659 B.R. 767
Bankr. D. Utah2024Background
- Dimitrios G. Golesis and Golesis Properties, LLC filed Chapter 11 (Subchapter V) bankruptcy petitions on May 18 and 19, 2023, respectively, represented by Diaz & Larsen ("Counsel").
- Counsel received pre-petition retainers, performed preparatory work for the filings, and began post-petition services, but did not file applications to be employed as Debtors’ counsel until May 31, 2023.
- The employment applications were not filed or approved retroactively to the petition dates, but rather became effective as of the application filing date.
- Counsel later moved to have its employment approved retroactively to the petition dates, arguing extraordinary circumstances excused the delayed filing.
- The U.S. Trustee objected, relying on Tenth Circuit precedent requiring a showing of "extraordinary circumstances" for retroactive approval of professional employment in bankruptcy.
- The bankruptcy court analyzed whether such extraordinary circumstances existed and whether Supreme Court precedent (Acevedo) altered the local circuit law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can the court retroactively approve counsel’s employment pre-application date? | Delayed filing due to workload and unavailability of notary; extraordinary circumstances exist | No extraordinary circumstances; Tenth Circuit precedent bars retroactive approval | No retroactive approval absent extraordinary circumstances; motion denied |
| Does Acevedo preclude retroactive approval of bankruptcy professional employment? | Retroactive approval should be permitted based on precedent and facts | Supreme Court's Acevedo restricts nunc pro tunc relief | Acevedo does not abrogate Tenth Circuit law on retroactive approval |
| Whether the work performed post-petition but pre-application filing justifies retroactive pay | Counsel performed valuable work for debtor | Routine work not extraordinary; compliance with bright-line rule required | Routine post-petition work does not justify retroactive employment |
| 21-day filing grace period under Rule 6003 allows employment applications to be timely if filed within that time | Counsel's application within 21 days should be adequate | Rule 6003 doesn't permit retroactive approval prior to application date | No grace period; Rule 6003 does not override circuit precedent |
Key Cases Cited
- In re Schupbach Investments, L.L.C., 808 F.3d 1215 (10th Cir. 2015) (retroactive approval of professional employment in bankruptcy only in the most extraordinary circumstances)
- In re Albrecht, 233 F.3d 1258 (10th Cir. 2000) (distinction between nunc pro tunc and retroactive/post facto approval, with retroactive approval permitted only in extraordinary cases)
- Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S. Ct. 696 (2020) (Supreme Court addressed limits of nunc pro tunc orders, but not retroactive employment in bankruptcy)