Guidelines for Reviewing
Applications
for Compensation & Reimbursement of
Expenses filed under 11 U.S.C. § 330
(Reprinted at 28 C.F.R. Part 58, Appendix)
(a) General Information.
(1) The Bankruptcy Reform Act of 1994 amended the responsibilities
of the United States Trustees under 28 U.S.C. 586(a)(3)(A)
to provide that, whenever they deem appropriate, United
States Trustees will review applications for compensation
and reimbursement of expenses under section 330 of the Bankruptcy
Code, 11 U.S.C. 101, et seq. ("Code"), in accordance with
procedural guidelines ("Guidelines") adopted by the Executive
Office for United States Trustees ("Executive Office").
The following Guidelines have been adopted by the Executive
Office and are to be uniformly applied by the United States
Trustees except when circumstances warrant different treatment.
(2) The United States Trustees shall use these Guidelines
in all cases commenced on or after October 22, 1994.
(3) The Guidelines are not intended to supersede local
rules of court, but should be read as complementing the
procedures set forth in local rules.
(4) Nothing in the Guidelines should be construed:
(i) To limit the United States Trustee's discretion
to request additional information necessary for the review
of a particular application or type of application or
to refer any information provided to the United States
Trustee to any investigatory or prosecutorial authority
of the United States or a state;
(ii) To limit the United States Trustee's discretion
to determine whether to file comments or objections to
applications; or
(iii) To create any private right of action on the part
of any person enforceable in litigation with the United
States Trustee or the United States.
(5) Recognizing that the final authority to award compensation
and reimbursement under section 330 of the Code is vested
in the Court, the Guidelines focus on the disclosure of
information relevant to a proper award under the law. In
evaluating fees for professional services, it is relevant
to consider various factors including the following: the
time spent; the rates charged; whether the services were
necessary to the administration of, or beneficial towards
the completion of, the case at the time they were rendered;
whether services were performed within a reasonable time
commensurate with the complexity, importance, and nature
of the problem, issue, or task addressed; and whether compensation
is reasonable based on the customary compensation charged
by comparably skilled practitioners in non-bankruptcy cases.
The Guidelines thus reflect standards and procedures articulated
in section 330 of the Code and Rule 2016 of the Federal
Rules of Bankruptcy Procedure for awarding compensation
to trustees and to professionals employed under section
327 or 1103. Applications that contain the information requested
in these Guidelines will facilitate review by the Court,
the parties, and the United States Trustee.
(6) Fee applications submitted by trustees are subject
to the same standard of review as are applications of other
professionals and will be evaluated according to the principles
articulated in these Guidelines. Each United States Trustee
should establish whether and to what extent trustees can
deviate from the format specified in these Guidelines without
substantially affecting the ability of the United States
Trustee to review and comment on their fee applications
in a manner consistent with the requirements of the law.
(b) Contents of Applications for Compensation and
Reimbursement of Expenses.
All applications should include sufficient detail to demonstrate
compliance with the standards set forth in 11 U.S.C. §
330. The fee application should also contain sufficient information
about the case and the applicant so that the Court, the creditors,
and the United States Trustee can review it without searching
for relevant information in other documents. The following
will facilitate review of the application.
(1) Information about the Applicant and the Application.
The following information should be provided in every fee
application:
(i) Date the bankruptcy petition was filed, date of the
order approving employment, identity of the party represented,
date services commenced, and whether the applicant is
seeking compensation under a provision of the Bankruptcy
Code other than section 330.
(ii) Terms and conditions of employment and compensation,
source of compensation, existence and terms controlling
use of a retainer, and any budgetary or other limitations
on fees.
(iii) Names and hourly rates of all applicant's professionals
and paraprofessionals who billed time, explanation of
any changes in hourly rates from those previously charged,
and statement of whether the compensation is based on
the customary compensation charged by comparably skilled
practitioners in cases other than cases under title 11.
(iv) Whether the application is interim or final, and
the dates of previous orders on interim compensation or
reimbursement of expenses along with the amounts requested
and the amounts allowed or disallowed, amounts of all
previous payments, and amount of any allowed fees and
expenses remaining unpaid.
(v) Whether the person on whose behalf the applicant
is employed has been given the opportunity to review the
application and whether that person has approved the requested
amount.
(vi) When an application is filed less than 120 days
after the order for relief or after a prior application
to the Court, the date and terms of the order allowing
leave to file at shortened intervals.
(vii) Time period of the services or expenses covered
by the application.
(2) Case Status. The following information should
be provided to the extent that it is known to or can be
reasonably ascertained by the applicant:
(i) In a chapter 7 case, a summary of the administration
of the case including all moneys received and disbursed
in the case, when the case is expected to close, and,
if applicant is seeking an interim award, whether it is
feasible to make an interim distribution to creditors
without prejudicing the rights of any creditor holding
a claim of equal or higher priority.
(ii) In a chapter 11 case, whether a plan and disclosure
statement have been filed and, if not yet filed, when
the plan and disclosure statement are expected to be filed;
whether all quarterly fees have been paid to the United
States Trustee; and whether all monthly operating reports
have been filed.
(iii) In every case, the amount of cash on hand or on
deposit, the amount and nature of accrued unpaid administrative
expenses, and the amount of unencumbered funds in the
estate.
(iv) Any material changes in the status of the case
that occur after the filing of the fee application should
be raised, orally or in writing, at the hearing on the
application or, if a hearing is not required, prior to
the expiration of the time period for objection.
(3) Summary Sheet. All applications should contain
a summary or cover sheet that provides a synopsis of the
following information:
(i) Total compensation and expenses requested and any
amount(s) previously requested;
(ii) Total compensation and expenses previously awarded
by the court;
(iii) Name and applicable billing rate for each person
who billed time during the period, and date of bar admission
for each attorney;
(iv) Total hours billed and total amount of billing
for each person who billed time during billing period;
and
(v) Computation of blended hourly rate for persons who
billed time during period, excluding paralegal or other
paraprofessional time.
(4) Project Billing Format.
(i) To facilitate effective review of the application,
all time and service entries should be arranged by project
categories. The project categories set forth in Exhibit
A should be used to the extent applicable. A separate
project category should be used for administrative matters
and, if payment is requested, for fee application preparation.
(ii) The United States Trustee has discretion to determine
that the project billing format is not necessary in a
particular case or in a particular class of cases. Applicants
should be encouraged to consult with the United States
Trustee if there is a question as to the need for project
billing in any particular case.
(iii) Each project category should contain a narrative
summary of the following information:
(A) a description of the project, its necessity and
benefit to the estate, and the status of the project
including all pending litigation for which compensation
and reimbursement are requested;
(B) identification of each person providing services
on the project; and
(C) a statement of the number of hours spent and the
amount of compensation requested for each professional
and paraprofessional on the project.
(iv) Time and service entries are to be reported in chronological
order under the appropriate project category.
(v) Time entries should be kept contemporaneously with
the services rendered in time periods of tenths of an
hour. Services should be noted in detail and not combined
or "lumped" together, with each service showing a separate
time entry; however, tasks performed in a project which
total a de minimis amount of time can be
combined or lumped together if they do not exceed .5 hours
on a daily aggregate. Time entries for telephone calls,
letters, and other communications should give sufficient
detail to identify the parties to and the nature of the
communication. Time entries for court hearings and conferences
should identify the subject of the hearing or conference.
If more than one professional from the applicant firm
attends a hearing or conference, the applicant should
explain the need for multiple attendees.
(5) Reimbursement for Actual, Necessary Expenses.
Any expense for which reimbursement is sought must be actual
and necessary and supported by documentation as appropriate.
Factors relevant to a determination that the expense is
proper include the following:
(i) Whether the expense is reasonable and economical.
For example, first class and other luxurious travel
mode or accommodations will normally be objectionable.
(ii) Whether the requested expenses are customarily
charged to non-bankruptcy clients of the applicant.
(iii) Whether applicant has provided a detailed itemization
of all expenses including the date incurred, description
of expense (e.g., type of travel, type of fare,
rate, destination), method of computation, and, where
relevant, name of the person incurring the expense and
purpose of the expense. Itemized expenses should be
identified by their nature (e.g., long distance
telephone, copy costs, messengers, computer research,
airline travel, etc.) and by the month incurred. Unusual
items require more detailed explanations and should
be allocated, where practicable, to specific projects.
(iv) Whether applicant has prorated expenses where
appropriate between the estate and other cases (e.g.,
travel expenses applicable to more than one case) and
has adequately explained the basis for any such proration.
(v) Whether expenses incurred by the applicant to third
parties are limited to the actual amounts billed to,
or paid by, the applicant on behalf of the estate.
(vi) Whether applicant can demonstrate that the amount
requested for expenses incurred in-house reflect the
actual cost of such expenses to the applicant. The United
States Trustee may establish an objection ceiling for
any in-house expenses that are routinely incurred and
for which the actual cost cannot easily be determined
by most professionals (e.g., photocopies, facsimile
charges, and mileage).
(vii) Whether the expenses appear to be in the nature
nonreimbursable overhead. Overhead consists of all continuous
administrative or general costs incident to the operation
of the applicant's office and not particularly attributable
to an individual client or case. Overhead includes,
but is not limited to, word processing, proofreading,
secretarial and other clerical services, rent, utilities,
office equipment and furnishings, insurance, taxes,
local telephones and monthly car phone charges, lighting,
heating and cooling, and library and publication charges.
(viii) Whether applicant has adhered to allowable rates
for expenses as fixed by local rule or order of the
Court.
[61 Fed. Reg. 24890 (May 17, 1996); 28 CFR
Part 58, Appendix]
|
|
|