Interim Compensation Procedures in Chapter 11 Cases

(a) Interim Compensation Requests. Pursuant to 11 U.S.C. §§ 330 and 331 and this Rule, the Court may authorize the debtor to pay professionals’ interim fees and expenses subject to final approval. Formal applications for interim compensation must comply with Fed. R. Bankr. P. 2016(a) and L.B.R. 2016-1. If the amount of fees and expenses requested exceeds $1,000, notice of the application must be given in accordance with Fed. R. Bankr. P. 2002(a)(6), L.B.R. 9013-1, and any order entered by the Court in the case.

8 (b) Authorization for Payment In Advance of Formal Fee Application. The Court may authorize procedures permitting the debtor to pay professionals interim fees and expenses in advance of a formal fee application (“Interim Advance Payments”). The motion authorizing procedures for Interim Advance Payments must include the following: (1) Necessity and Feasibility of Interim Advance Payments. A motion seeking authorization for Interim Advance Payments must include the following: (A) Statement of the cause necessitating Interim Advance Payment procedures; (B) Verification by the debtor that the debtor’s cash flow allows it to pay its professionals and other potential administrative priority claimants on a monthly or other specified interim advance basis; (C) Projection of monthly fees and expenses by the professional(s) seeking interim advance payment procedures; (D) Any additional information necessary and appropriate to support the allowance of interim advance payment procedures; and (E) Notice of the motion must be given in accordance with Fed. R. Bankr. P. 2002(a)(6), L.B.R. 9013-1, and any order entered by the Court in the case.

(2) Authorization of Payment. The estate’s representative must be authorized to pay, and the professional may seek or accept, Interim Advance Payments when and only to the extent that (a) funds are available to pay all professionals and other known administrative priority claimants, and (b) the professional has fully complied with the order authorizing the Interim Advance Payment procedures, including notice and objection provisions set forth herein. (3) Holdback Amount. Provided the professional complies with the provisions set forth herein, the professional may receive 80% of the fees (with the remaining 20% referred to as the “holdback”) and 100% of the expenses not subject to an unresolved objection, as provided in L.B.R. 2016-2(b)(8)(D).

The professional may seek authorization for payment of the holdback amount as part of a subsequent formal interim fee application. To the extent any fees or expenses are not approved by the Court, they must be offset against the 20% holdback or be disgorged from the professional as appropriate. (4) Monthly Billing Statements. (A) Deadline.

Within 14 days from the end of the monthly billing cycle for which Interim Advance Payments are sought, the professional must prepare a detailed monthly statement (“Monthly Statement”). If the professional fails to seek Interim Advanced Payments within 14 days, then the professional must await the next monthly billing cycle to obtain payment or await the formal fee application process to obtain payment. (B) Notice. Notice must be provided to the Noticed Parties described in L.B.R. 2016-2(b)(7).

9 (C) Content. The Monthly Statement must comply with L.B.R. 2016-1(a)(2)(B . (5) Reimbursement of Expenses. Monthly Statements seeking the reimbursement of expenses must include a summary of expenses by category.

Whenever a person pays expenses for others, the other person must be identified. It is not necessary to attach supporting documentation for expenses incurred to the Monthly Statement, unless and until the expense is challenged or questioned. (6) Redaction of Confidential Information. The description of any service that is confidential in nature may be redacted from the Monthly Statements, but professionals must endeavor to use descriptions that allow adequate review of their services without compromising sensitive commercial information, attorney work product, or other privileges.

If a redacted entry is questioned, these entries are to be treated as an Informal Objection, as set forth in L.B.R. 2016-2(b)(8)(A). For allowance of the fees for the redacted entries, the professional must move to submit unredacted Monthly Statements to the Court under seal as part of their subsequent formal fee application. (7) Notice of Interim Advance Payment. To receive an Interim Advance Payment, the professional must give timely notice and attach a copy of the applicable Monthly Statement to the following, collectively referred to as the “Noticed Parties”: (A) debtor; (B) attorney for the debtor; (C) United States Trustee, and, if applicable, to the chapter 11 trustee; (D) attorney for the Creditors’ Committee (or if there is no committee attorney, to all members of the committee); and (E) any party in interest who has specifically requested copies of the Monthly Statements.

(8) Objections to Monthly Statements. (A) Deadline. Objections to Monthly Statements, referred to as “Informal Objections,” must be submitted no later than 14 days after receiving notice of the Monthly Statement. (B) Notice.

Informal Objections must be submitted to the professional and Noticed Parties, and should not be filed with the Court. (The only objections that must be filed with the Court are objections to formal fee applications filed with the Court.) (C) Content. Informal Objections must specify the nature of the objection and the associated specific amount(s) within the Monthly Statement considered objectionable. (D) Effect.

If a professional receives an Informal Objection, then the professional may not seek or accept an Interim Advance Payment of any amount to which an Informal Objection has been lodged (and remains unresolved between the 10 professional and objecting party). Instead, the professional must wait to obtain payment through the formal interim or final fee application process or seek further order of the Court. As provided herein, the professional may then receive 80% of the fees and 100% of the expenses not subject to an unresolved objection. (E) Non-Waiver.

Failure to lodge an Informal Objection does not, by itself, constitute waiver of the right to object to a formal interim or final fee application. All Interim Advance Payments are subject to the interim and final fee applications filed with the Court pursuant to 11 U.S.C. §§ 330 and 331, and therefore subject to disgorgement. (9) Timely Formal Fee Applications Required. Parties seeking Interim Advance Payments must: (A) Comply with 11 U.S.C. §§ 330 and 331, L.B.R. 2016-1 and L.B.F. 2016-1.1 for interim and final compensation approval; (B) File formal interim fee applications not more than every 120-days and at least every 180-days, unless otherwise ordered by the Court; (C) Seek final approval of all interim compensation fee applications by filing a final fee application; and (D) When applicable, suspend seeking or accepting an Interim Advance Payment as provided in L.B.R. 2016-2(c).

(c) Suspension of Interim Advance Payments. A professional’s authorization to seek or accept any Interim Advance Payments will be for 120-day intervals only, beginning with the date the professional first began providing services after an order approving Interim Advance Payment procedures. After each 120 day interval, the professional’s authorization to seek or accept Interim Advance Payments will be suspended until the professional has filed a formal application for interim or final compensation for all prior unapproved professional fees pursuant to 11 U.S.C. §§ ‘330 or 331. Upon the filing of a formal interim fee application, the professional may seek and accept Interim Advance Payments, as provided herein, without further order of the Court.

(d) Form of Order. Any motion requesting authority to implement Interim Advance Payment procedures must include a proposed order in substantial conformity with L.B.F. 2016-2.1. 11 L.B.R. 2016-3. Compensation of Chapter 13 Debtor’s Attorney (a) Presumptively Reasonable Fee Application.

(1) Eligibility. To be eligible to use the Presumptively Reasonable Fee Application (the “PRFA”) procedure, the applicant must request a fee that is at or below the presumptively reasonable fee (the “PRF”) amount provided in the General Procedure Order titled, “In the Matter of Chapter 13 Fee,” as amended from time to time. The applicant must provide all reasonably necessary and appropriate services during the pendency of the entire case. (2) Presumptively Reasonable Fee.

To the extent provided for in the chapter 13 plan, the PRF, or lesser amount if requested by the plan, is to be paid by the trustee upon confirmation of the plan, to the extent funds are available after payment of the applicable trustee fee. The chapter 13 trustee may recommend or the Court may determine, in appropriate cases, that a lower fee be allowed. (3) Form of Application. Applications for allowance of fees and reimbursement of expenses pursuant to the PRFA procedure must be made using the checkbox on the chapter 13 plan, L.B.F. 3015-1.1.

Applicant need not supplement L.B.F. 3015-1.1, except upon formal objection, written request of the debtor, or order by the Court. (4) Extraordinary Costs. If a case has costs in excess of the amount provided for in the General Procedure Order published by the Clerk, In the Matter of Procedures for Fee Applications in Chapter 13 Cases, as amended from time to time, an attorney may file a Supplemental Fee Application using L.B.F. 2016‐3.5 and appropriate supplementary documentation. (5) Post‐Confirmation Fees.

Election of the PRF or any lesser fee does not preclude an attorney from filing a Supplemental Fee Application for post‐confirmation work. Electing the PRF does not preclude an attorney from providing for a greater amount in the plan. (6) Order. The chapter 13 confirmation order will serve as the order approving the payment of the PRF, or lesser amount requested.

(b) Long Form Fee Application. (1) Eligibility. If the applicant requests allowance of a fee in excess of the PRF amount, the attorney may not use the PRFA procedure and must use the Long Form Fee Application (the “LFFA”) procedure in addition to compliance with L.B.R. 2016-1(a)(2)(C)(i) and (ii). The applicant must provide all reasonably necessary and appropriate services during the pendency of the entire case.

(2) Form of Applications. Applications for allowance of fees and reimbursement of expenses pursuant to the LFFA procedure must be made using L.B.F. 2016-3.1, and must be supplemented by the attachments outlined in L.B.F. 2016-3.1. 12 (3) Service, Notice, and Objections. Debtor’s attorney must serve a copy of the LFFA, L.B.F. 2016-3.1, along with a notice in substantial conformity with L.B.F. 2016-3.2, on the chapter 13 trustee, the debtor, and any parties requesting notice.

Prior to the deadline to file a proof of claim, the notice, without the LFFA form, must be served on all other creditors, claimants, and parties in interest. If the claims deadline has passed, the notice, without the LFFA form, must be served on claimants. Parties will have 21 days from service of the notice within which to file an objection. (4) Timing.

Fee applications under the LFFA must be filed no sooner than the date of entry of the order confirming the chapter 13 plan and no later than 28 days after the date of entry of the order confirming the chapter 13 plan. (5) Order. The attorney must submit a form of order in substantial conformity with L.B.F. 2016-3.3, listing the specific amount of fees and expenses requested, the amount received outside of the plan or previously paid, and the amount payable from plan payments. (c) Supplemental Form Fee Application.

(1) Eligibility. If the applicant provides services post-confirmation and requests allowance of a supplemental fee for post-confirmation services, the applicant must use the Supplemental Form Fee Application (the “SUPFFA”) procedure in addition to compliance with L.B.R. 2016-1(a)(2)(C)(i) and (ii). (2) Form of Applications. Applications for allowance of fees and reimbursement of expenses pursuant to the SUPFFA procedure must be made using L.B.F. 2016- 3.4, and must be supplemented by the attachments outlined in L.B.F. 2016-3.4.

(3) Service, Notice, and Objections. Debtor’s attorney must serve a copy of the SUPFFA, L.B.F. 2016-3.4, along with a notice in substantial conformity with L.B.F. 2016-3.2, on the chapter 13 trustee, the debtor and those parties requesting notice. Prior to the deadline to file a proof of claim, the notice, without the SUPFFA form, must be served on all other creditors, claimants, and parties in interest. If the claims deadline has passed, the notice, without the SUPFFA form, must be served on claimants.

Parties will have 21 days from service of the notice to file an objection. (4) Timing. Fee applications under SUPFFA may not be filed until after entry of an order approving an application under either the PRFA procedure or the LFFA procedure, and no later than the date the chapter 13 trustee files a final report. (5) Order.

The attorney must submit a form of order in substantial conformity with L.B.F. 2016-3.5, listing the specific amount of post-confirmation fees and expenses requested, the amount previously approved by the Court, the amount received outside of the plan or previously paid, and the amount payable from plan payments. 13 (d) Hearing. If the applicant elects the PRFA procedure through a chapter 13 plan, any objection will be considered through the confirmation process. For all other types of fee applications, if no objection is filed, the Court may allow the requested fee in full or in part, upon the filing of a Certificate of Non-contested Matter in substantial conformity with L.B.F. 9013-1.3, or may order further supplementation or set the application for hearing.

If an objection is filed, the applicant is responsible for filing a Certificate of Contested Matter and Request for Hearing in substantial conformity with L.B.F. 9013-1.4. Upon the filing of the Certificate of Contested Matter, the Court may set the matter for hearing. Commentary The PRFA and LFFA procedures establish the time frame and process within which an applicant must apply initially for approval of chapter 13 fees and reimbursement of expenses. However, regardless of whether the applicant utilizes the PRFA or LFFA procedures, the prohibitions against and restrictions on limited representation contained in L.B.R. 9010-1 require that the engagement does not terminate at plan confirmation.

Rather, representation must last through the earlier of entry of discharge, or the conversion or dismissal of the case unless the attorney is permitted to withdraw in accordance with L.B.R. 9010-4. The PRFA procedure is for requesting fees and is not intended to limit the scope of chapter 13 engagements. When requesting fees using the PRFA procedure, attorneys are not required to submit their engagement letter or other fee agreement, detailed time slips, or a narrative unless requested by the trustee or otherwise ordered by the Court. However, attorneys are advised that if their fees are questioned, it may be quite difficult to prevail without the assistance of some or all of those items.

Although the PRFA process does not limit the ability of debtor’s attorney to seek additional fees post- confirmation, certain routine post-confirmation services are expected to be rendered by applicant as part of the PRF. For example, in most cases, such routine post- confirmation services will include reviewing claims after the expiration of the claims date; advising on the requirement that the debtor complete a financial management course; communicating with the debtor, creditors and other parties in interest concerning the case; defending a motion for relief from stay or motion to dismiss; and, completing the debtor's certification for discharge. However, generally, prosecuting or defending against a motion for a plan modification would not be considered a routine post-confirmation service. 14 The LFFA procedure is intended to be a fee-for-service arrangement where it is anticipated that total attorney fees for the case will exceed the PRF amount.

The SUPFFA procedure completes payment for post-confirmation services reasonably necessary and appropriate for the engagement. The Court will entertain supplemental fee applications that comply with the SUPFFA procedure, supported by time records, for post-confirmation services. Like the LFFA, applications under the SUPFFA must be supplemented by the same attachments.