Unpaid professional bills are piling up in the Fair Finance Co. bankruptcy.
And the $5 million-plus recovered so falls millions of dollars short of covering them — and those bills will be paid before the thousands of creditors owed about $215 million in the nearly three-year-long Akron-area fraud case get back a single dime.
Cleveland law firm Baker & Hostetler, where Fair Finance trustee Brian Bash works, says it is seeking nearly $7.7 million for work and expenses it has performed from Jan. 1, 2011, through Aug. 31, 2012. The law firm’s bills showed its professionals billed at rates ranging from a low of $150 to a high of $825 an hour.
The total does not include $1.04 million that the law firm says Bash is owed for his services, according to court documents.
Other professionals have submitted paperwork saying they are owed large sums of money as well.
As of Monday, Bash said the Fair Finance estate has a recovered a bit over $5 million that is now sitting in a money market fund.
Bash has filed lawsuits seeking more than $1 billion. He has won default judgments totaling a bit more than $44 million but has not been able to collect the bulk of the money owed.
The fee requests will be heard as part of a regularly scheduled status conference next month in U.S. Bankruptcy Court in downtown Akron.
Because the amount of money in the Fair Finance estate falls well short of what Baker & Hostetler said it is owed, the law firm said it is requesting an “interim payment of an amount the court deems appropriate in its discretion” with other amounts to be paid later.
Nearly 5,300 creditors are owed about $215 million in the case. Most of the creditors are Northeast Ohio residents, many of whom are elderly, who purchased uninsured investment certificates from the long-time Akron financial services and accounts receivables company.
Bankruptcy Judge Marilyn Shea-Stonum has regularly urged Bash to look into making an interim distribution of funds to the creditors. Earlier this year she rejected a proposal from Bash that professionals be compensated on a sliding fee contingency basis and another proposal calling for a flat fee.
Professionals get paid ahead of creditors in bankruptcy cases.
Baker & Hostetler said it “anticipates large recoveries from the cases that remain.”
Among the larger cases are lawsuits against Textron Financial Corp. and Fortress Credit Corp., which loaned money to Fair Finance; Bash is suing for more than $1 billion. He also is suing former Fair Finance owner Donald Fair for $150 million.
Comedy movie maker National Lampoon, run by former Fair Finance co-owner Timothy Durham, is being sued for $9 million.
Donald Fair sold Fair Finance in early 2002 to Indianapolis businessmen Durham and James Cochran.
The FBI raided Fair Finance’s offices the day before Thanksgiving in 2009 and the business, founded in 1934, never reopened. Bash and his team, along with federal criminal investigators, showed that Durham and Cochran used Fair Finance money to pay for lavish lifestyles in addition to propping up other failed businesses they owned as part of a complex scheme involving insider loans.
The two men, along with Rick Snow, a former Akron-area accountant hired to be Fair Finance’s chief financial officer, were convicted in July in U.S. District Court in Indianapolis on numerous financial fraud charges.
The three men are scheduled to be sentenced Nov. 30 in Indiana and could get life sentences.
The civil lawsuits are expected to continue deep into 2013.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org