Chicago law firm Quarles & Brady denied fees

Quarles & Brady LLP was denied 95 percent of the almost $900,000 in fees that the law firm requested for representing a company whose attempted reorganization in Chapter 11 was converted to a liquidation in Chapter 7. U.S. Bankruptcy Judge Bruce A. Markell in Las Vegas denied most of the fees because he found the services "did nothing to bring value into the estate."

The Quarles firm, from offices in Phoenix, filed a Chapter 11 petition for Hotels Nevada LLC after the company and a controlling officer were hit with a $141 million arbitration award. At the outset, Markell said the case seemed better suited to a liquidation in Chapter 7. Less than four months after filing, the judge switched the case to Chapter 7.

In the course of converting the case, Markell concluded that the Chapter 11 petition hadn't been filed in good faith. Passing on the firm's fee request, Markell ruled that the considerable expenditure of time produced "no results." Where the firm said that a malpractice claim against the bankrupt company's former lawyers was the only asset of the estate, Markell said no litigation was instituted and the firm "did nothing to bring any value into the estate."

In his Sept. 27 opinion, Markell found that services by the Quarles firm "could only be expected to benefit nondebtor parties primarily."

The Quarles firm also has offices in Illinois, Wisconsin and Florida. Frederick G. Lautz, the firm's managing partner, declined to comment because the matter is in litigation.

The case is In re Hotels Nevada LLC, 09-31131, U.S. Bankruptcy Court, District of Nevada (Las Vegas).