EMPLOYMENT OF DEBTOR’S PRINCIPALS IN CHAPTER 11 CASES,
U.S. Bankruptcy Court for the Central District of California
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AND PROFESSIONAL PERSONS (a) Employment of Debtor’s Principals or Insiders in Chapter 11 Cases. (1) Notice of Setting/Increasing Insider Compensation. No compensation or other remuneration may be paid from the assets of the estate to a debtor’s owners, partners, officers, directors, shareholders, or relatives of insiders as defined by 11 U.S.C. § 101(31), from the time of the filing of the petition until the confirmation of a plan nor may approved compensation be increased unless the debtor serves a Notice of Setting/Increasing Insider Compensation (“Notice”) in accordance with procedures adopted by the United States trustee pursuant to this rule. (2) Service of Notice.
The debtor must: (A) serve the Notice on the United States trustee, the creditors’ committee or the 20 largest creditors if no committee has been appointed, any other committee appointed in the case, counsel for any of the foregoing, and any secured creditor that claims an interest in cash collateral, and (B) provide proof of service to the United States trustee. As a non-filed document, the Notice does not result in the generation and delivery of an NEF, and therefore consent to electronic service via NEF on the United States trustee and other CM/ECF Users is not applicable to the Notice. (3) Payment of Insider Compensation. An insider may receive compensation or other remuneration from the estate if no objection is received within 14 days after service of the Notice.
An insider may receive an increase in the amount of insider compensation or other remuneration previously approved if no objection is received within 30 days after service of the Notice. (4) Objection and Notice of Hearing. If an objection is timely received, the debtor must set the matter for hearing. The debtor must file a true and correct copy of the Notice, objection, and the original notice of hearing.
The debtor must serve not less than 21 days notice of the date and time of the hearing on the objecting party and the United States trustee. (b) Employment of Professional Persons. (1) Application for Employment. (A) An application seeking approval of employment of a professional person pursuant to 11 U.S.C. §§ 327, 328, 1103(a), or 1114 must comply with the requirements of FRBP 2014 and 6003(a) and be filed with the court.
The 19 LBR 2014-1 application must specify unambiguously whether the professional seeks compensation pursuant to 11 U.S.C. § 328 or 11 U.S.C. § 330. (B) The application must be accompanied by a declaration of the person to be employed establishing disinterestedness or disclosing the nature of any interest held by such person. (C) The application must contain proof of service upon the United States trustee, and may be served and ruled on pursuant to LBR 9013-1(o). (D) A chapter 7 trustee who seeks authorization to act as attorney or accountant for the estate, or to employ the trustee’s firm in such capacity, must explain why such employment is in the best interests of the estate.
(E) A timely application for employment is a prerequisite to compensation from the estate. Therefore, an application for the employment of counsel for a debtor in possession should be filed as promptly as possible after the commencement of the case, and an application for employment of any other professional person should be filed as promptly as possible after such person has been engaged. (F) The substitution of an attorney must also comply with LBR 2091-1(b). (2) Notice of Application.
(A) Notice of an application by the debtor (if such application is required), debtor in possession or trustee to retain a professional person must be filed and served, in accordance with LBR 2002-2(a) and LBR 9036-1, on the United States trustee, the debtor (if a trustee has been appointed), the creditors’ committee or the 20 largest unsecured creditors if no committee has been appointed, any other committee appointed in the case, counsel for any of the foregoing, and any other party in interest entitled to notice under FRBP 2002. (B) Notice of an application by a committee to retain a professional person must be filed and served, in accordance with LBR 2002-2(a) and LBR 9036-1, on the United States trustee, debtor or debtor in possession, the trustee (if appointed), and their counsel. (C) The notice must be filed and served not later than the day the application is filed with the court. (3) Content of Notice.
The notice must: (A) State the identity of the professional and the purpose and scope for which the professional is being employed; (B) State whether the professional seeks compensation pursuant to 20 LBR 2015-2 11 U.S.C. § 328 or 11 U.S.C. § 330; (C) Describe the arrangements for compensation, including the hourly rate of each professional to render services, source of the fees, the source and amount of any retainer, the date on which it was paid, and any provision regarding replenishment thereof; (D) Provide a name, address, and telephone number of the person who will provide a copy of the application upon request; and (E) Advise the recipient that any response and request for hearing, in the form required by LBR 9013-1(f), must be filed and served on the applicant (and counsel, if any), and the United States trustee not later than 14 days from the date of service of the notice. (4) No Response and Request for Hearing. If the response period expires without the filing and service of a response and request for hearing, the applicant must promptly comply with LBR 9013-1(o)(3). (5) Response and Request for Hearing Filed.
If a timely response and request for hearing is filed with the court and served upon the applicant and the United States trustee, the applicant must comply with LBR 9013-1(o)(4).