Executive Office for United States Trustees
Office of the Director
Washington, DC 20530
UNITED STATES TRUSTEE
GUIDELINES FOR REVIEWING APPLICATIONS
FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES
FILED UNDER 11 U.S.C. § 330
Issued January 30, 1996
I.
GENERAL INFORMATION
A.
The Bankruptcy Reform Act of 1994 amended the responsibilities of the
United States Trustees under 28 U.S.C. § 586(a)(3)(A) to provide that,
whenever they deem appropriate, United States Trustees will review
applications for compensation and reimbursement of expenses under
section 330 of the Bankruptcy Code, 11 U.S.C. § 101, et seq. ("Code"),
in accordance with procedural guidelines ("Guidelines") adopted by the
Executive Office for United States Trustees ("Executive Office"). The
following Guidelines have been adopted by the Executive Office and are
to be uniformly applied by the United States Trustees except when
circumstances warrant different treatment.
B.
The United States Trustees shall use these Guidelines in all cases
commenced on or after October 22, 1994.
C.
The Guidelines are not intended to supersede local rules, but should be
read as complementing the procedures set forth in local rules.
D.
Nothing in the Guidelines should be construed:
1.
to limit the United States Trustee's discretion to request additional
information necessary for the review of a particular application or
type of application;
2.
to limit the United States Trustee's discretion to determine whether
to file comments or objections to applications; or
3.
to create any private right of action on the part of any person
enforceable in litigation with the United States Trustee.
II.
E.
Recognizing that the final authority to award compensation and
reimbursement under section 330 of the Code is vested in the Court, the
Guidelines focus on the disclosure of information relevant to a proper
award under the law. In evaluating fees for professional services, it is
relevant to consider various factors including the following: the time spent;
the rates charged; whether the services were necessary to the
administration of, or beneficial towards the completion of, the case at the
time they were rendered; whether services were performed within a
reasonable time commensurate with the complexity, importance, and
nature of the problem, issue, or task addressed; and whether
compensation is reasonable based on the customary compensation
charged by comparably skilled practitioners in non-bankruptcy cases,
The Guidelines thus reflect standards and procedures articulated in
section 330 of the Code and Rule 2016 of the Federal Rules of
Bankruptcy Procedure for awarding compensation to trustees and to
professionals employed under section 327 or 1103. Applications that
contain the information requested in these Guidelines will facilitate review
by the Court, the parties, and the United States Trustee.
F.
Fee applications submitted by trustees are subject to the same standard
of review as are applications of other professionals and will be evaluated
according to the principles articulated in these Guidelines. Each United
States Trustee should establish whether and to what extent trustees can
deviate from the format specified in these Guidelines without substantially
affecting the ability of the United States Trustee to review and comment
on their fee applications in a manner consistent with the requirements of
the law.
CONTENTS OF APPLICATIONS FOR COMPENSATION AND
REIMBURSEMENT OF EXPENSES
All applications should include sufficient detail to demonstrate compliance
with the standards set forth in 11 U.S.C. § 330. The fee application
should also contain sufficient information about the case and the applicant
so that the Court, the creditors, and the United States Trustee can review
it without searching for relevant information in other documents. The
following will facilitate review of the application.
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 2
A.
Information about the Applicant and the Application. The following
information should be provided in every fee application:
1.
Date the bankruptcy petition was filed, date of the order approving
employment, identity of the party represented, date services
commenced, and whether the applicant is seeking compensation
under a provision of the Bankruptcy Code other than section 330.
2.
Terms and conditions of employment and compensation, source of
compensation, existence and terms controlling use of a retainer,
and any budgetary or other limitations an fees.
3.
Names and hourly rates of all applicant's professionals and
paraprofessionals who billed time, explanation of any changes in
hourly rates from those previously charged, and statement of
whether the compensation is based on the customary
compensation charged by comparably skilled practitioners in cases
other than cases under title 11.
4.
Whether the application is interim or final, and the dates of
previous orders on interim compensation or reimbursement of
expenses along with the amounts requested and the amounts
allowed or disallowed, amounts of all previous payments, and
amount of any allowed fees and expenses remaining unpaid.
5.
Whether the person on whose behalf the applicant is employed has
been given the opportunity to review the application and whether
that person has approved the requested amount.
6.
When an application is filed less than 120 days after the order for
relief or after a prior application to the Court, date and terms of the
order allowing leave to file at shortened intervals.
7.
Time period of the services or expenses covered by the
application.
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 3
B.
C.
Case Status. The following information should be provided to the extent
that it is known to or can be reasonably ascertained by the applicant:
1.
In a chapter 7 case, a summary of the administration of the case
including all moneys received and disbursed in the case, when the
case is expected to close, and, if applicant is seeking an interim
award, whether it is feasible to make an interim distribution to
creditors without prejudicing the rights of any creditor holding a
claim of equal or higher priority.
2.
In a chapter 11 case, whether a plan and disclosure statement
have been filed and, if not yet filed, when the plan and disclosure
statement are expected to be filed; whether all quarterly fees have
been paid to the United States Trustee; and whether all monthly
operating reports have been filed.
3.
In every case, the amount of cash on hand or on deposit, the
amount and nature of accrued unpaid administrative expenses, and
the amount of unencumbered funds in the estate.
4.
Any material changes in the status of the case that occur after the
filing of the fee application should be raised, orally or in writing, at
the hearing on the application or, if a hearing is not required, prior
to the expiration of the time period for objection.
Summary Sheet. All applications should contain a summary or cover
sheet that provides a synopsis of the following information:
1.
total compensation and expenses requested and any amount(s)
previously requested;
2.
total compensation and expenses previously awarded by the court;
3.
name and applicable billing rate for each person who billed time
during the period, and date of bar admission for each attorney;
4.
total hours billed and total amount of billing for each person who
billed time during billing period; and
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 4
5.
D.
computation of blended hourly rate for persons who billed time
during period, excluding paralegal or other paraprofessional time.
Project Billing Format
1.
To facilitate effective review of the application, all time and service
entries should be arranged by project categories. The project
categories set forth in Exhibit A should be used to the extent
applicable. A separate project category should be used for
administrative matters and, if payment is requested, for fee
application preparation.
2.
The United States Trustee has discretion to determine that the
project billing format is not necessary in a particular case or in a
particular class of cases. Applicants should be encouraged to
consult with the United States Trustee if there is a question as to
the need for project billing in any particular case.
3.
Each project category should contain a narrative summary of the
following information:
a.
a description of the project, its necessity and benefit
to the estate, and the status of the project including all
pending litigation for which compensation and
reimbursement are requested;
b.
identification of each person providing services on the
project; and
c.
a statement of the number of hours spent and the
amount of compensation requested for each
professional and paraprofessional on the project.
4.
Time and service entries are to be reported in chronological order
under the appropriate project category.
5.
Time entries should be kept contemporaneously with the services
rendered in time periods of tenths of an hour. Services should be
noted in detail and not combined or "lumped" together, with each
service showing a separate time entry; however, tasks performed in
a project which total a de minimis
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 5
amount of time can be combined or lumped together if they do not
exceed .5 hours on a daily aggregate. Time entries for telephone
calls, letters, and other communications should give sufficient detail
to identify the parties to and the nature of the communication. Time
entries for court hearings and conferences should identify the
subject of the hearing or conference. If more than one
professional from the applicant firm attends a hearing or
conference, the applicant should explain the need for multiple
attendees.
E.
Reimbursement for Actual, Necessary Expenses. Any expense for
which reimbursement is sought must be actual and necessary and
supported by documentation as appropriate, Factors relevant to a
determination that the expense is proper include the following:
1.
Whether the expense is reasonable and economical. For example,
first class and other luxurious travel mode or accommodations will
normally be objectionable.
2.
Whether the requested expenses are customarily charged to
non-bankruptcy clients of the applicant.
3.
Whether applicant has provided a detailed itemization of all
expenses including the date incurred, description of expense (e,g.,
type of travel, type of fare, rate, destination), method of
computation, and, where relevant, name of the person incurring the
expense and purpose of the expense. Itemized expenses should
be identified by their nature (e.g., long distance telephone, copy
costs, messengers, computer research, airline travel, etc.) and by
the month incurred. Unusual items require more detailed
explanations and should be allocated, where practicable, to specific
projects.
4.
Whether applicant has prorated expenses where appropriate
between the estate and other cases (e.g., travel expenses
applicable to more than one case) and has adequately explained
the basis for any such proration.
5.
Whether expenses incurred by the applicant to third parties are
limited to the actual amounts billed to, or paid by, the applicant on
behalf of the estate.
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 6
6.
Whether applicant can demonstrate that the amount requested for
expenses incurred in-house reflect the actual cost of such
expenses to the applicant. The United States Trustee may establish
an objection ceiling for any in-house expenses that are routinely
incurred and for which the actual cost cannot easily be determined
by most professionals (e.g., photocopies, facsimile charges, and
mileage).
7.
Whether the expenses appear to be in the nature of
nonreimbursable overhead. Overhead consists of all continuous
administrative or general costs incident to the operation of the
applicant's office and not particularly attributable to an individual
client or case. Overhead includes word processing, proofreading,
secretarial and other clerical services, rent, utilities, office
equipment and furnishings, insurance, taxes, local telephone and
monthly car phone charges, lighting, heating and cooling, and
library and publication charges.
8.
Whether applicant has adhered to allowable rates for expenses as
fixed by local rule or order of the Court.
Guidelines For Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996) - Page 7
EXHIBIT A
PROJECT CATEGORIES
Here is a list of suggested project categories for use in most bankruptcy cases. Only
one category should be used for a given activity. Professionals should make their best
effort to be consistent in their use of categories, whether within a particular firm or by
different firms working on the same case. It would be appropriate for all professionals
to discuss the categories in advance and agree generally on how activities will be
categorized. This list is not exclusive. The application may contain additional
categories as the case requires. They are generally more applicable to attorneys in
chapter 7 and chapter 11, but may be used by all professionals as appropriate.
ASSET ANALYSIS AND RECOVERY: Identification and review of potential
assets including causes of action and non-litigation recoveries.
ASSET DISPOSITION: Sales, leases (§ 365 matters), abandonment and related
transaction work.
BUSINESS OPERATIONS: Issues related to debtor-in-possession operating in
chapter 11 such as employee, vendor, tenant issues and other similar problems.
CASE ADMINISTRATION: Coordination and compliance activities, including
preparation of statement of financial affairs; schedules; list of contracts; United
States Trustee interim statements and operating reports; contacts with the United
States Trustee; general creditor inquiries.
CLAIMS ADMINISTRATION AND OBJECTIONS: Specific claim inquiries; bar
date motions; analyses, objections and allowances of claims,
EMPLOYEE BENEFITS/PENSIONS: Review issues such as severance,
retention, 401 K coverage and continuance of pension plan.
FEE/EMPLOYMENT APPLICATlONS: Preparations of employment and fee
applications for self or others; motions to establish interim procedures.
FEE/EMPLOYMENT OBJECTIONS: Review of and objections to the
employment and fee applications of others.
FINANCING: Matters under § § 361, 363 and 364 including cash collateral and
secured claims; loan document analysis.
LITIGATION: There should be a separate category established for each matter
(e.g. XYZ Litigation).
MEETINGS OF CREDIT0RS: Preparing for and attending the conference of
creditors, the § 341 (a) meeting and other creditors' committee meetings.
PLAN AND DISCLOSURE STATEMENT: Formulation, presentation and
confirmation; compliance with the plan confirmation order, related orders and
rules; disbursement and case closing activities, except those related to the
allowance and objections to allowance of claims.
RELIEF FROM STAY PROCEEDINGS: Matters relating to termination or
continuation of automatic stay under § 362.
The following categories are generally more applicable to accountants and financial
advisors, but may be used by all professionals as appropriate.
ACCOUNTING/AUDITING: Activities related to maintaining and auditing books
of account, preparation of financial statements and account analysis.
BUSINESS ANALYSIS: Preparation and review of company business plan;
development and review of strategies; preparation and review of cash flow
forecasts and feasibility studies.
CORPORATE FINANCE: Review financial aspects of potential mergers,
acquisitions and disposition of company or subsidiaries.
DATA ANALYSIS: Management information systems review, installation and
analysis, construction, maintenance and reporting of significant case financial
data, lease rejection, claims, etc.
LITIGATION CONSULTING: Providing consulting and expert witness services
relating to various bankruptcy matters such as insolvency, feasibility, avoiding
actions; forensic accounting, etc.
RECONSTRUCTION ACCOUNTING: Reconstructing books and records from
past transactions and bringing accounting current.
TAX ISSUES: Analysis of tax issues and preparation of state and federal tax
returns.
VALUATION: Appraise or review appraisals of assets.
Guidelines for Reviewing Applications
For Compensation and Reimbursement
of Expenses (Jan. 30, 1996)
Exhibit A - Page 2
