Contributed by Joshua Nemser
On January 23, 2013, Chief Bankruptcy Judge Cecilia G. Morris of the Bankruptcy Court for the Southern District of New York signed Administrative Order M-447, updating the court’s guidelines for professional fees and disbursements. The order, which supersedes the court’s General Order M-389, goes into effect today. We at the Bankruptcy Blog have endeavored to provide you with a summary of the most pertinent changes. Even for those who do not practice law in the Southern District of New York, a review of the order is worthwhile, as it is a clear enunciation of the preferences other courts also may have when it comes to fee applications.
- Harmony with United States Trustee Guidelines: The order is meant to harmonize the requirements of the court with those promulgated by the United States Trustee. General Order M-389 intended to “supplement” the requirements contained in the United States Trustee Guidelines. As such, references to the United States Trustee Guidelines have been removed from the section of the order that addresses: (i) certification of the fee application; (ii) fee enhancements; and (iii) enhanced charges disbursements.
- Information Requirements: In addition to specifying that fee applications shall be in compliance with section 330 of the Bankruptcy Code, the order contains a list of specific information that should be included in fee applications. The purpose of an applicant providing the information called for in the list is to “facilitate a review without searching for relevant information in other documents.” The list is broken down into several categories: (i) Information about the Applicant and the Application; (ii) Case Status; (iii) Summary Sheet Requirements; (iv) Project Billing Format; and (v) Reimbursement for Actual, Necessary Expenses. This list was not part of General Order M-389 and should be reviewed by bankruptcy professionals with a practice in the Southern District of New York.
- Disbursements: Sorry, photocopier aficionados; photocopies shall now only be reimbursable at the lesser of $ .10 or cost. References to reimbursements for facsimiles and cellular telephone charges have been removed. General Order M-389 provided that daytime meals are not reimbursable “unless the individual is participating, during the meal, in a necessary meeting respecting the case.” This provision has been removed from the new order.
- Project Categories: The order includes, as an exhibit, suggested project billing categories that should be used to “facilitate effective review” of fee applications. Courts have generally required the use of project categories for larger and more complex bankruptcies; this exhibit formalizes the requirement. The categories listed in the order are not exclusive, but as a helpful starting point include: (i) asset analysis and recovery; (ii) asset disposition; (iii) business operations; (iv) case administration; (v) claims administration and objections; (vi) employee benefits/pensions; (vii) fee/employments objections; (viii) financing; (ix) litigation; (x) meeting of creditors; (xi) plan and disclosure statement; and (xii) relief from stay proceedings. There is a separate list for accountants and financial advisors, which includes: (i) accounting/auditing; (ii) business analysis; (iii) corporate finance; (iv) data analysis; (v) litigation consulting; (vi) reconstruction accounting; (vii) tax issues; and (viii) valuation.
While the order retains many of the same characteristics as General Order M-389, the inclusion of an application contents list and a sample of project billing categories is noteworthy.