Local Rule RULE 2016-1: COMPENSATION OF PROFESSIONALS IN A CHAPTER 11 CASE

RULE 2016-1 COMPENSATION OF PROFESSIONALS IN A CHAPTER 11 CASE

(a) Applications for Compensation. Applications for compensation shall comply with all requirements, including those related to format, outlined in Fed. R. Bankr. P. 2016(a) and the United States Trustee Fee Guidelines, which are available at www.justice.gov/ust/r02.

(b) Filing and Paper Copy Requirements. Applications for compensation are to be filed electronically. A paper copy marked "CM/ECF Case - Chambers Copy" is to be provided to the Court. In addition, the United States trustee is to be served with a paper copy of the application. Each application shall include:

(1) The date the applicant was appointed by the Court and, if applicable, the method of compensation, the maximum compensation, and any rate of compensation fixed in the order appointing applicant;

(2) A statement as to whether all services for which compensation is requested were performed for, or on behalf of, the party retaining applicant or on behalf of any other person or paraprofessional;

(3) A concise summary of the professional and paraprofessional services rendered, including:

(A) A factual explanation of the nature and extent of services performed, the results obtained, and the size of the estate; and

(B) For an interim fee request, an explanation of the status of the case, a projection as to the percentage of work that the current application covers in relation to the overall case, and any other matters that will enable the Court to determine the reasonable value of such services;

(4) An exhibit consisting of contemporaneous daily time records for all professionals and paraprofessionals, arranged in a project billing format as suggested by the United States Trustee Fee Guidelines. Applications seeking compensation less than $10,000.00, exclusive of expenses, are exempt from the project billing requirement. Entries in the time records must:

(A) Be legible and applicant shall define any codes, symbols, abbreviations, or non-legal technical terms used in the time records; and

(B) Be sufficiently specific to permit the Court to evaluate the reasonableness of the time allocated for the particular service. Failure to separately identify the time expended on each service with a single time entry may provide a basis for the Court to deny compensation for that service.

(5) A statement specifying the amounts, if any, within the total request that were previously received from any source, including guarantors, with or without Court authorization;

(6) A statement as to whether applicant has entered into any agreement to fix fees or to share compensation as prohibited by 18 U.S.C. § 155 and 11 U.S.C. § 504;

(7) A statement describing the estate's ability to pay the fees requested and the status of fees owed to other administrative claimants of equal priority to the extent the professional is employed pursuant to §§ 327 or 1103 and compensation is sought from the estate and not a third party;

(8) A specific description of the basis and justification for the request in terms related to the benefit of the services to the estate to the extent an enhancement of fees beyond those supported by the time records is sought; and

(9) An itemization of expenses incurred, conforming to paragraph (c) of this Rule.

(c) Reimbursement of Expenses. All requests for reimbursement of expenses shall be separately supported in the application by a detailed, itemized listing. Each category of expenses shall be separately totaled. A summary of all expense categories shall be included, which total should equal the aggregate request.

(1) The following expenses may be reimbursable if adequately supported in the application:

(A) Duplication of documents at actual cost at a rate not to exceed $0.20 per page or, if the photocopies were made by an entity unrelated to the applicant, at the rate charged by the entity as supported by a photocopy of the invoice appended to the application;

(B) Computer legal research at a rate not to exceed the cost of said service incurred by the applicant;

(C) Long distance travel expenses, if adequately described, including the mode of transportation, the date, destination, and purpose of the trip, and, if by automobile, the number of miles traveled, the rate used, and substantiation of incidental expenses, including lodging, tolls, and parking; and

(D) Facsimile transmission charges for outgoing transmissions to long distance numbers, reimbursable at either the actual toll charge or $1.00 per page.

(2) The applicant shall certify that all expenses for which reimbursement is sought were incurred on behalf of the client and no other person and that the reimbursement, if allowed in full, will not exceed the amount that applicant paid for the items.

(3) The following expenses may be considered unreasonable unless separately justified through a detailed itemization and explanation by the applicant as to why they were necessary and verification that the hourly rates charged by the professionals do not support said expenses as an overhead item within the applicant's office:

(A) Travel to and from the courthouse within a twenty-five (25)-mile radius;

(B) Any charges for typing, word processing and clerical assistance;

(C) A travel mileage rate in excess of that which the Administrator of General Services has prescribed for official travel of employees of the Federal Government, as amended from time to time, and set forth in http:/www.gsa.gov/portal/content/100715; and

(D) Any meal expenses incurred while on long-distance travel.

(d) Certification. Each application for compensation shall be accompanied by a separate certification of the person or entity on whose behalf the applicant is employed, including the debtor, creditors' committee, or trustee. This certification must reflect both alternative options in substantially the form set forth below:

I, [person or representative of entity], certify that I have reviewed the [title of fee application] filed by [applicant], and Check one: ☐ I do not object to allowance of the application and payment of fees and expenses in full as the services rendered and fees charged appear reasonable;

or ☐ I object to the application and to payment of the fees and expenses in full in the amounts and for the reasons set forth below:

Dated: ______________________________________ [Person or Representative of Entity, with Title]

(e) Applications for Final Compensation in Chapter 11 Cases. At the time of the hearing on the approval of the disclosure statement or at some later time, the Court may fix the time by which all applications for final compensation must be filed. Absent such directive, all applications for allowance of fees and expenses must be filed prior to or with the notice of substantial consummation.

(1) Estimate of Future Services. An application for final compensation may include a reasonable estimate of the hours it is anticipated will be expended and the expenses incurred through the closing of the case. The estimate shall identify the specific tasks to be performed with an allocation of hours for each task.

(2) Supplementary Exhibit. Any estimate of future services and expenses shall be subject to later substantiation in the form of a supplementary exhibit, to be filed both on the return date of the hearing on the application for final compensation and with the application for final decree. The exhibit shall be filed in conformity with subparagraph (b)(4) governing professional compensation and Fed. R. Bankr. P. 2016(a). The supplementary exhibit must account for the actual services, hours and expenses which were estimated in the previously submitted application.

Comment This Rule provides a procedure for the Court to fix final compensation of professionals in order to determine the total administrative expenses chargeable to the estate while at the same time compensate and monitor services required after confirmation through the closing of the case. Paragraph (e) is intended to clarify that professionals who are required to be appointed by the Court in order to be paid must receive Court approval of fees and expenses for services rendered during the case, before the case is closed. Failure to file the supplementary exhibit required by subparagraph (e)(2) in a timely manner may result in an order of the Court directing a party to disgorge compensation allowed on the basis of previously submitted estimates.

Compensation of auctioneers is addressed by LBR 6005-1.

The travel mileage rate changes referred to in subparagraph (c)(3)(C) of this Rule are available on the Court's website: www.nynb.uscourts.gov. Expenses specifically addressed in this Rule are not intended to be either an exclusive or exhaustive list of potentially reimbursable expenses.