Local Rule LBR 2016-1: Compensation of Professionals

LBR 2016-1. Compensation of Professionals

(a) Application Requirements. Unless these rules provide otherwise, an application for compensation for services or reimbursement of expenses under § 330, 331, or 503(b)(4) must include the following: (1) the information about the applicant and the application, case status, project billing, and actual, necessary expenses as set forth in the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. § 330, contained in:

(A) Appendix A - Guidelines for Reviewing Applications for Compensation filed under 11 U.S.C. § 330 in (1) larger chapter 11 cases by those seeking compensation who are not attorneys, (2) all chapter 11 cases below the larger case thresholds, and (3) cases under other chapters of the Bankruptcy Code (except that the project billing format is required only if the professional's compensation is anticipated to exceed $50,000); and

(B) Appendix B - Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. § 330 for Attorneys in Larger Chapter 11 Cases (including Exhibits A - E). (2) a summary sheet substantially conforming to the local form (Compensation Summary Sheet); (3) detailed time records unless the professional is an auctioneer, real estate agent, or other professional whose compensation is based on a commission percentage; and (4) a certification by the applicant that: (A) the applicant has reviewed the application; (B) the amounts being requested are billed at rates no less favorable than those customarily employed by the applicant and generally accepted by the applicant's nonbankruptcy clients; and (C) to the best of the applicant's knowledge, information, and belief, the application conforms to the U.S. Trustee's Guidelines, this rule, and any order of the court, except as specifically noted in the certification.

(b) Client Review of Application. A debtor in possession, trustee, or official committee must exercise reasonable business judgment in monitoring the fees and expenses of the estate's professionals. If a professional's total fees are anticipated to exceed $20,000 in a case, billing statements must be sent monthly to the client and include a cover letter with the following statement: "The court requires that a debtor in possession, trustee, or an official committee exercise reasonable business judgment in monitoring the fees and expenses of the estate's professionals. Any objections, concerns, or questions about the services or amounts in this billing statement should be communicated promptly to the professional and may be shared with the Office of the United States Trustee."

(c) Foreign Currency Amounts. Amounts requested in an application for compensation must be stated in United States currency. The application may request approval of compensation and expenses in a foreign currency amount as converted to United States dollars in an approximate amount in effect at the time the application is filed, e.g. ¥1,500,000 (approx. US$13,800). Unless the court orders otherwise, the actual payment amount may be calculated using the conversion rate in effect at the time of payment.

(d) Standards for Reasonableness.

(1) Compensation for Services. In addition to the factors identified in the U.S. Trustee's Guidelines, the court generally will apply the following in determining the reasonableness of an application for compensation.

(A) Multiple Professionals. Professionals must explain time spent in meetings and conferences or at hearings or depositions with other professionals or paraprofessionals in the same firm. Failure to justify this time may result in the allowance of fees limited to those requested at the lowest billing rate.

(B) Multiple Cases. Time claimed for periods of attendance at hearings, meetings of creditors, or other services involving more than one case must be prorated.

(C) Administrative and Clerical Tasks. Administrative and clerical services, such as photocopying, scanning, or faxing documents, filing papers with the court, or supervising such tasks performed by another, are not compensable.

(D) Travel Time. "Travel time" means time spent while traveling and not actually performing professional services for a client. A reasonable amount of travel time, not to exceed 8 hours per day, may be allowed for actual, necessary travel. If the travel also involves another case or client, the travel time must be prorated.

(E) Privilege or Excise Taxes on Compensation. Amounts attributable to privilege or excise taxes, but not income taxes, such as the State of Hawaii General Excise Tax, payable on receipts for compensation may be included in requests for compensation if customarily charged to nonbankruptcy clients and to the extent that such taxes will actually be paid to a taxing authority.

(2) Reimbursement for Expenses. In addition to the factors identified in the U.S. Trustee's Guidelines, the court generally will apply the following in determining the reasonableness of an application for reimbursement for expenses.

(A) Professional or Paraprofessional Services. A professional employed under § 327 may not charge as an expense any fee payable to another professional or paraprofessional (e.g., an expert witness) unless the employment of the other professional or paraprofessional has been approved by the court prior to performance of the services.

(B) Meals.

(i) While Traveling. Reimbursement may be sought for the reasonable cost of meals while away from the island (inside Hawaii) or state (outside Hawaii) of the professional's office or principal place of business.

(ii) While Working. Working meals at a restaurant or private club are not reimbursable. Reimbursement may be sought for working meals only where food is catered to the professional's office in the course of a meeting with clients, such as a creditors committee, for the purpose of allowing the meeting to continue through a normal meal period.

(C) Transportation. Air travel may be reimbursable using the actual cost or the amount of the economy class fare, whichever is lower. Automotive travel expense is limited to the actual cost of rental of an appropriate vehicle, together with insurance and fuel costs associated with the rental.

(D) Parking. The actual cost of parking expenses may be reimbursable except for parking at the applicant's principal place of business and, for applicants whose principal place of business is on the island of Oahu, parking while attending a court hearing or a meeting of creditors.

(E) Amenities. Amenities, including, but not limited to, charges for entertainment, alcoholic beverages, newspapers, dry cleaning and laundry, are not reimbursable.

(F) Privilege or Excise Taxes on Expenses. Amounts attributable to privilege or excise taxes, but not income taxes, such as the State of Hawaii General Excise Tax, payable on expenses may be included in requests for expenses if customarily charged to nonbankruptcy clients and to the extent that such taxes will actually be paid to a taxing authority.

(G) Objection Ceilings for In-House Expenses. The U.S. Trustee's Guidelines provide for the establishment of objection ceilings for in-house expenses that are routinely incurred and for which the actual cost cannot easily be determined. The court generally will apply the following objection ceilings.

(i) Photocopies: $.20 per page.

(ii) Faxes: $.20 per paper page for outgoing and incoming transmissions, except that $1.00 may be charged for the first paper page of an outgoing transmission.

(e) Chapter 7 Trustees. Compensation Request in Final Report. A chapter 7 trustee may seek court approval of a final application for compensation by including the request in the trustee's final report. The trustee may include in a compensation request an amount attributable to liability for privilege or excise taxes, such as the State of Hawaii General Excise Tax, to the extent that the total compensation request does not exceed the statutory limitation of § 326(a).

(f) Chapter 7 Trustee's Professionals. A professional employed by a chapter 7 trustee may file an application for final compensation substantially conforming to the local form (Final Application for Compensation by Professional Employed by Chapter 7 Trustee) in lieu of an application conforming to the requirements of subdivision (a) of this rule.

(g) Chapter 13 Debtor's Attorney Fees.

(1) Chapter 13 Rights, Responsibilities and Fee Agreement Allowance of compensation to a debtor's attorney in a chapter 13 case requires the execution and filing of an acknowledgement of the parties' responsibilities and a fee agreement substantially conforming to the local form (Chapter 13 Rights, Responsibilities and Fee Agreement).

(2) Allowance of Compensation. A chapter 13 debtor's attorney may seek allowance of compensation under § 330(a)(4)(B) by either: (A) requesting an order approving a "standard fee application" using a form substantially conforming to the local form (Application for Compensation by Debtor's Attorney in Chapter 13 Case), or (B) requesting an award in a plan confirmation order of presumptively reasonable fees described in paragraph (3).

(3) Chapter 13 Attorney Fee Guidelines.

(A) Presumptive Fees. After notice and opportunity for comment, the court may adopt Chapter 13 Attorney Fee Guidelines that establish procedures and determine presumptively reasonable fee amounts ("presumptive fees") for typical and customary services performed by a debtor's attorney in a chapter 13 case.

(B) Adjustment of Dollar Amounts. The guidelines establishing presumptive fees shall be adjusted periodically in the same manner and at the same time as dollar amounts are adjusted under 11 U.S.C. § 104(a) (except that the adjusted dollar amounts will be rounded upward to the nearest $50), beginning with the adjustment to take effect on April 1, 2025.

(4) Court Approval of Compensation. Unless fully earned and withdrawn from a client trust account prior to the filing of the petition, any funds paid to the attorney by or on behalf of the debtor for services in or in connection with the chapter 13 case must remain in a client trust account pending entry of a court order approving the compensation.

(5) Chapter 13 Case Converted from Another Chapter. In a case converted to chapter 13, the debtor's attorney's request for fees in the chapter 13 case must disclose and take into account any payments for preconversion services.