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11 debtors, and number of employees that it had, had no bearing on standard to which it was held in conducting thorough conflicts search for connections of its own employees to parties in interest in jointly administered bankruptcy cases. Further, even assuming that financial advisory firm had fulfilled its initial obligation to disclose fee sharing arrangement between firm and regular firm associate slated to perform work in debtors' jointly administered Chapter 11 cases, firm violated its disclosure obligations in not making supplemental disclosure after fee sharing arrangement was modified to eliminate "exclusivity" condition and to allow this associate to work on engagements for other firms, even those which might directly or indirectly compete with firm's current business activities. (3) Even in absence of any objection, bankruptcy court has independent duty to review professional fee applications to protect the estate, to prevent overreaching professionals from draining estate of wealth which by right should inure to benefit of unsecured creditors. There is strong presumption that "lodestar" figure, which is product of professional's reasonable hours multiplied by reasonable hourly rate, represents "reasonable" fee for bankruptcy professional. In this case, percentage reductions in fees sought were warranted to account, inter alia, for vagueness of many of entries in time records submitted by financial advisor, the lumping of time, and duplication of effort by multiple timekeepers; (4) Interim fee awards remain subject to re-examination and readjustment, and the Bankruptcy Code specifically permits court to order disgorgement of interim payments to extent that they exceed ultimate amount of fees and expenses approved by court. In this case, further reduction of approximately 18% in fees awarded to financial advisor that represented debtors in jointly administered Chapter 11 cases, beyond reduction already ordered on reasonableness grounds, was warranted as remedy for financial advisor's violation of its disclosure obligations; (5) While professionals are certainly entitled to reimbursement for expenses reasonably incurred in connection with bankruptcy case, such as late night meals while working in office on matters requiring urgent attention, retention as estate professional is not license to eat lavish dinners at expense of creditors. In this case, expenses, in amount of roughly $254,000, for which reimbursement was sought by financial advisor that represented debtors in jointly administered Chapter 11 cases had to be reduced by $6,400, on account of excessive charges for meals eaten in or ordered from restaurants, by an additional $32,000, which represented fifty percent of charges for airfare and hotels incurred by financial advisor's out-of-town personnel "commuting" to New York and New Jersey, and by $5,000 on account of excessive and insufficiently documented cell phone and telephone charges (6) no non-monetary relief, in form of order requiring financial advisor that represented debtors in jointly administered Chapter 11 cases to overhaul its internal conflicts checking procedures, was warranted; (7) court would exercise its discretion not to impose any Rule 9011 sanctions, even if it found that financial advisor's recalcitrance in refusing to admit its disclosure violation had resulted in violation of the Rule; (8) Even assuming that the gross negligence or willful misconduct for which liquidating trustee could be removed included conduct occurring before liquidating trust agreement went into effect, liquidating trustee's violation of disclosure obligations under Bankruptcy Rules did not rise to level of gross negligence or willful misconduct, of kind supporting his removal from liquidating
©2014 William L. Norton III
