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Bankruptcy court may disallow fees incurred by law firm for work relating to plan if it was clear that plan was unconfirmable at time that these services were rendered. In this case, the lack of success by attorneys to debtor in proposing original reorganization plan that was found to be lacking in requisite "good faith," or by attorneys to creditors' committee in supporting this same plan, did not warrant reduction in attorneys' fees; (2) When attorney seeks compensation from estate for legal research which attorney performed, attorney's time records should identify the issues researched with enough specificity to allow court to assess their relevancy and necessity to the case. In this case, vagueness of many of entries in time records of attorneys to unsecured creditors' committee warranted 50% reduction in fees awarded for attorneys' performance of these tasks; (3) fees sought by attorneys for reviewing and editing their bills to ensure that no confidential information was disclosed, in amount of over $10,000, would be allowed; and (4) fees, in amount of $18,626, sought by attorneys to unsecured creditors' committee for time spent in defending fee application would be reduced by $2,000 to account for fact that portion of these fees was for time spent by attorneys in correcting vague nature of many of time entries, as well as for meritorious nature of some of the United States Trustee's objections to attorneys' fee application.
xi. In re American Housing Foundation, 498 B.R. 713 (Bankr. N.D. Tex 2013)>/b>
Issue: Objections were filed to fee applications of Chapter 11 trustee, trustee's counsel and financial advisor, and attorneys representing unsecured creditors' committee.
Holdings: The Bankruptcy Court, Robert L. Jones, J., held that in order to result in "identifiable, tangible, and material benefit" to estate, as required to be compensable, professional's services need not produce something that directly augments estate. "Identifiable, tangible, and material benefit" is provided if professional's services help administer estate asset, whether or not the effect of administration of asset is enhancement of estate, as long as professional's services are performed at direction of estate representative, and estate representative is acting in accordance with the Bankruptcy Code and its sound business judgment: In this case,
(1) Attorneys for unsecured creditors' committee were not entitled to full $102,000 in fees they requested for opposing appointment of Chapter 11 trustee, where level of services that attorneys provided reflected motive on part of some of members of committee to resist appointment of trustee, even though it was clear that debtor was floundering in its efforts to comply with the many requirements imposed on it as debtor-in-possession. While it was impossible to precisely quantify extent to which motives of committee members impacted on level of service provided, court would disallow $40,000 of fees requested based on excessive nature of services provided in opposing trustee's appointment.
(2) Reduction of $25,000 in compensation requested by attorneys for unsecured creditors' committee was warranted for attorneys' conduct, even after Chapter 11 trustee was appointed over objection by creditors' committee, in continuing to oppose trustee's efforts to fulfill his basic duties as trustee with regard to confirmation of plan and thereby escalating estate expenses, all in apparent effort by committee members to avoid losing control over case.
©2014 William L. Norton III
