Judge may order review of NorthWestern's legal fees

HELENA (AP) - The judge in NorthWestern Corp.'s bankruptcy case may call in an outside expert to review millions of dollars in company expenses, including more than $5 million in legal fees last fall.

The Montana Public Service Commission discussed the fees at a meeting here Wednesday. The idea of a fee examiner first came up at a hearing in the case that took place in Delaware bankruptcy court on Tuesday, said Al Brogan, a commission lawyer.

At the hearing, Brogan said, Judge Charles Case told NorthWestern officials to ask other parties in the case, such as the PSC, if they want to appoint an examiner. The examiner would review NorthWestern's requests for court approval of bankruptcy costs and advise the judge.

NorthWestern spokesman Roger Schrum, in Butte, said the company had warned that the fees associated with bankruptcy would be large, ''and unfortunately that's how the process developed.

''There's a process in place to review fees that includes not only the company's review but also reviews by the creditors committee and the U.S. trustee. However, if the judge feels there needs to be someone else in addition, we would understand that.''

Schrum added that the fees are not incurred just by the company, but also by the creditors committee and other interests.

While the commission didn't make a formal stand on the idea Wednesday, several members said after the meeting that they think a fee examiner might be necessary.

''I think it's a superb idea,'' said Chairman Bob Rowe, a Democrat who represents northwestern Montana. ''If we have the opportunity to raise it with (NorthWestern) I'm certainly going to tell them it's a good idea.''

Fellow commissioner Matt Brainard, a Republican representing southwestern Montana agreed.

''You can't help but draw a comparison between the budget allowed their professionals and what the Public Service Commission has to deal with,'' he said. According to documents released in the case, NorthWestern Energy is spending much more money for lawyers than the PSC does.

''Their fees may be entirely appropriate,'' he said. ''That's the reason to have the fee examiner.''

The legal fees totaled more than $5 million between Sept. 14 and Nov. 30 last year, court documents show. More than $4 million was spent by NorthWestern, and the rest was by the committee of creditors - the people to whom bankrupt NorthWestern owes money. NorthWestern is responsible for paying all the legal fees of the bankruptcy case.

Rowe said none of the legal fees are paid with money from Montana utility customers. The PSC has retained the right to set how much the company can charge Montanans. Still, he said, high fees only take more money out of the shrinking assets of the NorthWestern.

Bob Nelson, the Montana consumer counsel, who is also a party to the bankruptcy, said he's not sure an examiner is needed. He said he would have to weigh the benefits.