
Canada and Mexico, along with foreign subsidiaries in the United Kingdom, France,
Belgium, Spain, Italy, Austria, Switzerland, the Netherlands, Germany and Hong Kong.
Warnaco’s products are distributed to approximately 20,000 wholesale customers
operating approximately 50,000 department, specialty and mass merchandising stores,
including leading retailers in the United States such as Dayton-Hudson, Macy’s and
13
other units of Federated Department Stores, The May Department Stores, J. C. Penney,
Kohl’s, Sears and Wal*Mart and leading retailers in Canada such as The Hudson Bay
Company and Zeller’s. Warnaco’s products also are distributed to leading European
retailers such as House of Fraser, Harrods, Galeries Lafayette, Au Printemps, Karstadt,
Kaufhof and El Corte Ingles, and to leading Mexican retailers such as Palacio de Hierro
and Liverpool.
21. As of January 1, 2003, Warnaco employed approximately 13,100
employees. Warnaco’s U. S. subsidiaries employ approximately 23% of the Com-
pany’s workforce and its foreign subsidiaries employ the remaining 77%. As of
January 1, 2003, approximately 161 of Warnaco’s domestic employees working in the
Company’s Duncansville, Pennsylvania distribution center were members of the Union
of Needletrades, Industrial And Textile Employees, AFL-CIO, CLC.
22. Warnaco has domestic manufacturing and warehouse facilities
located in California, Georgia and Pennsylvania. Additionally, Warnaco has interna-
tional manufacturing and warehouse facilities located in Canada, Costa Rica, France,
Honduras, Mexico, the Netherlands (through a joint venture) and the United Kingdom.
Warnaco operates manufacturing facilities in Mexico and the Caribbean pursuant to
duty-advantaged programs.
23. Warnaco has license agreements permitting it to manufacture and
market specific products using the trademarks of others, including Chaps by Ralph
14
Lauren, Calvin Klein Jeans, and Speedo. Although the specific terms of each of
Warnaco’s license agreements vary, generally such agreements provide for minimum
royalty payments and/or royalty payments based on a percentage of net sales. Such
license agreements also generally grant the licensor the right to approve any designs
marketed by the licensee. Warnaco sub-licenses the White Stag and Catalina brand
names to Wal*Mart for sportswear and other products. These agreements require the
licensee to pay royalties and fees to Warnaco. Warnaco, on an ongoing basis, also
evaluates entering into distribution or license agreements with other companies that
would permit such companies to market products under Warnaco’s trademarks.
Warnaco will assume all of its license agreements pursuant to the Plan or other orders
of the Bankruptcy Court.
B. Significant Events Leading to the Formulation of the Plan
24. To facilitate the formulation of a plan of reorganization in the
Reorganization Cases, the Debtors completed a comprehensive business plan review
process in late 2001, which enabled the Debtors to finalize their overall business plan.
In general, the business plan had three components intended to maximize value. First,
the Debtors committed to continue in their efforts to stabilize and improve the opera-
tions of their “core” business groups, Intimate Apparel, Swimwear and Sportswear.
Second, to permit the Debtors to focus on maximizing the value of their “core”
businesses, the Debtors planned to pursue the sale or liquidation of certain “non-core”
15
businesses. Third, the Debtors determined that they would explore the sale of “core”
business units, or the Company as a whole, for purposes of comparing the values that
might be achieved in a sale with stand-alone reorganization values.
25. The Debtors aggressively implemented their business plan during
the Reorganization Cases. First, as noted above, the Debtors completed the actions
necessary to stabilize and improve the operations of their “core” businesses, including
recruiting new talent where necessary, implementing extensive cost-cutting measures
and making operational changes that have dramatically improved the performance of
the businesses. Second, the Debtors completed the sale or liquidation process for
certain “non-core” units. Briefly, the sales of the Company’s GJM Sleepwear,
Penhaligon’s and Ubertech businesses were completed, generating gross proceeds
totaling approximately $20 million, and a small and unprofitable French intimate
apparel business, IZKA, has been liquidated. Finally, throughout the Reorganization
Cases, the Debtors exhaustively explored the potential sale of certain of their “core”
business units for purposes of comparing the values that might be achieved in such a
sale with stand-alone reorganization values. After considering the likelihood, timing
and value of consummating any such potential sales, the Company concluded that the
prompt consummation of the Plan would maximize value for its constituencies.
Therefore, the Plan provided for the internal restructuring of the entire Company and its
emergence from chapter 11 on a stand-alone basis.
16
D. The Plan of Reorganization
26. The Plan represented the culmination of extensive negotiations
among the Debtors, the Creditors’ Committee and the Debt Coordinators for the
Debtors’ Pre-Petition Secured Lenders. In addition, the Debtors’ creditors overwhelm-
ingly voted to accept the Plan.
27. The Plan provided for an internal reorganization of the Debtors.
In general, the Plan contemplated the payment in full of all administrative and priority
claims against the Debtors, and the repayment in full of outstanding amounts, if any,
under the Debtors’ DIP Facility. Furthermore, the Plan provided for the treatment of
claims against, and interests in, the Debtors as follows:
C With respect to the Debtors’ prepetition secured lenders (a) payment ofall amounts due in respect of the Original Foreign Facility GuarantyClaims (as defined in the Plan), estimated at approximately $90.1million, (b) distribution of new second lien notes of ReorganizedWarnaco in the principal amount of $200 million, and (c) distribution of96.263% of newly issued common stock of Reorganized Warnaco,subject to dilution in respect of new common stock to be issued tomanagement of Reorganized Warnaco under a stock incentive plan;
C With respect to each holder of an allowed unsecured claim (other than aTOPrS Claim (as defined in the Plan)), distribution of its pro rata shareof 2.549% of the newly issued common stock of Reorganized Warnaco,subject to dilution as described above;.
C With respect to TOPrS Claims, distribution of 0.596% of the newlyissued common stock of Reorganized Warnaco, subject to dilution asdescribed above; and
17
C No distributions on account of common stock issued by Warnaco,including claims arising out of, or with respect to, such common stockinterests.
REQUESTED FEES AND REIMBURSEMENT OF DISBURSEMENTS
28. As discussed herein, Skadden played an important role in
assisting the Debtors with various corporate governance issues and litigation matters
related to the Debtors’ activities, including their efforts regarding the contemplated
disposition of certain non-core assets. As a result of its efforts during the Case Period,
Skadden now seeks final approval of (a) $9,853,740 in fees calculated at the applicable
guideline hourly billing rates of the Firm’s personnel who have worked on the Reorga-
nization Cases, (b) $564,233 in charges and disbursements actually and necessarily
incurred by Skadden while providing services to the Debtors during the Case Period,
and (c) $438,704 with respect to the value-added tax incurred in connection with
services provided by Skadden in connection with certain foreign affiliates of the
Debtors. Of this final amount, the amounts for the fifth period are (a) $1,830,673 in
fees calculated at the applicable guideline hourly billing rates, (b) $42,433 in charges
and disbursements, and (c) $17,515 with respect to the value-added tax.
29. With respect to the Fifth Period, this Application reflects a
voluntary reduction by Skadden in connection with each monthly statement in the
aggregate amount of $161,875 and an additional voluntary reduction in connection with
this Application in the amount of $25,190 to reflect the elimination of all fees related to
6 Skadden believes that the amounts requested in this Application are reason-able in relation to the services rendered. The amounts requested are alreadyreduced to reflect the client accommodations described herein. To the extentthat a party objects to this Application, Skadden reserves the right to recap-ture such client accommodations and seek up to the full amount of feesactually incurred in connection with this engagement.
18
any timekeeper billing less than ten hours during the Fifth Period. In connection with
prior fee applications in the Reorganization Cases and the monthly statements associ-
ated therewith, Skadden extended voluntary accommodations to the Debtors in the
aggregate amount of $1,103,746 with respect to fees and $58,366 with respect to
charges and disbursements. Accordingly, including the voluntary client accommoda-
tions extended in connection with each monthly statement and all fee applications,
Skadden has voluntarily reduced, for the Case Period, its fees by $1,320,445 or
approximately 11.2%, and its charges and disbursements by $83,556, or approximately
12.9%, for a total reduction of $1,404,011 for items Skadden normally would bill its
clients.6
PRIOR FEE APPLICATIONS
30. First Interim Fee Application. On December 21, 2001, Skadden
filed the First Application of Skadden, Arps, Slate, Meagher & Flom LLP and Its
Affiliated Law Practices, Special Counsel for The Warnaco Group, Inc. and Certain of
Its Subsidiaries, Seeking Allowance of Interim Compensation and Reimbursement of
Expenses Under 11 U.S.C. §§ 330 and 331 for the Period June 11, 2001, Through
7 The Debtors’ directors and officers liability carriers have reimbursed theDebtors for the fees, charges and disbursements incurred in connection withthe Litigation (Insurance Recovery) matter, including the $395,177 incurredin connection with such matter as set forth in the Second Interim Fee Appli-cation (defined below), and the Debtors, in turn, have paid Skadden for suchservices.
19
October 31, 2001 (the “First Interim Fee Application”). For the period covered by the
First Interim Fee Application, Skadden requested allowance of $2,893,664 as compen-
sation for professional services rendered as attorneys for the Debtors and reimburse-
ment of $270,432 in out-of-pocket disbursements and charges actually and necessarily
incurred with respect thereto, plus value-added tax in the amount of $158,900. The
amounts requested in the First Interim Fee Application reflected a voluntary reduction
by Skadden of its fees by $260,729 (approximately 8.3%) and of charges and disburse-
ments incurred in the rendition of services by $9,703 (approximately 4.6%). Prior to
the hearing with respect to the First Interim Fee Application, Skadden agreed to a
further voluntary reduction of its fees in the amount of $130,000 (for an aggregate
reduction of approximately 12.4%) and to defer the payment of fees in the amount of
$199,013 with respect to one matter (Litigation (Insurance Recovery)).7 Accordingly,
pursuant to this Court’s order approving the First Interim Fee Application, Skadden was
awarded compensation for professional services provided to the Debtors in the amount
of $2,564,652, reimbursement of charges and disbursements incurred in connection
20
with providing professional services in the amount of $197,464, and payment of the
value-added tax in the amount of $158,900.
31. Second Interim Fee Application. On April 20, 2002, Skadden
filed the Second Application of Skadden, Arps, Slate, Meagher & Flom LLP and Its
Affiliated Law Practices, Special Counsel for The Warnaco Group, Inc. and Certain of
Its Subsidiaries, Seeking Allowance of Interim Compensation and Reimbursement of
Expenses Under 11 U.S.C. §§ 330 and 331 for the Period November 1, 2001, Through
February 28, 2002 (the “Second Interim Fee Application”). For the period covered by
the Second Interim Fee Application, Skadden requested allowance of $3,296,615 as
compensation for professional services rendered as attorneys for the Debtors and
reimbursement of $174,823 in out-of-pocket disbursements and charges actually and
necessarily incurred with respect thereto, plus value-added tax in the amount of
$170,210. The amounts requested in the Second Interim Fee Application reflected a
voluntary reduction by Skadden of its fees by $408,194 (approximately 11.0%) and of
charges and disbursements incurred in the rendition of services by $37,494 (approxi-
mately 17.7%).
32. Prior to the hearing with respect to the Second Interim Fee
Application, Skadden agreed to a further voluntary accommodation with respect to
certain charges and disbursements incurred by Skadden in the amount of $532 and to
postpone the payment of fees in the amount of $395,177 with respect to one matter
8 As described in the preceding footnote, Skadden subsequently receivedpayment for such services.
21
(Litigation (Insurance Recovery)).8 Accordingly, pursuant to this Court’s order
approving the Second Interim Fee Application, Skadden was awarded compensation for
professional services provided to the Debtors in the amount of $2,901,438, reimburse-
ment of charges and disbursements incurred in connection with providing professional
services in the amount of $174,291, and payment of the value-added tax in the amount
of $170,210.
33. Third Interim Fee Application. On August 20, 2002, Skadden
filed the Third Application of Skadden, Arps, Slate, Meagher & Flom LLP and Its
Affiliated Law Practices, Special Counsel for The Warnaco Group, Inc. and Certain of
Its Subsidiaries, Seeking Allowance of Interim Compensation and Reimbursement of
Expenses Under 11 U.S.C. §§ 330 and 331 for the Period March 1, 2002, Through June
30, 2002 (the “Third Interim Fee Application”). For the period covered by the Third
Interim Fee Application, Skadden requested allowance of $1,234,341 as compensation
for professional services rendered as attorneys for the Debtors and reimbursement of
$80,879 in out-of-pocket disbursements and charges actually and necessarily incurred
with respect thereto, plus value-added tax in the amount of $51,349. The amounts
requested in the Third Interim Fee Application reflected a voluntary reduction by
Skadden of its fees by $143,093 (approximately 10.4%) and of charges and disburse-
22
ments incurred in the rendition of services by $9,085 (approximately 10.1%). Pursuant
to this Court’s order approving the Third Interim Fee Application, Skadden was
awarded compensation for professional services provided to the Debtors in the amount
of $1,234,341, reimbursement of charges and disbursements incurred in connection
with providing professional services in the amount of $80,879, and payment of the
value-added tax in the amount of $51,349.
34. Fourth Interim Fee Application. On December 20, 2002,
Skadden filed the Fourth Application of Skadden, Arps, Slate, Meagher & Flom LLP
and Its Affiliated Law Practices, Special Counsel for The Warnaco Group, Inc. and
Certain of Its Subsidiaries, Seeking Allowance of Interim Compensation and Reim-
bursement of Expenses Under 11 U.S.C. §§ 330 and 331 for the Period July 1, 2002,
Through October 31, 2002 (the “Fourth Interim Fee Application”). For the period
covered by the Fourth Interim Fee Application, Skadden requested allowance of
$1,322,639 as compensation for professional services rendered as attorneys for the
Debtors and reimbursement of $69,166 in out-of-pocket disbursements and charges
actually and necessarily incurred with respect thereto, plus value-added tax in the
amount of $40,730. The amounts requested in the Fourth Interim Fee Application
reflected a voluntary reduction by Skadden of its fees by $188,682 (approximately
12.5%) and of charges and disbursements incurred in the rendition of services by
$9,982 (approximately 12.6 %). Pursuant to this Court’s order approving the Third
23
Interim Fee Application, Skadden was awarded compensation for professional services
provided to the Debtors in the amount of $1,322,639, reimbursement of charges and
disbursements incurred in connection with providing professional services in the
amount of $69,166, and payment of the value-added tax in the amount of $40,730.
SUMMARY OF SERVICES RENDERED BYSKADDEN DURING THE CASE PERIOD
35. During the Case Period, Skadden worked closely with the
Debtors, General Bankruptcy Counsel and the Debt Coordinators for the Debtors’
prepetition secured lenders to implement the strategies described above
to maximize the value of the Debtors’ estates and emerge from chapter 11 as expedi-
tiously as possible. As discussed herein, the services provided by Skadden have been
directed toward a myriad of tasks necessary to achieve this result. To meet the Debtors’
needs, Skadden attorneys and professionals have provided multi-disciplinary services
on a daily basis, often working nights and weekends. Throughout the chapter 11
process, certain of the principal Skadden attorneys and professionals working on the
Reorganization Cases were required to devote the vast majority of their time to this
matter, often to the exclusion of other clients and other potential client engagements.
36. The amounts requested by this Application compare favorably to
fees, charges and disbursements incurred by other chapter 11 debtors in cases of similar
size, complexity and duration.
9 Exhibit D contains a table of all matter numbers used in these cases, as wellas a description of certain business statistics of Skadden in these cases.
24
37. At the commencement of the Reorganization Cases, Skadden
created twenty-one (21) different matter numbers or subject matter categories, which
are in accordance with the Guidelines, to which its professionals assigned the time
billed by them, all of which are related to the tasks performed by Skadden on behalf of
the Debtors.9 All Skadden professionals kept a contemporaneous record of time spent
rendering such services and, consistent with the Guidelines, separated tasks in billing
increments of one-tenth of an hour. The November 2002 through February 4, 2003
Monthly Statements, separated by matter number, are attached hereto as Exhibit E.
Monthly statements for the periods from June 11, 2001 through October 31, 2002, were
submitted in appendices accompanying the First through Fourth Interim Applications.
The statements contain a breakdown of attorneys’ daily time detail, by billing matter,
that was billed during the Case Period. All of the services performed by Skadden have
been legal in nature and necessary for the proper administration of the Reorganization
Cases.
38. During the Case Period, Skadden devoted approximately
68.1% of its time to the following three matters and incurred in excess of $2,000,000
for each such matter: Regulatory Matters (SEC/DOJ), Asset Dispositions and Foreign
Subsidiaries (VAT Services).
25
39. Skadden devoted approximately 27.8% of its time during the
Case Period to the following four matters and incurred between $225,000 and
$2,000,000 for each such matter: General Corporate Advice, Financing/DIP and
Emergence, Litigation (Insurance Recovery) and Employee/Labor Matters.
40. Skadden devoted the remainder of its time to the following eight
matters and incurred less than $225,000 for each such matter: Retention/Fee Matters;
Nonworking Travel Time; Disclosure Statement re: Plan of Reorganization; Litigation
(General); Leases (Real Property); Business Operations; Foreign Subsidiaries (Non-
VAT Services; and Tax Matters.
MATTERS OVER $2,000,000
A. Regulatory Matters (SEC/DOJ)
41. During the Case Period, the Debtors required Skadden’s
assistance in monitoring and responding to various regulatory matters which required
periodic attention, including review of public filings with the U.S. Securities and
Exchange Commission (the “SEC”) and continued attention to various SEC matters.
42. During the Case Period, Skadden professionals devoted a
substantial amount of time to assisting the Debtors in responding to an investigation
initiated by the SEC prior to the commencement of these cases to determine whether
any violations of the Securities Exchange Act of 1934 occurred in connection with
Warnaco’s preparation and publication of various financial statements and reports.
26
With respect to the SEC investigation, Skadden helped the Debtors formulate a strategy
for dealing with the investigation and develop a chronology of the matters subject to
investigation. This assistance included meeting with numerous officers and senior
managers of the Debtors to gather the factual information necessary to respond to
discovery requests from the SEC. Skadden interviewed certain of the Debtors’ officers
and senior managers on several occasions, gathered documents, and coordinated the
assembly of other information, including the retrieval of electronic information by a
consultant to the Debtors. Once the documentation and information was gathered,
Skadden reviewed the materials for privilege issues and responsiveness prior to
dissemination of the materials to the SEC. In this regard, Skadden attorneys also
reviewed transcripts of financial analyst and investor conference calls and the Debtors’
audit committee minutes.
43. Also in connection with the investigation, Skadden prepared in
excess of 15 witnesses for testimony before the SEC. This preparation involved a
variety of tasks, including: (a) meeting with the individual witnesses on several
occasions; (b) interviewing the witnesses with respect to the matters under
investigation; (c) reviewing documentation and other factual information relevant to the
testimony of each witness; (d) outlining the testimony to be given as summarized by the
witness; and (e) drafting summaries of such testimony following the appearance by a
witness before the SEC. Skadden attorneys also represented several of the witnesses in
27
testimony before the SEC, and likely will represent additional witnesses as the
investigation continues. Following the testimony of a witness before the SEC, Skadden
reviewed the testimony transcript for accuracy and analyzed and advised the Debtors
with respect to the results of such testimony.
44. In July, the SEC staff provided information to Warnaco
regarding the investigation and provided Warnaco the opportunity to prepare a Wells
submission in connection therewith. Skadden professionals and the Debtors devoted
considerable time to developing the Debtors’ response to the SEC. In connection
therewith, Skadden conducted extensive research on various issues and participated in
numerous conversations with the SEC. Subsequently, the Debtors, with Skadden’s
assistance, filed a Wells submission with the SEC in September, and prepared and filed
a supplemental Wells submission thereafter.
45. Following the Wells submission, Skadden attorneys continued to
attend meetings with the SEC, reviewed SEC deposition transcripts, and prepared
materials in response to a subpoena issued by the SEC related to the investigation.
Skadden attorneys also continued to assist the Debtors in their negotiations with the
SEC. Skadden attorneys also prepared materials for NASD and NASDAQ for their
review. Ultimately, although the investigation is still ongoing, Skadden has assisted the
Debtors in formulating a strategy for handling the investigation and preparing the
evidence in conjunction with that strategy.
28
46. In connection with the foregoing services, Skadden’s
professionals expended 8,393.6 hours for which Skadden seeks compensation of
$2,680,707. An itemized breakdown of services rendered from June 11, 2001, through
October 31, 2002, was submitted with the First through Fourth Interim Applications.
An itemized breakdown of the services rendered to the Debtors during the Fifth Period
is attached as Exhibit E-1. A general breakdown of these services is as follows:
Names Rate Fifth
Period
Hours
Fifth
Period
Amounts
Total
Hours
Total
Amount
Charles F. Walker $453 25.4 $ 12,319 1,389.6 $ 629,529
Louis D . Greenste in $365 16.5 $ 6,848 1,046.0 $ 382,640
Henry P. Wass erstein $693 – – 349.7 $ 242,472
Colleen P. Mahoney $631 12.6 $ 8,568 352.7 $ 222,971
Charlie J. Gambino $374 16.3 $ 6,765 1,094.3 $ 409,780
10 Services relating to asset dispositions performed with respect to foreignsubsidiaries were recorded under the matter description, Foreign Subsidiaries(VAT Services).
67. During the Case Period, Skadden assisted the Debtors in their
efforts to procure both DIP financing and emergence financing. Skadden worked with
the Debtors’ senior management and certain of the Debtors’ prepetition lenders to
structure and negotiate a financing arrangement involving postpetition financing and
11 Final Order (I) Authorizing Debtors in Possession to Enter into Post-PetitionCredit Agreement Pursuant to Section 364 of the Bankruptcy Code, (II)Authorizing the Use of Cash Collateral Pursuant to Section 363 of theBankruptcy Code, (III) Granting Adequate Protection Pursuant to Sections363 and 364 of the Bankruptcy Code, and (IV) Scheduling Final HearingPursuant to Bankruptcy Rule 4001(C) [Docket No. 151].
43
the use of cash collateral to fund the Reorganization Cases and the Debtors’ ongoing
operations.
68. Before commencement of the Reorganization Cases, Skadden
assisted with the negotiation of the terms of a debtor-in-possession credit facility (the
“DIP Facility”), the terms of which were memorialized in a final financing order11
entered by the Court on July 9, 2001, pursuant to which the postpetition lenders loaned
monies to the Debtors to fund operations during the pendency of the Reorganization
Cases (the “DIP Facility”).
69. During the Reorganization Cases, Skadden assisted the Debtors
in obtaining an amendment to the DIP Facility to accommodate for business
performance in light of the events of September 11, 2001, general economic weakness
and the difficult retail environment. In addition, Skadden continued to review the DIP
Facility, as amended, and the underlying documents to ensure the Debtors’ compliance
with the obligations therein in connection with the general operations of the Debtors.
Skadden also assisted the Debtors in complying with the terms of DIP Facility in
connection with certain asset dispositions undertaken by the Debtors and with
44
negotiating and obtaining waivers and/or consents from the lenders for such asset
dispositions where necessary. Skadden also continued to research and inform the
Debtors regarding specific issues of foreign debt and foreign transfer restrictions.
70. Toward the conclusion of the Case Period, Skadden provided
advice to the Debtors concerning the proposed exit financing facilities. Such advice
included assisting the Debtors with the preparation of the various documents for the
Debtors’ exit financing, including the second lien notes. In conjunction with the exit
financing, Skadden assisted with the preparation of the note distribution agreement,
indenture and credit agreement, intercreditor agreement, security agreement, deposit
agreement and other documents related to the exit credit facilities. Skadden also
assisted the Debtors in preparing the schedules and term sheets for the agreements,
reviewing the exit financing for tax implications, and conducting UCC research and
preparing and filing the UCC documents related to the exit financing. Skadden also
prepared and issued an opinion regarding the exit financing and assisted the Debtors in
preparing the necessary corporate governance documents for the exit financing.
71. In addition, Skadden coordinated with the issuer and issuer’s
counsel regarding various matters concerning the issuance of the lien notes including
the registration rights agreement. In connection with the lien notes, Skadden also
assisted the Debtors in obtaining the necessary consent from other lenders, including
reviewing of the DIP facility and preparing lien releases. Finally, Skadden also
45
prepared and filed with the SEC an application for qualification of indentures including
compiling and reviewing the various corporate governance documents required.
72. In connection with the foregoing services, Skadden’s
professionals expended 2,525.1 hours for which Skadden seeks compensation of
$995,051. An itemized breakdown of services rendered from June 11, 2001, through
October 31, 2002, was submitted with the First through Fourth Interim Applications.
An itemized breakdown of the services rendered to the Debtors during the Fifth Period
is attached as Exhibit E-5. A general breakdown of these services is as follows:
Names Rate Fifth
Period
Hours
Fifth
Period
Amount
Total
Hours
Total
Amount
David D . Almro th $455 316.7 $ 150,433 690.0 $ 313,618
Charles M. Fox $668 142.3 $ 98,900 285.7 $ 190,966
Jena Q. Watson $415 163.7 $ 67,936 163.7 $ 67,936
Brian H arty $240 282.4 $ 67,776 282.4 $ 67,776
Elizabeth M. Ba rtolo $467 118.3 $ 56,193 133.0 $ 62,147
97. Skadden attorneys advised the Debtors with respect to certain
operational issues during the Case Period. As part of these services, Skadden advised
the Debtors with respect to various financial accounting issues and reviewed other
operational issues associated with relief the Debtors received under the First Day
Orders.
98. In connection with the foregoing services, Skadden’s
professionals expended 17.2 hours for which Skadden seeks compensation of $6,700.
An itemized breakdown of services rendered from June 11, 2001, through October 31,
2002, was submitted with the First through Fourth Interim Applications. A general
breakdown of these services is as follows:
Names Rate Fifth
Period
Hours
Fifth
Period
Amount
Total
Hours
Total
Amount
Timothy P. Olson $ 355 – – 13.5 $4,793
John Wm . Butler, Jr. $ 670 – – 2.4 $1,608
Shea D. Welch $ 230 – – 1.3 $299
TOTAL – – 17.2 $6,700
N. Foreign Subsidiaries (Non-VAT Services)
99. On a prepetition basis, Skadden assisted the Debtors and certain
foreign subsidiaries of the Debtors in negotiating and finalizing certain refinancing
agreements with their prepetition lenders. During the Case Period, Skadden continued
61
to assist the Debtors and their foreign subsidiaries with various compliance
requirements under the terms of those agreements.
100. In connection with the foregoing services, Skadden’s
professionals expended 14.1 hours for which Skadden seeks compensation of $4,402.
An itemized breakdown of services rendered from June 11, 2001, through October 31,
2002, was submitted with the First through Fourth Interim Applications. A general
breakdown of these services is as follows:
Names Rate Fifth
Period
Hours
Fifth
Period
Amount
Total
Hours
Total
Amount
Alessandra Zingone $370 – – 6.0 $2,220
Shea D. Welch $269 – – 8.1 $2,182
TOTAL – – 14.1 $4,402
O. Tax Matters
101. Near the conclusion of the Reorganization Cases, Skadden
advised the Debtors with respect to certain tax issues that arose in connection with
consummation of the Plan and other tax issues regarding the proposed exit financing.
102. In connection with the foregoing services, Skadden’s
professionals expended 2.4 hours for which Skadden seeks compensation of $1,632.
An itemized breakdown of services rendered from June 11, 2001, through October 31,
2002, was submitted with the First through Fourth Interim Applications. An itemized
62
breakdown of the services rendered to the Debtors during the Fifth Period is attached as
Exhibit E-10. A general breakdown of these services is as follows:
Names Rate Fifth
Period
Hours
Fifth
Period
Amount
Total
Hours
Total
Amount
Sally A. Thurston $680 2.4 $ 1,632 2.4 $ 1,632
TOTAL 2.4 $ 1,632 2.4 $ 1,632
RELIEF REQUESTED
103. In accordance with the Fee Procedures Order, Skadden submitted
its monthly statements, and Skadden now submits this fifth and final Application. By
this Application, with respect to the Fifth Period, Skadden now seeks final allowance of
$1,830,673 in fees calculated at the applicable guideline hourly billing rates of the
Firm’s personnel who have worked on the Reorganization Cases, plus $42,433 in
charges and disbursements actually and necessarily incurred by Skadden while
providing services to the Debtors during the Fifth Period, plus the value-added tax of
$17,515 accrued during the Fifth Period. Moreover, with respect to the periods covered
by the First through Fourth Interim Applications, Skadden seeks final allowance of
$8,023,067 in fees calculated at the applicable guideline hourly billing rates of the
Firm’s personnel who worked on the Reorganization Cases, plus $521,800 in charges
and disbursements actually and necessarily incurred by Skadden while providing
13 Skadden believes that the amounts requested in this Application are reason-able in relation to the services rendered. The amounts requested are alreadyreduced to reflect the client accommodations described herein. To the extentthat a party objects to this Application, Skadden reserves the right to recap-ture such client accommodations and seek up to the full amount of feesactually incurred in connection with this engagement.
63
services to the Debtors, plus the value-added tax of $421,189 that accrued during the
periods covered by the First through Fourth Interim Applications.
104. Based on the Firm’s customary billing practices, the Debtors
ordinarily would be billed a total of $11,768,375 for fees during the Case Period and
$647,789 for charges and disbursements during the Case Period. In keeping with
Skadden’s commitment to self-policing its fees, charges and disbursements, and based
on various accommodations to the Debtors, however, Skadden voluntarily reduced, as
part of its monthly fee statements and in connection with the First through Fourth
Interim Applications and additional accommodations for fees incurred in the Fifth
Period, its fees by $1,320,455, or approximately 11.2%, and its charges and
disbursements by $83,556, or approximately 12.9%.13 As a result, when taking into
account the reimbursement from insurance carriers in the amount of $594,190, the
actual amount sought herein with respect to the Case Period is $9,853,740 for fees and
$564,233 for charges and disbursements.
105. Pursuant to the Fee Procedures Order and the order entered by
the Bankruptcy Court with respect to the Fourth Interim Application, the aggregate
14 The holdback consists of (a) the 5% continuing holdback in the amount of$270,305 with respect to the First and Second Interim Applications and (b) a20% holdback pursuant to the Fee Procedures Order in the amount of$371,172 for fees incurred during the Fifth Period.
64
amount currently due to Skadden and payable by the Debtors is $1,762,807, which
amount includes (a) $243,358 with respect to the outstanding 20% fee holdback for the
period covered by the Fourth Interim Application the payment of which was authorized
by order of the Bankruptcy Court with respect to the Fourth Interim Application;
(b) $1,459,501 with respect to 80% of the fees incurred during the Fifth Period, the
payment of which is authorized by the Fee Procedures Order (provided no objection is
made pursuant thereto); and (c) $42,433 of charges and disbursements (plus the value-
added tax in the amount of $17,515) incurred during the Fifth Period, the payment of
which is authorized by the Fee Procedures Order (provided no objection is made
pursuant thereto). Once the payment of these authorized amounts occurs, Skadden will
have accrued a holdback in the amount of $641,477.14 Following the application of the
additional client credit in the amount of $25,190 reflected in this Application to
eliminate all timekeepers billing less than ten hours during the Fifth Period, Skadden
will be requesting $616,287 in full satisfaction of the holdback amount.
106. Allowance of Professional Fees. During the Case Period,
attorneys and paraprofessionals at Skadden billed an aggregate of 31,398.4 hours
reflected in this Application working on matters concerning the Debtors’ reorganization
15 Skadden maintains records of the time it expended in the rendition of allprofessional services, which time records are made concurrently with therendition of professional services.
16 In addition, Exhibit D hereto sets forth the blended hourly rate and certainother business statistics associated with the Reorganization Cases.
65
case.15 Of such time spent, 5,381.9 hours were spent by partners and counsel, 18,833.9
hours were spent by associates and 7,182.6 hours were spent by paraprofessionals. A
summary showing the name and position of each such partner, counsel, associate and
paraprofessional, together with that person’s date of admission to the bar (as
applicable), net hours during the Case Period and hourly billing rate, is provided at the
front of this Application.16
107. Reimbursement of Charges and Disbursements. As disclosed in
the Retention Application that the Court approved, it is Skadden’s standard policy to
charge its clients in all areas of practice for certain charges and disbursements incurred
in connection with such clients’ cases. However, under the bundled rate structure as
described in the Retainer Agreement, certain charges and disbursements are not
separately charged to clients. The charges and disbursements charged to clients under
the bundled rate structure include, among others, charges for messenger services,
photocopying, court fees, travel expenses, postage for large mailings, long distance
telephone, computerized legal research, investigative searches, and other charges
customarily billed by law firms.
66
108. During the Fifth Period and the Case Period, Skadden disbursed
the following sums for actual and necessary charges and disbursements in the rendition
of professional services in the Reorganization Cases, and requests that it be reimbursed
therefor:
Charges and Disbursements Incurred
Fifth Period Case Period
Reproduction and Document Preparation $ 16,666 $ 231,591
112. The Johnson approach and the lodestar analysis examine similar
factors including: (i) the novelty or difficulty of the questions, (ii) the experience,
reputation and skill of the professional, (iii) time limitations imposed by the
circumstances, (iv) whether the fee is fixed or contingent, (v) the preclusion of other
68
employment by the professional due to acceptance of the case and (vi) the amount
involved and the results obtained or the quality of the services.
113. In addition, irrespective of the individual factors enumerated
above, the primary focus should be on the reasonableness of the services rendered to the
estate, rather than hindsight.
[I]t is important for a court to maintain a sense of overall proportion andnot become enmeshed in meticulous analysis of every detailed facet ofthe professional representation. It is easy to speculate that the workcould have been done in less time or with fewer attorneys or with anassociate rather than a partner. On the other hand, it is also possible that[the debtor] would not have enjoyed the success it did had its counselmanaged matters differently.
In re Boston & Maine Corp., 776 F.2d 2, 10 (1st Cir. 1985) (citations omitted).
114. In accordance with the factors enumerated in 11 U.S.C. § 330
and above, the amount requested herein by Skadden is fair and reasonable, given:
(i) the nature of the Reorganization Cases, (ii) the novelty and complexity of the
Reorganization Cases, (iii) the time and labor required to represent the Debtors
effectively, (iv) the time limitations imposed by the Reorganization Cases, (v) the
nature and extent of the services rendered, (vi) Skadden’s experience, reputation and
ability, (vii) the value of Skadden’s services and (viii) the cost of comparable services
other than in a case under title 11 of the United States Code.
115. Nature, Complexity and Duration of the Case. As discussed
above, the Debtors' chapter 11 cases were extremely complex involving over thirty-
69
seven (37) Debtors, with subsidiaries domiciled in numerous countries around the
world. This worldwide restructuring required Skadden to provide advice with respect
to corporate law in multiple foreign jurisdictions and the restructuring of debt
obligations with creditors around the world.
116. The timetable pursuant to which the Reorganization Cases
proceeded required Skadden and the other professionals involved to use every effort to
seek to work quickly and efficiently in assisting the Debtors in meeting their goals.
Skadden assisted the Debtors by employing a streamlined case management structure
that consisted of small, core teams and assigned various attorneys to other discrete tasks
to avoid the performance of duplicative or unnecessary work.
117. Experience of Skadden. The experience of Skadden’s attorneys
also has benefitted the estates. Skadden is among the largest firms and has one of the
largest corporate restructuring groups in the country. Skadden also is recognized as
being a leading law firm in the merger and acquisition areas. As more fully set forth in
the Retention Application, Skadden’s restructuring attorneys and attorneys from other
practice areas have extensive knowledge and experience in dealing with the multitude
and fast-paced issues that arise in similar chapter 11 proceedings. Accordingly,
Skadden’s depth of experience in chapter 11 matters has insured that a number of
pressing matters could be addressed promptly.
70
118. In addition, Skadden’s commitment to monitoring the
administrative expenses of the estates, including its own legal fees, has been a constant
element of its representation of the Debtors. Indeed, this emphasis has been manifested
in Skadden’s careful review of its fees, charges and disbursements and a voluntary
client accommodation in excess of $1.4 million.
119. Comparable Services. Skadden, Arps’ rates are consistent with
rates charged to other clients in non-bankruptcy matters. Moreover, its rate structure
was disclosed clearly in its Retention Application, which the Court approved and to
which none of the major constituents objected.
120. The amounts sought by Skadden compare favorably to fees,
charges and disbursements incurred by other chapter 11 debtors in cases of similar size,
complexity and duration. Accordingly, the cost of comparable services supports the
Application, and the services performed during the Case Period more than warrant the
allowance of compensation, particularly in view of the results achieved.
121. Compliance with Guidelines. Skadden believes that this
Application, together with the attachments hereto, substantially complies in all material
respects with the Guidelines. To the extent this Application does not comply in every
respect with the requirements of such guidelines, Skadden respectfully requests a
waiver for any such technical non-compliance.
71
122. Skadden requests that this Court deem the contents of this
Application to be sufficient for the purposes of satisfying the memorandum of law
requirement in Rule 9013-1(b) of the Local Rules for the United States Bankruptcy
Court for the Southern District of New York. The relief requested in this Application
presents no novel issues of law.
WHEREFORE, Skadden respectfully requests that the Court (a) grant it
(i) final allowance of $1,830,673 as compensation for professional services rendered as
attorneys for the Debtors during the Fifth Period plus reimbursement of actual and
necessary charges and disbursements incurred during the Fifth Period in the amount of
$42,433, plus the value-added tax of $17,515; and (ii) final allowance of $8,023,067 as
compensation for professional services rendered as attorneys for the Debtors during the
periods covered by the First through Fourth Interim Applications, plus reimbursement
of actual and necessary charges and disbursements incurred during the periods covered
by the First through Fourth Interim Applications in the amount of $521,800, plus the
value-added tax of $421,189; (b) authorize Skadden to apply $616,287 from its retainer
in full satisfaction of the Holdback accrued during the Case Period and hold the
remaining portion of its retainer to pay any subsequent fees, charges and disbursements
72
incurred by Skadden on behalf of the Company and (c) grant it such other and further
/s/ John Wm. Butler, Jr.John Wm. Butler, Jr.Timothy P. OlsonSkadden, Arps, Slate, Meagher & Flom (Illinois)333 West Wacker DriveChicago, Illinois 60606-1285(312) 407-0700
- and -
J. Gregory St. Clair (JS-8344)Skadden, Arps, Slate, Meagher & Flom LLPFour Times SquareNew York, New York 10036(212) 735-2000
EXHIBIT A
John Wm. Butler, Jr.SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)333 West Wacker DriveChicago, Illinois 60606-1285(312) 407-0700
J. Gregory St. Clair (JS-8344)SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPFour Times SquareNew York, New York 10036(212) 735-2000
Special Counsel for Debtors and Debtors-in-Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
In re
THE WARNACO GROUP, INC., et al.,
Debtors.
Chapter 11
Case Nos.: 01-41643 (RLB) through 01-41680 (RLB)
(Jointly Administered)
CERTIFICATION UNDER GUIDELINES FOR FEES ANDDISBURSEMENTS FOR PROFESSIONALS IN RESPECT OF FIFTH
AND FINAL APPLICATION OF SKADDEN, ARPS, SLATE, MEAGHER& FLOM LLP AND AFFILIATED LAW PRACTICE ENTITIES FORFINAL COMPENSATION AND REIMBURSEMENT OF EXPENSES
2
I, John Wm. Butler, Jr., hereby certify that:
1. I am an attorney at law admitted to practice pro hac vice
before this Court and a member of the law firm of Skadden, Arps, Slate, Meagher &
Flom (Illinois), and its affiliated law practices (collectively, “Skadden”), special
counsel for The Warnaco Group, Inc. (“Warnaco” or the “Company”) and certain of
its affiliates (the “Affiliate Debtors”), debtors and debtors-in-possession in the
above-captioned cases (Warnaco and the Affiliate Debtors collectively, the
“Debtors”). I am the professional designated by Skadden in respect of compliance
with the Amended Guidelines for Fees and Disbursements of Professionals in
Southern District of New York Bankruptcy Cases adopted by the Court on April 19,
1995 (the “Local Guidelines”), and the United States Trustee Guidelines for
Reviewing Applications for Compensation and Reimbursement of Expenses Filed
Under 11 U.S.C. § 330, adopted on January 30, 1996 (the “UST Guidelines”;
together with the Local Guidelines, the “Guidelines”).
2. I make this certification in support of the application of
Skadden, dated March 3, 2003 (the “Application”), for final compensation and
reimbursement of expenses for the period beginning June 11, 2001, and ending
February 4, 2003 (the “Compensation Period”), in accordance with the Local
Guidelines.
3
3. In respect of section B.1 of the Local Guidelines, I certify that:
(a) I have read the Application.
(b) To the best of my knowledge, information and beliefformed after reasonable inquiry, the fees and disbursements sought fall within theLocal Guidelines.
(c) Except to the extent that fees or disbursements areprohibited by the Guidelines, the fees and disbursements sought are billed at rates inaccordance with practices customarily employed by Skadden and generally acceptedby Skadden’s clients and disclosed and approved in the Retention Application,including the bundled rate structure.
(d) In providing a reimbursable service, Skadden does notmake a profit on that service, whether the service is performed by Skadden in-houseor through a third party.
4. In respect of section B.2 of the Local Guidelines, I certify that
Skadden has provided monthly statements of Skadden’s fees and disbursements
accrued during the previous month, by serving monthly statements pursuant to the
Fee Procedures Order (as defined in the Application) for the Case Period.
5. In respect of section B.3 of the Local Guidelines, pursuant to
the Fee Procedures Order, I certify that copies of the Application are being provided
to (a) the Debtors, (b) counsel for the Debtors, (c) the Office of the United States
Trustee for this district, (d) counsel to the agent for the Debtors’ prepetition secured
4
lenders, (e) counsel to the agent for the Debtors’ postpetition secured lenders, and
(f) counsel to the Committee.
Dated: Chicago, IllinoisMarch 3, 2003
/s/ John Wm. Butler, Jr. John Wm. Butler, Jr.
EXHIBIT D
Matter Name Matter Number
General Corporate Advice 0001Asset Dispositions 0002Business Operations 0003Disclosure Statement re Plan of Reorganization 0004Employee/Labor Matters 0005Environmental Matters 0006Executory Contracts (ex. Licenses) 0007Financing/DIP and Emergence 0008Foreign Subsidiaries (VAT Services) 0009Foreign Subsidiaries (Non-VAT Services) 0010Insurance 0011Leases (Real Property) 0012Litigation (General) 0013Litigation (Insurance Recovery) 0014Nonworking Travel Time 0015Press/Public Affairs 0016 Real Estate Owned 0017Regulatory Matters (SEC/DOJ) 0018Retention/Fee Matters (SASM&F) 0019Secured Claims/Cash Collateral 0020Tax Matters 0021
SKADDEN BUSINESS STATISTICSAND SUMMARY OF ATTORNEY TIME
FOR THE FIFTH PERIOD AND THE CASE PERIODNOV. 1, 2002 - FEB. 4, 2003 AND JUNE 11, 2001 - FEB. 4, 2003
FIFTH PERIOD CASE PERIOD
Total Fees Recorded: $2,000,447 $11,768,375
Actual Fees Requested: $1,830,673 $9,853,740
Total Hours Recorded
Partners: 671.7 4,291.7
Counsel: 42.2 1,633.6
Associates: 3,880.6 19,909.5
Paraprofessionals: 1,183.6 10,247.9
Total Hours: 5,778.1 36,082.7
Total Hours Reflected in Application
Partners: 615.6 (12.2%) 3,797.8 (12.1%)
Counsel: 25.4 (0.5%) 1,5481 (5.0%)
Associates: 3,709.4 (73.6%) 18,833.9 (60.0%)
Paraprofessionals: 691.5 (13.7%) 7,182.6 (22.9%)
Total Hours: 5,041.9 31,398.4
Blended Hourly Rate: 317 273
Total Charges and Disbursements Recorded: $59,194 $647,789
Actual Charges and Disbursements Requested: $42,433 $564,233
