In re Edwards

510 B.R. 554, 2014 WL 1385734, 2014 Bankr. LEXIS 1508
CourtUnited States Bankruptcy Court, S.D. Texas
DecidedApril 9, 2014
DocketNo. 13-34274
StatusPublished
Cited by3 cases

This text of 510 B.R. 554 (In re Edwards) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Edwards, 510 B.R. 554, 2014 WL 1385734, 2014 Bankr. LEXIS 1508 (Tex. 2014).

Opinion

MEMORANDUM OPINION

(Docket No. 13)

DAVID R. JONES, Bankruptcy Judge.

Before the Court is the Application to Employ Counsel under 11 U.S.C. § 327 filed by Allison Byman in her capacity as the chapter 7 trustee in this case. After considering the evidence and arguments presented, the Court orally approved the application during a hearing on March 28, 2014. At the hearing, the Court indicated to all parties that it intended to issue a written opinion explaining the Court’s analysis. The Court hopes this opinion will provide some practical guidance to trustees filing employment applications in this district. A separate order consistent with this opinion will issue.

Factual Background

Venezia Edwards (the “debtor”) filed a voluntary chapter 7 petition on July 11, 2013 [Docket No. 1]. Allison Byman was appointed as the chapter 7 trustee in the case.

On August 15, 2013, the trustee conducted a meeting of creditors pursuant to 11 U.S.C. § 341. The debtor appeared with counsel and answered the trustee’s questions. After reviewing the debtor’s schedules, the trustee requested additional documentation concerning certain items identified in the schedules. The trustee continued the creditors’ meeting until September 3, 2013 to allow the debtor an opportunity to provide the requested documentation.

The debtor provided the trustee with the requested documentation prior to the continued creditors’ meeting. After reviewing the additional documentation, the trustee concluded the meeting of creditors on September 3, 2013 and noted, “[tjrustee to further investigate value of potential claim scheduled by Debtor.” [Unnumbered docket entry entered September 5, 2013].

On February 21, 2014, the trustee filed an application to employ Hughes Watters Askanase, L.L.P. (“HWA”) as her counsel on an hourly fee basis [Docket No. 13]. In the application, the trustee states that the employment of HWA is needed to perform a variety of legal services including (i) representing the estate/trustee in litigation; (ii) negotiating and closing asset sales; (iii) prosecuting claim objections; (iv) coordinating with the Office of the United States Trustee; (v) providing tax advice; (vi) collecting judgments; and (vii) handling miscellaneous problems that arise in the normal course of administering a bankruptcy case [Docket No. 13]. The application goes on to disclose in detail the types of bankruptcy representations rou[557]*557tinely undertaken by HWA [Docket No. 13]. The application concludes with the representations that (i) HWA is disinterested as that term is defined under the Bankruptcy Code; (ii) HWA holds no interest adverse to the estate; and (iii) HWA will charge its customary hourly rates ranging from $175 to $450 [Docket No. 18].

Attached to the application is the affidavit of Rhonda Chandler, an attorney with HWA. Ms. Chandler is designated as the proposed attorney-in-charge for the representation by HWA of the trustee in this case [Docket No. 13]. The affidavit sets forth in detail the process undertaken by HWA to identify any potential conflicts as well as HWA’s general rate structure [Docket No. 13]. No party objected to the trustee’s application.

Over the past several years, courts in this district have issued a number of decisions involving trustees that attempt to hire their own firms.1 Because the trustee in this case is a licensed attorney employed by HWA, the Court scheduled an eviden-tiary hearing to better understand the trustee’s decision process in selecting HWA as her counsel in light of those decisions [Docket No. 14].

The Court conducted an evidentiary hearing on March 28, 2014. Both the trustee and Ms. Chandler appeared and testified in support of the application. During the presentation, the Court asked a number of questions. After considering the evidence and arguments of counsel, the Court orally approved the application and indicated that a written opinion would follow. To the extent that findings of fact and conclusions of law were made on the record, they are incorporated herein pursuant to Rule 7052.

Analysis

The Court has jurisdiction over this contested matter pursuant to 11 U.S.C. § 1322. This contested matter is a core proceeding arising under title 11 pursuant to 28 U.S.C. § 157(b)(2). See In re Southmark Corp., 163 F.3d 925, 930 (5th Cir.1999). The Court has constitutional authority to enter a final order in this matter under the Supreme Court’s holding in Stern v. Marshall, — U.S. -, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).

The trustee proposes to employ HWA pursuant to 11 U.S.C. § 327. Section 327(a) of the Code2 provides that:

[e]xcept as otherwise provided in this section, the trustee, with the court’s approval, may employ one or more attorneys, accountants, appraisers, auctioneers or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under this title.

11 U.S.C. § 327. The Code further provides that a trustee (or her firm) may act as counsel for the bankruptcy estate if the retention is in the best interest of the estate. 11 U.S.C. § 327(d). As the moving party, the trustee bears the burden of proof in establishing that the retention is in the best interest of the estate. In re [558]*558Jackson, 484 B.R. 141, 154 (Bankr.S.D.Tex.2012).

A chapter 7 trustee’s statutory-duties are set forth in § 704 of the Code. Section 704 states that a chapter 7 trustee shall:

(1) collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest;
(2) be accountable for all property received;
(3) ensure that the debtor shall perform his intention as specified in section 521(a)(2)(B) of this title;
(4) investigate the financial affairs of the debtor;
(5) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper;
(6) if advisable, oppose the discharge of the debtor;
(7) unless the court orders otherwise, furnish such information concerning the estate and the estate’s administration as is requested by a party in interest;

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Cite This Page — Counsel Stack

Bluebook (online)
510 B.R. 554, 2014 WL 1385734, 2014 Bankr. LEXIS 1508, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-edwards-txsb-2014.