The ongoing bankruptcy proceedings of Steward Health Care System LLC have encountered a significant hurdle as the Justice Department’s bankruptcy division has expressed opposition to Steward’s proposal to hire the law firm Latham & Watkins LLP. The Department’s bankruptcy watchdog, the U.S. Trustee, has filed an objection with the U.S. Bankruptcy Court for the Southern District of Texas, arguing that the distressed healthcare provider “cannot afford the fees of another large multinational law firm” (Bloomberg Law).
Steward Health, which has been operating under Chapter 11 protection, originally enlisted the services of Weil, Gotshal & Manges LLP, a well-regarded firm that has been providing bankruptcy counsel since the previous spring. Since their engagement, Weil has accrued approximately $70 million in legal fees, a figure that underscores the Trustee’s concern over adding another prominent and presumably costly partner to the proceedings.
The request to bring Latham & Watkins into the fold is partly motivated by Steward’s interest in the legal acumen of former Weil partners who have transitioned to Latham. However, the U.S. Trustee maintains that the current representation should suffice and argues that the recruitment of another top-tier law firm is unwarranted. This development adds yet another layer of complexity to Steward’s restructuring efforts as it seeks to manage financial liabilities while maintaining operations across its healthcare network.