Bankruptcy Adviser Goes Bankrupt

Tersigni Consulting, a specialist in helping asbestos creditors get paid by reorganizing companies, is suspected of improperly inflating its bills.

File this one under “Man Bites Dog”: A prominent bankruptcy adviser has filed for Chapter 11 protection, according to the Associated Press.

L. Tersigni Consulting — best known for advising asbestos creditors in claims against bankrupt companies ¬— filed for bankruptcy around the same time federal bankruptcy monitors were gearing up to appoint an examiner to investigate claims that Loreto Tersigni, the firm’s deceased leader, improperly inflated bills, the AP reported.

LTC is suspected of padding some bills by 5 to 15 percent before submitting its fee applications to bankruptcy courts, according to thedeal.com. A U.S. attorney’s office in New Jersey looked into the matter last year but did not bring charges against Tersigni, the AP noted. The alleged actions reportedly were brought to their attention by Tersigni employees.

According to thedeal.com, visiting judge Judith Fitzgerald of the U.S. Bankruptcy Court in a Delaware bankruptcy judge appointed an examiner to investigate Tersigni Consulting’s billing practices and related conduct in eight asbestos-related bankruptcy cases under her purview. Those cases involved the currently bankrupt Federal-Mogul Corp., ACandS Inc., Flintkote Co., and W.R. Grace, as well as USG Corp., which emerged from bankruptcy in June 2006.

Fitzgerald also appointed an examiner for three cases in her home court in the Western District of Pennsylvania: Global Industrial Technologies, North American Refractories, and Pittsburgh Corning Corp., the website reported.

“It appears that LTC engaged in a systematic effort to improperly increase its bills in many other bankruptcy cases in which LTC was employed,” Kelly Beaudin Stapleton, the U.S. Trustee for the region that includes Pennsylvania, New Jersey, and Delaware, said in her request for an examiner, according to thedeal.com.

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