Borders' bankruptcy consultants getting paid hundreds of dollars an hour
A dozen consultants providing services to Ann Arbor-based Borders Group Inc. are earning more than $500 an hour to help the company navigate the bankruptcy process, according to a document filed today in New York.
Borders is paying its top consultants hundreds of dollars an hour to help the company navigate the bankruptcy process.
The highest paid consultant, supervising partner Lisa Donahue, is being paid $895 an hour. Two others are making $790 an hour and three are making $695 an hour.
The filing comes as Borders is also trying to defend its proposed plan to distribute up to $7.8 million in bonuses to its top executives if the company successfully and quickly emerges from bankruptcy.
Borders is closing 226 superstores as part of its Chapter 11 filing and is simultaneously considering a move out of Ann Arbor.
Here are the highest-paid Alix Partners consultants working for Borders:
1. Lisa Donahue, supervising partner: $895 an hour.
2. Todd Brents, bankruptcy process and operational support: $790.
3. Paul C. Svindland, revenue and merchandise performance improvement support: $790.
4. Keith Jelinek, revenue and merchandise performance improvement: $695.
5. Eva Anderson, SG&A cost reduction: $695.
6. Tim Gallagher, IT performance management and improvement: $695.
7. Pilar Tarry, Chapter 11 administrative lead: $645.
8. Jeffrey Webb, bankruptcy process and operational support: $600.00
9. Russell Spieler, revenue and merchandise performance improvement support: $560.
10. Ojas Shah, weekly cash/business model lead: $560.
11. Thomas Studebaker, bankruptcy process and operational support: $560.
12. Clayton G. Gring, Chapter 11 administrative lead: $560.
13. Jonathan E. O'Reilly, bankruptcy process and operational support: $490.
14. Esben T. Christensen, revenue and merchandise performance improvement support: $490.
15. Adam Z. Hollerbach, revenue and merchandise performance improvement: $440.
16. Brad Spooner, bankruptcy process and operational support: $440.
17. Jarod Clarrey, bankruptcy process and operational support: $415.
18. Kimberly Cote, bankruptcy process and operational support: $415.
19. Robby J. Spigner, financial analysis support: $395.
20. Prashant Waghela, revenue and merchandise performance improvement support: $395.
21. Brian Nemeth, revenue and merchandise performance improvement support: $395.
22. Alex U. Gass, bankruptcy process and operational support: $290.
23. Stephen Tucker, bankruptcy process and operational support: $220.
In the filing, AlixPartners says its functions include: "assisting in overseeing the implementation of operational restructuring plan, assisting in evaluating and implementing a store closing program, managing the claims and claims reconciliation processes, assisting with the management of and communications with creditors, creditors’ advisors and other external parties in interest, and providing testimony before the Bankruptcy Court as required."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
snapshot
Thu, Apr 21, 2011 : 4:41 p.m.
Let's publish all the names and amounts that Ann Arbor schools pay their "consultants" too. Also include if they are "retired" from the district. I think this would be very beneficial to the public. Borders is a private company so our "tax" dollars aren't being used. Public school "consultants" are paid with tax dollars.
dmkellman
Thu, Apr 21, 2011 : 2:31 p.m.
News like this really irritates me. Everywhere you look, there's stories of teachers losing their jobs. Police and fire positions are also being eliminated because there isn't enough money, and yet, here's a nice story of people making hundreds and hundreds of dollars an hour. Not a day, but an HOUR! It just makes me sick.
clownfish
Thu, Apr 21, 2011 : 12:50 p.m.
Too rich, last month A2.com posted salaries of degreed public employees that pale in comparison to these outrageous fees, and the blogsphere was outraged! How dare those people make 100k a year!! People were outraged that A2 has so many lawyers. Now people are excusing $895 and hour because the person has a degree and all of a sudden being a lawyer is a good thing. Go figure.
Carole
Thu, Apr 21, 2011 : 12:31 p.m.
Just totally disgusting -- and they are still wishing to pay millions to execs.
Goofus
Thu, Apr 21, 2011 : 3:25 a.m.
What are hourly workers at Borders...AKA the people who will actually be losing their jobs... making these days?
dmkellman
Thu, Apr 21, 2011 : 2:33 p.m.
Probably somewhere around $9/hr
Escapee
Thu, Apr 21, 2011 : 2:14 a.m.
A bit of history for you..Alix Partners was brought in back in 2008 to help turn Borders around. They were responsible for recomendations on many of the layoffs in the corporate office. (Tim Gallagher was one of the "saviors" back then. Obviously the brilliant turn around plan failed but apparently the new stellar leadership thinks they deserve another chance to squeeze the good people at Borders for more money.
Jon Saalberg
Thu, Apr 21, 2011 : 12:58 a.m.
It doesn't matter if it's usual or unusual for these kind of hourly rates are paid to consultants advising a company in bankruptcy - they are completely absurd.
A2Realilty
Thu, Apr 21, 2011 : 12:55 a.m.
Crazy hourly rates. I'm not sure that God himself could justify $895 per hour. I hate the bankruptcy process. The executives get huge bonuses somewhat in reward for terrible decisions that led the company to this point. The consultants get paid a ransom that would make a king blush. And then many of the rank and file will get laid off and lots of suppliers will get stiffed on their bills - most of which are for merchandise that Borders took, sold for revenue and then doesn't have to pay for... I'm not sure how this is different from stealing. Everything is terrible about this.
5c0++ H4d13y
Wed, Apr 20, 2011 : 11:18 p.m.
Insert outrage and disgust here.
Jojo B
Wed, Apr 20, 2011 : 10:56 p.m.
Everybody wants to get their cut of the pork before the pig dies and is just a pile of bones.
Adam Dickson
Wed, Apr 20, 2011 : 10:54 p.m.
Bankruptcy is complicated and contentious, and the best lawyers and consultants command a high price for their expertise. Borders had the option to hire cheaper, less experienced alternatives, but they made the wise decision to pay legal fees now rather than pay creditors more later. Good lawyering and consulting will save Borders money in the future even though it is expensive in the present.
lynel
Wed, Apr 20, 2011 : 11:23 p.m.
" they made the wise decision to pay legal fees now rather than pay creditors more later" Do you mean pay their creditors what they owe them?
Nathan Bomey
Wed, Apr 20, 2011 : 10:10 p.m.
For historical perspective, here's a New York Times story on the U.S. government's objection in 2009 to "staggering" fees paid by General Motors to AlixPartners consultants during GM's bankruptcy: <a href="http://dealbook.nytimes.com/2009/06/23/trustee-objects-to-gm-fees-for-evercore-alixpartners/" rel='nofollow'>http://dealbook.nytimes.com/2009/06/23/trustee-objects-to-gm-fees-for-evercore-alixpartners/</a>
Jordan Miller
Wed, Apr 20, 2011 : 9:45 p.m.
This is common practice for a company restructuring. And these prices are not in any way unusual. The headline and copy of this story are misleading and factually incorrect. There is a big difference between what a consultant bills and what he/she is being paid. A mid-level consultant (operational support, for example) may be billing $220, but he/she is probably being paid somewhere around $75/hour, which is not an unreasonable wage for a professional strategic and operations consultant. The rest goes to the consultancy overhead and operating costs. Also, did A2.com attempt to contact Borders or the consulting firm? Or was this simply gleaned directly from a press release and a website? You need to give some context and... well... reporting.
Nathan Bomey
Wed, Apr 20, 2011 : 10:08 p.m.
Jordan, As stated in the story, this comes directly from the bankruptcy documents, not a press release. According to the bankruptcy document, this list includes "all of the members of the Temporary Staff that provided services to the Debtors during this Staffing Period, along with their corresponding function descriptions and APS billing rates." I've got an e-mail out to AlixPartners and will update if the firm provides any additional details.
Roadman
Wed, Apr 20, 2011 : 9:41 p.m.
I knew Jay Alix's small Southfield staff in the 1980s. Jay was a CPA that was a business turnaround expert. One of his first big accounts was Sanders Confectionery. The executive bonuses are obscene, however if Jay is successful at cost reduction and the company survives it shall be well worth it.
lynel
Wed, Apr 20, 2011 : 11:17 p.m.
I didn't realize AlixPartners was a Michigan company. What's good for Michigan....
northside
Wed, Apr 20, 2011 : 9:32 p.m.
Nice to see a look at private sector wages following the paper's close scrutiny of public sector ones. Based on these numbers it appears that going broke is a very expensive process.
PLGreen
Wed, Apr 20, 2011 : 9:08 p.m.
So how much did Borders CEO make per hour while he was running the Company into the ground? I think you will find that it was MUCH more than $895 per hour.
a2girl
Wed, Apr 20, 2011 : 9:03 p.m.
This does look bad, but the reporting is incomplete. No where does it state how many hours the employees are billing. In my experience working in consulting firms, the lower paid employees bill the majority of the hours. While I am not privy to this case, I would guess that the higher the compensation, the fewer the hours they are billing. Those partners billing at $500+/hour are busy bringing in more work to their firm so that they can continue to stay in business and employ the support staff that do not bill hours to the clients. Yes, consultants can make a lot of money, but just because they bill at the rates you see listed, doesn't mean that they get to keep all of it.
SuperiorMother
Thu, Apr 21, 2011 : 12:59 p.m.
Alix Partners has been working with Borders since at least late 2008. (I worked at the corporate office until Feb. 2009, when they laid me off.)
Lamont Cranston
Wed, Apr 20, 2011 : 10:13 p.m.
The other thing is that they are only there for a few weeks or months. They are not there for life. It is not a job for a pensioner
Do not taunt Happy Fun Ball
Wed, Apr 20, 2011 : 8:47 p.m.
This is now in the realm of 'lawyer-world' - and out of the hands of normal people. Borders is dealing with over a Billion dollars in problems and a future that predicts they can't pay off contracts they signed. If they can get the best team to handle the debts owned - perhaps more of the 17,000 people employed by the company will keep their jobs and perhaps the stock holders will get more future value. I am rooting for them.
A2comments
Thu, Apr 21, 2011 : 10:43 a.m.
The stockholders will get zero. All debt with liens gets pd first, usually at less than 100 cents on the dollar. Since they can't get pd, they become the equity owners. Recent examples include Oriental Trading Company, Orchard Brands, and join Harry and David.
say it plain
Wed, Apr 20, 2011 : 8:18 p.m.
So what are the bonuses for the CEO-types for then?! Calling the 'right' bankruptcy consultants?! I'm guessing that much of the CEO-types' heavy lifting is pretty much that, calling in teams of consultants to do the actual work?!
javajolt1
Wed, Apr 20, 2011 : 8:17 p.m.
@ RS The lawyers ALWAYS find a way to get paid.
A2comments
Wed, Apr 20, 2011 : 7:39 p.m.
In a bankruptcy such as this, MILLIONS in fees will be paid out including costs incurred by potential acquirers and their teams. Rape and pillage it was called in olden times.
bob
Wed, Apr 20, 2011 : 7:30 p.m.
$895/hr...really?!? That is $1,861,600 per year if they actually work 40 hours a week. Ridiculous! It would take middle class America over 30 years to make that much money
Lamont Cranston
Wed, Apr 20, 2011 : 10:09 p.m.
Well what you fail to realize, is that person won't be there for a year. You can a med student, much less than a surgeon, but you only have to wait for them to learn. If you don't mind waiting for a few years you can get them on the cheap. On the other hand, if it is important for you to deal with the heart attack right now, you will probable pay for the trained expert.
grye
Wed, Apr 20, 2011 : 8:53 p.m.
Jealous? Suggest you get what ever degree this guy has and get a better job. Plenty of them out there. Just need to be ambitious. Or if you feel guilty after getting such a job, keep only $100,000 and give the rest to those not willing to work so hard.
mentalNomad
Wed, Apr 20, 2011 : 7:36 p.m.
The actual employee probably gets much less than that. The rest of it goes to pay for the office rent, support staff, non-billable time, etc. Still a good salary, though. Lawyers ain't cheap.
Oregon39_Michigan7
Wed, Apr 20, 2011 : 7:28 p.m.
Wait, you mean to tell me legal fees are expensive?
andys
Wed, Apr 20, 2011 : 7:28 p.m.
What does Stephen Tucker do for only $220 per hour, run and get sandwiches for the others?
Stephen Tucker
Thu, Apr 21, 2011 : 6:36 p.m.
You guys are just jealous.
Salinemary
Thu, Apr 21, 2011 : 2:34 a.m.
Good one lynel!
lynel
Wed, Apr 20, 2011 : 11:04 p.m.
I'm guessing he drives Alex Gass, who actually picks up the sandwiches.
mentalNomad
Wed, Apr 20, 2011 : 7:26 p.m.
Is this unusual for a company in bankruptcy? How does this compare to other legal fees? I would expect them to pay for expert legal advice to help them get through the process as smoothly as possible. Context please! This article only regurgitates the legal document and does not provide any analysis or background.
rs
Wed, Apr 20, 2011 : 7:21 p.m.
Its just one more bill that Borders won't pay when they slide into Chapter 7.
javajolt1
Wed, Apr 20, 2011 : 7:14 p.m.
The irony never ceases......