In re Harry Viner, Inc.

520 B.R. 268, 2014 WL 3867563, 2014 Bankr. LEXIS 3318
CourtUnited States Bankruptcy Court, W.D. Wisconsin
DecidedAugust 5, 2014
DocketNo. 11-16408-7
StatusPublished
Cited by4 cases

This text of 520 B.R. 268 (In re Harry Viner, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Harry Viner, Inc., 520 B.R. 268, 2014 WL 3867563, 2014 Bankr. LEXIS 3318 (Wis. 2014).

Opinion

DECISION

CATHERINE J. FURAY, Bankruptcy Judge.

The matter before the Court is the final application of Debtor’s counsel, Galen W. [272]*272Pittman, S.C., for compensation and disbursements. For the reasons that follow, the application is approved in part and denied in part.

JURISDICTION

The federal district courts have “original and exclusive jurisdiction” over all cases under title 11 (“Bankruptcy Code” or “Code”) and “original but not exclusive jurisdiction” over all civil proceedings that arise under the Bankruptcy Code or that arise in or are related to cases under the Code. 28 U.S.C. §§ 1334(a)-(b). The district courts may, however, refer such cases to the bankruptcy judges within their district. In the Western District of Wisconsin, the district court has made such a reference. See Western District of Wisconsin Administrative Order 161 (July 12, 1984). Accordingly, this Court “may hear and determine all cases under title 11 and all core proceedings under title 11, or arising in a case under title 11 ... and may enter appropriate orders and judgments, subject to review under section 158 of this title.” 28 U.S.C. § 157(b)(1).

Bankruptcy courts determine whether a proceeding is core or non-core. 28 U.S.C. § 157(b)(3). Applications for compensation and reimbursement of expenses under 11 U.S.C. § 330 are core proceedings insofar as they concern the administration of the estate and are proceedings for the allowance of claims against the estate. 28 U.S.C. §§ 157(b)(2)(A), (B).

FACTS AND PROCEDURAL HISTORY

The Debtor, Harry Viner, Inc., filed a voluntary Chapter 11 petition on October 21, 2011. On December 1, 2011, the Debt- or filed an application to employ Galen W. Pittman, S.C. (“Pittman S.C”) as attorney on a general retainer. The application contemplated “any representation relating to actions by creditors, the preparation of the liquidation analysis and preparation and representation and [sic] the Plan and any and all residual matters relating to the Chapter 11 Proceedings until the confirmation of the Chapter 11 Plan and related matters.” On December 8, 2011, the Court approved the application.

On March 1, 2013, Pittman S.C. filed an Amended Application for Interim Allowance of Compensation and Disbursements (“Interim Application”). The Interim Application sought compensation of $58,773.75 and reimbursement of $1,486.13 in expenses for the period from October 28, 2011, through February 26, 2013. After an evidentiary hearing at which the Court concluded that a portion of the work for which Pittman S.C. sought compensation was not performed on behalf of the Debtor, but rather on behalf of the Debt- or’s sole principal in her individual capacity in a state court proceeding, the Court denied compensation in the amount of $1,300, but approved the remainder of the application. The Order concerning the Interim Application was entered on June 27, 2013.

On June 25, 2013, the Debtor’s amended plan was confirmed following an evidentia-ry hearing. The confirmation order was entered on July 18, 2013.

The confirmed plan provided that the Debtor would make periodic payments to its creditors. After the Debtor failed to make several payments called for in the plan, including quarterly tax payments, priority plan payments, and payments to general unsecured creditors, the United States Trustee (“UST”) and an unsecured creditor filed motions to convert or dismiss the case. The Debtor filed a proposed modified plan on January 15, 2014, and objected to the motions to convert or dismiss. At an evidentiary hearing on the motions, the Debtor conceded that the con[273]*273firmed plan had been substantially consummated. At the close of the evidentiary hearing, on January 28, 2014, the Debtor’s case was converted to a case under Chapter 7.

On January 22, 2014, Pittman S.C. filed another fee application titled “Interim Application by Attorneys for Debtors/Debtors in Possession for Interim Allowance of Compensation and Disbursements” (“Final Application”).1 The Final Application included itemizations for time and expenses for the period June 26, 2012, through January 22, 2014.2 The UST objected to the Final Application, as did the Chapter 7 Trustee.3 The UST’s objection recites numerous failures of the Debtor to comply with or fulfill the terms of the confirmed plan. The UST asserts those failures evidence counsel’s failure to “adequately advise the Debtor regarding obligations with respect to the Debtor’s Plan.” Examples of the Debtor’s failures include filing operating reports that wrongly state that all post-petition taxes (other than sales tax) were current, making payments to former shareholders before payments to other classes of creditors, and failing to sell certain collateral as provided in the plan to make payments to secured creditors. Counsel was acting as a disbursing agent at the time of each of these failures.

Although they were not raised as an objection by the UST, the Court has identified other deficiencies and errors that must also be addressed. See In re Tak Commc’ns, Inc., 154 B.R. 514, 516 (Bankr.W.D.Wis.1993) (“Whatever its responsibility may be in the absence of any objection, once an objection has been made and evidence and argument have been presented in support of the objection, a court may not adopt the ostrich’s fabled position, but rather must assess the reasonableness of the fee application.”). Such deficiencies include: the inclusion in the Final Application of sums previously disallowed by the Court, duplicate time entries, vague descriptions of services, lumping of entries, and failure to clearly state the total and actual amount of compensation sought on a final basis.

Although the Final Application fails to clearly describe the amounts sought as final compensation, the history and applications before the Court for final approval can be summarized as:

Time Period Fees Costs Approved Requested Requested Fees & Costs

1st Amended Interim Application 10/28/11-2/26/13 $61,746.01 $1,486.18 $58,959.88

[274]*2742nd Amended Final Application 6/26/12-1/22/14 57,117.60 1,062.60

Total $118,863.61 $2,548.73

STATEMENT OF LAW

11 U.S.C. § 330

Unlike many scenarios outside of bankruptcy, attorney’s fees in bankruptcy are not purely a private matter to be negotiated by the parties. In re S.T.N. Enters., Inc., 70 B.R. 823, 831 (Bankr.D.Vt.1987). The fees sought by counsel for the debtor are, instead, subject to the supervision and approval of the bankruptcy court. 11 U.S.C. §§ 327(a), 1107(a); Fed. R. Bankr.P. 2014(a). In re S.T.N.

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Cite This Page — Counsel Stack

Bluebook (online)
520 B.R. 268, 2014 WL 3867563, 2014 Bankr. LEXIS 3318, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-harry-viner-inc-wiwb-2014.