What Is A Bankruptcy Fee Examiner?
08/09/13
Detroit’s Chapter 9 Bankruptcy case is making news across the country. It will set records for bankruptcy fees in my home town of Detroit, no doubt.
In order to assist him in reviewing those upcoming fee applications, similar in form to the one of mine pictured above, but for way more bucks, Bankruptcy Judge Steven W. Rhodes will be appointing a fee examiner.
From his order:
Order Regarding Comment Period on Fee Examiner Appointment
Interested parties may submit suggestions for a person to be appointed as a fee examiner directly to Judge Rhodes in care of the Bankruptcy Clerk’s office by August 9, 2013. Comments should be sealed in an envelope and labeled “CONFIDENTIAL FEE
EXAMINER COMMENTS.” Comments should not be filed through CM/ECF.
What Is A Bankruptcy Fee Examiner?
In large bankruptcy cases, like Detroit’s Chapter 9 bankruptcy case, there will be many professionals employed, attorneys and accountants.
Their appointment, and compensation, must be approved by the Bankruptcy Judge.
There will be an unsecured creditors’ committee, counsel for Detroit, the debtor, of course, and whatever other committees the Court approves, which will be allowed to hire professionals, with the required Court permission.
The office of the United States Trustee, at least in Chapter 11 cases, is
placed in a position to assist the court by fulfilling its statutory obligation to examine fee applications and comment on them as it determines necessary. (from American Bankruptcy Institute proposal to eliminate fee examiners)
It is the duty and function of the Court under the bankruptcy code to review all fee applications, whether objections were filed or not. Each interested party, the unsecured creditors’ and other committees, can review applications and file objections. Indeed, if they are performing their functions properly, they would review all fee applications.
Using a fee examiner outsources this function of the Court.
Approved fees come off the top, as administrative expenses, they are the highest priority claim. So, the higher the fees approved, the less pie there is for everyone else.
I support the American Bankruptcy Institute proposal:
The Bankruptcy Code should explicitly preclude the appointment of fee examiners as an improper delegation of the court’s duty to review and award compensation under section 330. The proposal does not affect the court’s authority under section 1104(c) to appoint an examiner to investigate and report on certain aspects of a chapter 11 case, for example, a potential fraudulent transfer or particularly complicated claims estimation issues. (American Bankruptcy Institute working proposal)
I assume they would extend this to Chapter 9 bankruptcy, as well as Chapter 11 bankruptcy.
Bankruptcy fee examiner magnifying glass from Dreamstime
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