Three Canadian law firms failed to persuade an appeals court to double the C$6.3 million ($5.9 million) fees awarded by a trial judge after settling a group lawsuit against Atlas Cold Storage Income Trust.

Sutts Strosberg LLP, Koskie Minsky LLP and Groia & Co. had sought C$12 million in fees, which they said they were entitled to because they had a contingency agreement with shareholders who sued Atlas, an operator of refrigerated warehouses, in 2004 for overstating its earnings in 2001 and 2002.

Atlas agreed to settle the class-action suit by paying C$40 million, which paid shareholders as much as C$4.50 for each share they held. Ontario Superior Court Judge Joan Lax in a Feb. 12 ruling concluded that the lawyers couldn’t justify payment for 7,400 hours billed for a three-day pleading motion, preparation for a certification motion that was never argued and three days of mediation.

Struggling CIT Group Inc. has launched a debt restructuring effort it hopes will trim at least $5.7 billion from its balance sheet, but also is asking bondholders to approve a prepackaged reorganization plan in case it is forced to file for Chapter 11 bankruptcy protection.

New York-based CIT, one of the nation's largest lenders to small and midsize businesses, has been devastated by the downturn in the credit markets and is attempting to restructure its operations to remain in business. CIT received $2.3 billion in federal bailout aid last fall, a $3 billion emergency loan in July from some of its largest bondholders, and bought back $1 billion in debt but still needs to reduce its debt burden to survive.

The company said late Thursday that its restructuring plan has been approved by its board and by the steering committee of its bondholders. Under terms of the deal, bondholders would exchange their current notes for a portion of five series of newly issued secured notes, with maturities ranging from four to eight years, and/or newly issued preferred shares.

The exchange offers will expire just before midnight Oct. 29. However, for the out-of-court debt restructuring to be successful, CIT said at least $5.7 billion worth of debt must be able to be wiped off of its balance sheet.

Therefore, CIT also is asking most bondholders and other holders of CIT debt to approve a prepackaged reorganization plan so the company has the option of filing for and quickly exiting Chapter 11 bankruptcy protection in the event the debt swap doesn't achieve its goals.