Bear Communications, LLC

CourtUnited States Bankruptcy Court, D. Kansas
DecidedSeptember 17, 2021
Docket21-10495
StatusUnknown

This text of Bear Communications, LLC (Bear Communications, LLC) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bear Communications, LLC, (Kan. 2021).

Opinion

Bank xes LQ OY, ey No Rr Se C S/ SRSEEEG S| Verges SO ORDERED. y SS □ + *\ ere □ SIGNED this 17th day of September, 2021. oe Zi a

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Dale L. Somers United States Chief Bankruptcy Judge

Designated for online use but not print publication IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF KANSAS

In re: Bear Communications, LLC, Case No. 21-10495-11 Debtor. Memorandum Opinion and Order Granting Application to Employ Counsel The Official Committee of Unsecured Creditors (the “Committee”) of Debtor Bear Communications, LLC seeks to employ counsel, retroactively effective to the date of the law firm’s retention. Multiple parties object to the application to employ, including the United States Trustee. Because the

Court concludes the standards for employment of professionals under 11 U.S.C. § 1103! have been met, the Court grants the application to employ. I. Procedural Background Debtor filed its Chapter 11 bankruptcy petition on May 28, 2021, and

on June 29, 2021, the United States Trustee formed the Committee under § 1102.2 The Committee members are (1) Advance Business Capital, LLC dba Triumph Business Capital; (2) Erica Burnette; (8) Eagle Capital Corp.; (4) KLJ Engineering, LLC, fka Kadrmas, Lee & Jackson, Inc.; (5) Poblocki Paving Corp.; (6) RC Underground, LLC; and (7) Verizon Sourcing, LLC. Early in Debtor’s case, significant issues arose with respect to the use of cash collateral, payment of critical vendors, and other matters. Shortly after the Committee was formed, potential counsel, not yet retained, filed pleadings in the case to preserve the Committee’s rights in early disputes. About a week after the Committee was formed, on July 6, 2021, Debtor filed a motion to remove creditor Verizon Sourcing, LLC from the Committee,® and a hearing was set on the motion on an expedited basis.®

1 Future statutory references are to title 11, the Bankruptcy Code, unless otherwise stated. 2 Section 1102 directs the United States Trustee to “appoint a committee of creditors holding unsecured claims” in Chapter 11 cases and provides the procedure for that process. 3 Doc. 116. 4 Doc. 120. 5 Doc. 181. 6 Doc. 133, Doc. 141.

Debtor’s largest secured creditor, Central Bank of the Midwest, and a large unsecured creditor who was also a member of the Committee, Advance Business Capital LLC, joined in Debtor’s motion,’ while the United States Trustee and Verizon Sourcing, LLC opposed.® Debtor listed a “claim against Verizon” for $12,250,946 for breach of contract in its Schedules® and an unliquidated, disputed claim by Verizon for $43,969,599.88,'° and argued a conflict of interest existed with having Verizon Sourcing, LLC on the Committee. Counsel for the Committee appeared at the hearing on the motion and provided information for the Court. Ultimately, on July 14, 2021, the Court denied the motion to remove Verizon Sourcing LLC from the Committee, without prejudice.!! The Court concluded Debtor had not carried its burden to show “change is necessary to ensure adequate representation of creditors” under § 1102(a)(4).!2 A few weeks thereafter, on August 9, 2021, the Committee filed its application to employ counsel.!* In that application, the Committee reported

7 Doc. 144, Doc. 149. 8 Doc. 148, Doc. 147. 9 Doc. 80 p.15. 10 Doc. 80 p.108. On August 31, 2021, Verizon Sourcing, LLC filed a proof of claim for a net unsecured, non-priority claim of $59,439,009.70, with additional recovery to be sought for unliquidated obligations and attorneys’ fees. Proof of Claim No. 135-1. 11 Doc. 151. 2 Doc. 153. 13 Doc. 197.

that it had selected the Dentons law firm" as its counsel on July 4, 2021 and requested retroactive appointment to that date. The Dentons firm proposed compensation at its ordinary rates, subject to a 20% discount. The proposed rates are: James Irving, partner at $408/hr, Sam Alberts, partner at $832/hr, Robert Hammeke, partner at $492/hr, Christopher Madden, associate at $276/hr, David Cook, associate at $484/hr, Gina Young, associate at $224/hr, and Jennifer Weber, paralegal at $160/hr. The application also noted that Dentons reserved the right to recover the 20% reduced fee if recovery and distributions “support such recovery.” The declaration in support of the application to employ indicated Dentons completed a conflicts check of Debtor, Debtor’s equity owner, Debtor’s secured creditors, Debtor’s twenty largest unsecured creditors, and the creditor members of the Committee. The law firm found two connections: (1) attorneys at Dentons previously represented one of Debtor’s large unsecured creditors in an unrelated matter; and (2) attorneys at Dentons currently represent “Verizon” in an unrelated matter.!® Dentons reported: “out of an abundance of caution, Dentons has erected an ethical screen

14 The Committee proposes the use of Dentons as shorthand for attorneys from Dentons Bingham Greenebaum LLP and Dentons US LLP, both member firms of the Dentons Swiss Verein. 15 Doc. 197 p. 7. 16 Doc. 197 p. 15.

between professionals representing the Committee and those representing Verizon. Dentons plans to assert the Committee’s position with respect to any dispute involving Verizon, though the Committee may need to engage conflicts counsel to litigate an adversary proceeding directly against Verizon.” Multiple objections were filed to the application to employ. Generally, objections were to three aspects: (1) that the Dentons law firm had a conflict of interest because of its representation of Verizon on other matters; (2) the proposed rates and compensation were too high and would cause a diminished distribution to creditors and other terms of employment were unacceptable; and (8) no extraordinary circumstances were present to permit retroactive employment.!® The Committee then supplemented its application to employ with a

new declaration, giving significantly more detail. The law firm colloquially known as “Dentons,” is a broad enterprise. The firm uses a Swiss Verein structure, with multiple law firms in the United States providing their own

17 Td. 18 The objections are highly summarized in the text. Details are within Doc. 238 (Objection from creditor D&E Underground, Inc.), Doc. 240 (Objection from Jet Underground LLC), and Doc. 269 (Objection from the U.S. Trustee). Certain objections are in the process of being resolved, e.g., the U.S. Trustee objected to Dentons only conflict checking the twenty largest creditors. Dentons reports it is in the process of running the names of all creditors who filed proofs of claim through its conflicts database and will file a supplemental disclosure as necessary.

compensation. In this matter, two “Dentons” firms are involved: Dentons US LLP and Dentons Bingham Greenebaum LLP. Of the partners who seek to be

employed by the Committee, two of those (Mr. Hammeke and Mr. Alberts) are at Dentons US LLP and one (Mr. Irving) is at Dentons Bingham Greenebaum LLP. Mr. Irving proposes to be lead counsel for the Committee, and Mr. Hammeke and Mr. Alberts have also participated in significant, but

lesser, ways. The supplemental declaration also reports that Dentons has no active matters with Verizon Sourcing, LLC, but that Dentons Bingham Greenbaum LLP has one active matter with an affiliate of Verizon Sourcing, LLC,

referred to as Verizon Communications. One partner in the Dentons Bingham Greenebaum LLP firm represents Verizon Communications in a political lobbying matter. As of August 30, 2021, the Dentons Bingham Greenbaum LLP firm had received $52,500 in fees year to date for that

matter, representing 0.13% of that firm’s revenue year to date. The supplemental declaration also reports that no Verizon entity sought out Dentons for representation of the Committee.

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