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1
.
PLTF SUPP MEM OPP MTD
|
EXTRACTED KEY WORDS
COMPLAINT FRAUD FIDUCIARIES PLAINTIFF PROXIMATE DEFENDANT SWIDLER ALLEGES MALPRACTICE TURNAROUND COURT TORT JURY COMMIT LAW ADVICE FINANCING MARYLAND DAISY PRINCIPLES DISMISS CAUSATION CONCEALMENT INJURY NEGLIGENCE FIDUCIARY DUTY YONCE BALTIMORE HARM |
IN THE CIRCUIT COURT FOR BALTIMORE CITY . . '
2: 22
_ _ _ _ _ _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ _ _ _ _ X
DEBORAH HLTNTFEVAN, TRUSTEE, :
. . iJb
Plaintiff,
V. Case
ERNST & YOUNG LLP,
Defendant. X
_ _ _ _ f _ _ _ _ _ _ _ _ l _ _ _ _ _ -
SUPPLEMENTAL MEMORANDUM OF PLAINTIFF
IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS
The purpose of this Supplemental Memorandum is to dispel any doubt as to the theory of
the Plaintiffs fraud Counts and to summarize succinctly how those Counts fit comfortably into '
accepted principles of proximate causation. Since the Defendant, in its Reply Memorandum,
professes a lack of understanding of the Plaintips allegations regarding the manner in which
E&Y's fraud was a proximate cause of the demise of MGRE, the Plaintiff, will, once again, point
to the essential allegations of the Complaint and the governing legal precepts. The averments of
the Complaint relating to proximate cause are more than sufficient, and, in this case as in others,
the issue of proximate causation is for the jury to decide at the trial on the merits.
I. The Complaint Alleges that E&Y Committed
Fraud Which Proximately Caused MGRE to
Suffer Financial Iniurv and to Fail.
The first two Counts of the Complaint allege that E&Y committed fraud by intentionally
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2
.
PLTF ANSW 2ND INTS
|
EXTRACTED KEY WORDS
SWIDLER BERLIN EMST DEBTOR RELATING PLAINTIFF ROUND CONCEALMENTS INTERROGATORY MERRY SUBPOENA CONTENTION PURSUANT TRUSTEE DEFENDANT REPRESENTATIONS DECLARATION ENGAGEMENT ATTORNEYS DAMAGES LISTS ROUND ENTERPRISES FURNISH FACTS COURT INTENT CONNECTIONS INTEND HERETO |
( c b
IN THE CIRCUIT COURT FOR BALTIMORE CITY
_ _ l _ _ _ - - - _ _ - - - - - l - _ _ _ _ _ _ _ _ _ _ _ X
D E B O W HUNT DEVAN, TRUSTEE, :
Plaintiff,
V. Case No. 97335002KC8243
ERNST & YOUNG LLP, et al.
Defendants.
_ _ _ - _ _ _ - _ _ _ _ _ _ _ I - _ - _ - - - - - - - - - X
ANSWERS OF PLAINTIFF D E B O W HUNT DEVAN,
C U T E R 7 TRUSTEE, TO DEFENDANT ERNST & YOUNG LLP'S
5
The Plaintiff, Deborah Hunt Devan Chapter 7 Trustee (the "Trustee "), by and
undersigned attorneys, in response to the Interrogatories propounded by Defendant Emst k
Young LLP (E&Y), answers.&d objects to the Interrogatories as foIlows:
. . ,
. ( . INTRODUCTION
These Answers are based partly upon the knowledge of the Trustee and partly
infomation gathered by counsel for the Trustee. The word usage and sentence structure is
of the Trustee's counsel and, therefore, does not purport to be the word usage and
structure of the Trustee.
GENERAL OaTECTIONS
The Trustee objects to each and every Interrogatory to the extent the
work product, information or materials prepared in contemplation of litigation, information
communications protected by attomey-client privilege, or the opinions, mental impressions,
conclusions or legal theories of the Trustee's attorneys or other representatives.
24125
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3
.
PLTF AMN ANSW INT 18
|
EXTRACTED KEY WORDS
CALCULATIONS ESQ MGRE COSTS SALES INTERROGATORY CASH PEER GROUP BALTIMORE PLAINTIFF LLP TRUSTEE DAMAGES ATTORNEYS DEFENDANT CLOSINGS MERCHANDISE COST COUNSEL AVENUE YORK WASHINGTON CONNECTION WAVE HAVC LIABILITY EXPENSES SALES GROWTH BALANCE MARYLAND |
IN THE CIRCUIT COURT FOR BALTIMORE CITY
_ _ _ _ _ _ _ _ * * _ - - - - - - - - _ - - - - - - - - -
X
- -c
DEBORAH HUNT DEVAN,
TRUSTEE, :
Plaintiff,
V. Case No. 97335002/CC8243
ERNST & YOUNG LLP,
PLAINTIFF'S SUPPLEMENTAL
ANSWER TO DEFENDANT'S INTERROGATORY NO. 18
The Plaintiff, Deborah Hunt Devan, Chapter 7 Trustee (the "Trustee"), by and through
her undersigned attorneys, in further response to Interrogatory No. 18 propounded by Defendant
Emst & Young LLP (E&Y), answers and objects to this Interrogatory as follows:
INTRODUCTION
This Answer is based partly upon the knowledge of the Trustee and partly upon
information gathered by counsel for the Trustee. The word usage and sentence structure is that
of the Trustee's counsel and, therefore, does not purport to be the word usage and
structure of the Trustee.
G E m W OBJECTIONS
The Trustee objects to this Interrogatory to the extent that the Interrogatory is
burdensome and seeks work product, information or materials prepared in contemplation of
litigation, information or communications protected by attorney-client privilege, or the opinions,
mental impressions, conclusions or legal theories of the Trustee's attorneys or other
representatives.
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4
.
PLTF AMN ANSW INT 16
|
EXTRACTED KEY WORDS
MGRE STANDARDS ENGAGEMENT PROFESSIONALS SUBIECT MATTER GROUNDS THEREFOR BANKRUPTCY SWIDLER BERLIN SUBSTANCE CONSULTANT DISCLOSURE DAMAGE OBJECTIVITY FINDINGS CLIENT ACCOUNTANT NEGLIGENT DEVIATION TRUSTEE INTERROGATORY BANKRUPTCY COUNSEL REPORT SUMMARV INIONS SSCS RECOMMENDATIONS EXPENSES BUSINESS CONSULTANT CONCEALMENT |
IN THE CIRCUIT COURT FOR BALTIMORE CITY , _ .
DEBORAH HUNT =VAN, TRUSTEE, :
Plaintiff,
V. Case No. 9733500UCC8243
ERNST & YOUNG LLP,
PLAINTIFF'S SUPPLEMENTAL
ANSWER TO DEFENDANT'S INTERROGATORY NO. 16
The Plaintiff, Deborah Hunt Devan Chapter 7 Trustee (the "Trustee"), by and through her
undersigned attorneys, in response to Interrogatory No. 16 propounded by Defendant Emst &.
Young LLP (E&Y), answers and objects to this Interrogatory as follows:
INTRODUCTION
This Answer is based partly upon the knowledge of the Trustee and partly upon
information gathered by counsel for the Trustee. The word usage and sentence structure is that
of the Trustee's counsel and, therefore, does not purport to be the word usage and
structure of the Trustee.
GENERAL OBJJKTIONS
The Trustee objects to this Interrogatory to the extent that the Interrogatory seeks work
product, information or materials prepared in contemplation of litigation, information or
communications protected by attorney-client privilege, or the opinions, mental impressions,
conclusions or legal theories of the Trustee's attorneys or other representatives.
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5
.
PLFS RESP TO DEF MTSJ
|
EXTRACTED KEY WORDS
ERNST DEFENDANT SUMMARY JUDGMENT MGRE COURT MOTION LAW MARYLAND SWIDLER EVANS PLAINTIFF ENGAGEMENT MATERIAL FACTS STORES LIMITATIONS HOPKINS WEINGLASS PRINCIPLES PROFESSIONALS BANKRUPTCY INAPPROPRIATE RESTRUCTURING REPRESENTATIONS REASONABLENESS FINANCIAL ADVISOR AFFIDAVIT REORGANIZATION MALPRACTICE ROGER FRANKEL |
V. Case No. 97335002KC8243
ERNST & YOUNG LLP,
PLAINTIFF'S RESPONSE TO DEFENDANT'S
.,,MOTION FOR SUMMARY JUDGMENT >,
, . INTRODUCTION
The Defendant, E&Y, has filed a lengthy motion, and an extensive but highly
record, seeking summaqqjudgment in a case in which almost all of the material facts are shaply
disputed. The Defendant also searches for a ruling which would avoid trial by relying upon a
number of legal principles and cases which have no application to the facts of the present case,
and, in some particularly egregious instances, by relying upon the decisions of out of state cases
which are at odds with controlling Maryland authorities which the Defendant has not cited. The
motion for summary judgment in this case, which is so inappropriate under the facts and the law,
lends credence to the oft stated view that defendants in large cases believe that it is always
their advantage to try to take one last shot at avoiding an otherwise inevitable trial.
FACTUAL, BACKGROUND
Events Leadinv to Filiap For ChaDter 11
It all began in 1968 when Baltimore native Leonard "Boogie" Weinglass ventured into
the retail world, opening a clothing store catering to teenagers and young adults. He would later,
in 1972, connect with his high school friend, Harold Goldsmith and launch Merry-Go-Round
Enterprises, Inc. (`MGRE"), a six-store chain of retail clothing stores. From this
beginning, MGRE,
at all times headquartered in Maryland, would enjoy 20 years of success and
growth.
In 1983, MGRE became a publicly traded company on the New York Stock Exchange,
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6
.
ORDER SETTLEMENT
|
EXTRACTED KEY WORDS
DEFENDANTS APPROVING SETTLING DEFENDANTS PLAINTIFFS COSTS PAYMENTS PARTIES LITIGATION DISMISSING PREJUDICE SETTLEMENT AGREEMENT PARTIES CONTEMPLATE CHARLES JEFFERIES AFBDABLE HOUSING SETTLEMENT FOREVER EXTINGUISHES PARTIES HERETO REQUEST COURT PURSUANT MSCYLAND RULE PARTY BEAR ATTORNEYS FEES BRUCE SHIRK ESQUIRE HOME LOAM HEREBY COUNTRYWIDE HOMES LOANS |
IN THE
Circuit Court
For
Baltimore City
SETTLEMENT ORDER
--
TO THE CLERK:
Please enter this case Agreed and Settled,
, *
/ n
today's date, judgment for costs will be entered against
a This settlement is subject to approval by
, but the entry of judgment is not. Judgment
entered in 30 days unless notice is filed that such approval has been denied.
Attorney(s) for
3. As part of the Settlement Agreement, the Settling Defendants have agreed to
make certain settlement payments to the Plaintiffs (collectively, the "Settlement Payment"). The
. -
Parties contemplate that the Plaintiffs will continue to pursue the Litigation against Defendant
Charles Jefferies and Center for Afbdable Housing. The settlement forever releases, satisfies
and extinguishes all claims of the Plaintiffs against the Settling Defendants.
4. The parties hereto request that the Court, pursuant to Mscyland Rule 2-506@),
enter the Order below approving the settlement and dismissing the Litigation against the Settling
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7
.
ORDER DENY SUM JUDGMENT
|
EXTRACTED KEY WORDS
DEFENDANT SUMMARY JUDGMENT HUNT DEVAN TRUSTEE ERNST YOUNG LLP MOTION HEREBY |
IN THE CIRCUIT COURT FOR BALTIMORE CITY
_ _ _ - _ _ - - - - - - - - - _ _ - - - - - - - - * - - -
- - X
DEBORAH HUNT DEVAN, TRUSTEE, :
Plaintiff,
V. Case No. 97335002/CC8243
ERNST & YOUNG LLP,
Defendant.
- * - _ _ f - _ _ f _ _ * * - - - - _ - - - - - - - - - - X
ORDER DENYING SUMMARY JUDGMENT
The Defendant having moved for Summary Judgment; the Plaintiff having filed a
response thereto; and the matter having been heard and considered; it is this
, hereby
ORDERED that the Motion for Summary Judgment be, and the same is hereby, denied.
KATHLEEN O'FERRALL FRIEDMAN, JUJIGE
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9
.
E&Y FINAL FEE APP
|
EXTRACTED KEY WORDS
ERNST FEE APPLICANT EXPENSES BUSINESS MANAGEMENT BANKRUPTCY REIMBURSEMENT COSTS PLAN STORE PROFESSIONALS SENIOR MANAGEMENT FINANCIAL ADVISORS COMPENSATION DISCLOSURE DIP FINANCING DISTRIBUTION STAKEHOLDERS REORGANIZATION INTERIM FEE ENTERPRISES RESTRUCTURING COMMITTEES MERCHANDISING NEGOTIATION DISTRIBUTION CORPORATION UNITED STATES FEE APPLICATIONS |
- 4
IN THE UNITED STATES BANKRUPTCY COURT
FOR T*E DISTRICT OF MARYLAPID
In re:
MERRY -GO-ROUND ENTERPRISES, INC., :
MGhR DISTRIBUTION CORPORATION,
and :
MCRR, INC., and Chapter 11
ALMEDA CHESS KING , et g! Case Nos.:
through 94-5-0163
Debtors. and 94-5-3774-SD,
(Chapter 7)
FINAL FEE APPLICATION OF ERNST & YOUNG LLP FOR ALLOWANCE OF
COMPENSATION AND REIMBURSEMENT OF EXPENSES
TO THE HONORABLE E. STEPHEN DERBY, UNITED STATES BANKRUPTCY
JUDGE:
Ernst & Young LLP ("Ernst & Young" or the "Applicant"),
accountants, business consultants and financial advisors for Merry -Go-Round
Enterprises, Inc. and its subsidiaries (collectively, the "Debtors"), submits
I
Application for Allowance of Compensation and Reimbursement of Expenses
Application"). This Final Application details services rendered and costs
behalf of the Debtors during the Chapter 1 1 proceedings, for the period
SNIPPETS:
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10
.
E & Y NEW BUS ALERT
|
EXTRACTED KEY WORDS
PEN1 FASHION AUDITOR KPMG-PEAT REGISTRANT ILART REQUEST ROGER FRANKEL SWIDLER BERLIN FILING FIRMS RECOMMENDATIONS WIRH BEN EVANS MICHAEL DIEBER BALTIMORE LOTH RESTRUCRURINP FINANCIAL ADVISORS ART |
of pen1
Part 1
Address: 3300 Fashion Way
Jty: Joppa State: MD Zip: 21085
-
Iontact Name: Isaac bufman
h r e n t Auditor: KPMG-Peat SEC Registrant? a
Yes
Manvick
hbmitted By: Ben EvanslMark Hopkins
Service Opportunity
I Other: Possible othe m c r u h g advisors
I sole source 0 unknown
.i tten Proposal Required? Yes NO
lposat Due Date: ReFerraI
- . ' Referral
e Distribution . .
, RegionMatiod
. .
036283
SNIPPETS:
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11
.
DEF RESP 2 PTF MEM OP MTD
|
EXTRACTED KEY WORDS
FRAUD PROXIMATE BREACH CAUSATION COMPLAINT PLAINTIFF SUPP ALLEGE DEFENDANT TRUSTEE SWIDLER LAW COURT MISREPRESENTATION DISMISS MGRE SUPPLEMENTAL MEMORANDUM CONCEALMENT FRAUDULENT MEM MALPRACTICE TORT OPINION HIGHER STANDARD LOSS YORK LAW DESPITE MARYLAND NEGLIGENCE |
D E B O M HUNT DEVAN, TRUSTEE, * IN THE
--
:
Plaintiff, * CIRCUIT
*
V. COURT
ERNST & YOUNG LLP. * FOR
Defendant. * BALTIMORE CITY
* Case No. 97335002/CC8243
. . . . . . . . . . . . . . . . . . . . . . . .
DEFENDANT ERNST & YOUNG LLP'S RESPONSE TO TRUSTEE'S
SUPPLEMENTAL MEMORANDUM IN OPPOSITION TO DEFENDANT'S
MOTION TO DISMISS
Some nine months after the close of briefing and just three days before the scheduled
hearing on defendant Ernst & Young's ("E&Y's") motion to dismiss, the Trustee has filed
a curious "Supplemental Memorandum" for the purported purpose of "dispel[ling] any doubt
as to the theory of the Plaintiffs fraud counts." Supp. Mem. 1. This filing is an obvious sign
of desperation on the Trustee's part: she uses it to introduce an entirely new legal theory of
proximate cause, tacitly acknowledging that the arguments she has advanced thus far are
inadequate to support her claim. While we congratulate the Trustee on her persistence and
creativity, her efforts succeed only in emphasizing the defects in her position.
21218993.3 121098 llJlE98435811
1. _Responding to the causation arguments made in our reply brief, the Trustee now
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12
.
DEF E&Y ANS TO COUNTS & C
|
EXTRACTED KEY WORDS
PARAGRAPH ADMITS COMPLAINT COURT DEBTORS UNITED STATES MARYLAND BANKRUPTCY COURT DISTRICT MANAGEMENT ERNST YOUNG LLP STANDARDS TRUTH ASSISTED MANAGEMENT COUNTERCLAIM BALTIMORE DUTY CARE INFORMATION SUFFICIENT PLAINTIFF DOCTRINE PURSUANT FOREGOING LACKS KNOWLEDGE FINANCING DEFENDANT RESPECTFULLY REQUESTS PROFESSIONALS REVIEW |
IN THE CIRCUIT COURT FOR BALTIMORE CITY I -I
c
DEBORAH HUNT DEVAN,
Chapter 7 Trustee,
Plaintiff,
V. Case No. 97335002kC824&
w
ERNST & YOUNG LLP,
Defendant.
DEFENDANT ERNST AND YOUNG LLP'S ANSWER TO COUNTS I AND I1
AND AMENDED ANSWER TO COUNT 111 AND COUNTERCLAIM
Defendant Ernst & Young LLP, by its attorneys, having previously answered
Count I11 of the Complaint in its Answer to Count 111 and Counterclaim filed on January
14, 1998, in the United States Bankruptcy Court for the District of Maryland, Baltimore
Division, answers Counts I and I1 of the Complaint and amends its Answer to Count I11
and Counterclaim as follows:
First Defense
The Complaint fails to state a claim against the Defendant upon which relief can
be granted.
Second Defense
The claims alleged in the Complaint are barred by the doctrine of estoppel.
Third Defense
The claims alleged in the Complaint are barred by the doctrine of waiver.
- 1 -
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13
.
COMPLAINT
|
EXTRACTED KEY WORDS
ERNST MARYLAND BALTIMORE CREDITORS TRUSTEE BUSINESS RESTRUCTURING TURNAROUNDHESTRUCTURING EXPERT FINANCIAL ADVISOR MERRY-GO-ROUND ENTERPRISES PLAINTIFF LLP STORES REORGANIZATION CASH FLOW BANKRUPTCY UNITED STATES MGR DISTRIBUTION CORPORATION REPRESENTATIONS RESTRUCTURING ACCOUNTANT ESTATE THEREOF ENGAGEMENT PARAGRAPHS BUSINESS CONSULTANT MGRR UNSECURED CREDITORS TIMES RELEVANT HERETO RESIDENT AGENT |
- , - , , ~ - - _- - " " " " - "--- - - - - - - X
DEBORAH HUNT DEVAN, as Chapter : IN THE
7 Trustee for MERRY-GO-ROUND
ENTERPRISES, INC., MGR
DISTRIBUTION CORPORATION and
MGRR, INC.,on behalf of the Debtors, :
The Chapter 7 Estate Thereof and the
Unsecured Creditors, Equity Security :
Holders, and Priority and Administrative
Creditors Thereof,
One South Street, 27'h Floor
Baltimore, Maryland 21 202
Plaintiff
Case No.:
v.
ERNST & YOUNG, LLP
One N. Charles Street
Baltimore, Maryland 21 201
SERVE ON: Resident Agent
Robert Neu bert
One N. Charles Street \
Baltimore, MD 21 201
and . .
ERNST & YOUNG INTERNATIONAL,
INC.
787 Seventh Avenue
New York, New York 1001 9
SERVE ON: Resident Agent
The Corporation Trust Co.
1209 Orange Street
Wilmington, DE 19801
. .
zc .+ p ' -
. _. ,<.?
, p . '.. -.
.i
:
-.f$
. ..*. .
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15
.
ORDER REMANDING
|
EXTRACTED KEY WORDS
BALTIMORE CITY REMAND CIRCUIT COURT MARYLAND TRUSTEE ERNST PROCEEDING MERRY-GO-ROUND ENTERPRISES DEBORAH DEVAN YOUNG LLP DEFENDANTS SUBMISSIONS PARTIES ORAL OPINION EQUITABLE GROUNDS ADVERSARY PROCEEDING PURSUANT BEARS HEREBY REISTERSTOWN ROAD STE IRSWSBCPERBWERRYWORO |
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Baltimore
11 In re:
' Case Nos. 94-5-0161-SD
I MERRY-GO-ROUND ENTERPRISES, INC., through 94-5-0163-SD
MGR DISTRIBUTION CORPORATION, Chapter 7
and MGRR, INC., *
Debtors. *
* * *
I
~~~~~~~
DEBORAH H. DEVAN, as Chapter 7 Trustee
for Merry-Go-Round Enterprises, Inc., MGR MAR
Distribution Corporation, and MGRR, Inc., 3
Plaintiff, *
*
V. * . Adversary No. 97-5-783
ERNST & YOUNG LLP
and t
ERNST & YOUNG INTERNATIONAL, LTD.,
Defendants.
t
* * * *
ORDER REMANDING PROCEEDING
ll This adversary proceeding was initiated by its removal to this court by
!I and the Plaintiff Trustee moved to remand. The court considered the submissions and 1
I ll arguments of the parties; and for reasons stated in an oral opinion on the record on I
1( March 18, 1998, the court has determined. that there are equitable grounds for remanding
11 this adversary proceeding. Therefore, pursuant to 28 U.S.C. §1452(b), it is this /T& day
-1 - ORDERED, that the within proceeding, Devan v. Ernst & Youna. LLP. et al.,
was removed to this court from the Circuit Court for Baltimore City, and bears
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16
.
DEFS MTSJ
|
EXTRACTED KEY WORDS
PLAINTIFF TRUSTEE SUMMARY JUDGMENT DEFENDANT CONCEALMENT NEGLIGENCE COMPLAINT FRAUDULENT SWIDLER FRAUD MARYLAND ERNST MOTION EVIDENCE ENGAGEMENT PETRAGLIA REPRESENTATION PETRAGLIA DECLARATION BANKRUPTCY LIMITATIONS PROFESSIONALS LITIGATION WEINGLASS GRANTING SUMMARY JUDGMENT FINANCIAL ADVISOR MANAGEMENT ALLEGATIONS AFFIDAVIT MERRY-GO-ROUND ENTERPRISES |
DEBORAH HUNT DEVAN, TRUSTEE, * IN THE
.c
Plaintiff, * CIRCUIT
* COURT
V.
ERNST & YOUNG LLP, * FOR
Defendant. * BALTIMORE CITY
* Case No. 97335002/CC8243
. . . . . . . . . . . . . . . . . . . . . . . .
DEFENDANT ERNST & YOUNG LLP'S MOTION FOR SUMMARY JUDGMENT
Defendant Ernst & Young LLP (,`E&,') respectfully moves this Court,
Maryland Rule of Civil Procedure 2-501, for an order granting summary judgment in favor
of E&Y on the claims asserted against it by the plaintiff in this case. For the reasons
below and set forth in the accompanying memorandum of points and authorities adopted
herein by reference, summary judgment is warranted:
1. Plaintiff Deborah Hunt Devan ("plaintiff ') filed the Complaint in this case
December 30, 1997, over four years after the first acts of the alleged fiaud,
concealment, and negligence committed by E&Y. Complaint fl 1, 19,24,28-29,33,42.
2. As the trustee suing on behalf of the estate of Merry-Go-Round Enterprises
V`MGRE'') (and related companies), plaintiff stands in the shoes of MGRE and is subject to
~
all defenses that could be asserted against MGRE. Stratton v. Sucks, 99 B.R. 686,692 (D.
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17
.
LTR CONCERNS RE E&Y FEES
|
EXTRACTED KEY WORDS
HOPKINS ESTATES INTERIM PROFESSIONALS EXPENSES COMMITTEE DEBTORS MARK REQUEST SENIOR CONSULTANT BILLING WARREN PETRAGLIA SPENT MANAGER HOURLY RATE KPMG CREDITORS STORE ADMINISTRATION ENGAGEMENT EXPLANATION COMPENSATION PARAPROFESSIONALS REASONABLENESS REVIEW COST REPORT ESQUIRE |
March 6, 1995
VIA FACSIMILE & FIRST CLASS M&Z&
~r
. Mark A. Hopkins
pw. Warren Petraglia
Ernst h Young UP
787 seventh Avenue
New York, NY 10019
Re: In re Merry-Go-Round Enterprises, Inc., et al., '.
Case Nos. 94-5-0161-SD Through 94-9-0163-S0, Inclusive,
Second Application Of Ernst & Young LLP For Interim
Allowance Of Compensation And Reimbursement of Expenses
J t h e wADalicationwl
Dear Messrs. Hopkins and Petraglia: ;
By t h i s letter, The Official Committee of Equity
securities Holders (the "Equity CommitteeB1),
The Official Committee
of Unsecured Creditors (the **Creditors' committee," and,
collectively with the Equity Committee, the "Committees"), and
Fidelity Management L Research Company, on behalf of funds it
manages ("Fidelitym*)
communicate our concerns with respect to the.
fees and expenses requested by Ernst h Young LLP ("EYW) in its
Application for the period from May 1, 1994 to August 31, 1994 (the
*lSecond Interim Period"). We propose to attempt to resolve these
concerns through an informal dialogue and avoid the expense of a
contested fee application hearing. The Assistant United States
Trustee Karen Moore has encouraged us to seek such a consensual
resolution and present the fruits of our negotiations to the Court
in an uncontested form.
In the Application, your firm requests $700,318.00 and
$51,169.00 in fees and expenses, respectively. Those fees were
generated by twenty-four professionals and paraprofessionals who
expended 2,672 hours at a blended hourly rate of $262.10.
Cumulative fees and expenses of EY for t h i s entire case through
August 31, 1994 will total $1,187,967.00, if allowed.
We have approached the EY fee application with the
understanding that the Merry-Go-Round debtors (the '*Debtors" or the
**Companyn) retained EY to provide leadership and guidance in these
reorganization proceedings. EY was selected by t h e Company for its
extensive experience as consultants in retail business
reorganizations. KPMG Peat Marwick, LLP (**KPMG*')
already provides
the Company with accounting and auditing services and EY was
brought in to lead the Debtors to a successful business turnaroUd.
.The facts demonstrate, however, that no significant changes in the
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