Let us PRay?

If your company is a corpse does it make sense to hire a big-time communications agency to put a happy face on it with the media? After all, if there's no future, what's to say?

Well, according to this article by Daniel Wagner at Newsday, that's what American Home did, and apparently wanted to continue doing, until some lawyers for the unsecured creditors presented a court filing objecting to it. The filing seems to have brought this dead lender to its senses:

Melville-based American Home Mortgage has decided to stop paying a high-priced crisis communications firm that creditors had objected to as "a waste," a lawyer for the bankrupt lender's committee of unsecured creditors said Friday.

Curious about what this sort of communications casket costs? In this case, American Home had already paid a nonrefundable $50,000 retainer. Going forward, they were going to spend $200 to $875 an hour, plus expenses. Dearly beloved!

Here's what the lawyers said about the communications deal in their filing (italics added for emphasis):

"...(the agency) does not appear to be performing any services which will assist in maximizing the values obtained for the debtors' assets or minimizing estate expenses," the creditors' attorneys wrote in an Aug. 30 filing. "Instead, the primary purpose... appears to be to assist management in putting its best face forward with the media and its stockholders concerning the failure of the company."

In my humble opinion, it seems likely that the same sort of business judgement that led to this high-priced media funeral may have been at work in decisions leading up to the company's failure in the fiurst place?

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