449 B.R. 441
Bankr. S.D.N.Y.2011Background
- Deloitte Tax provided tax compliance and advisory services to Mesa Air Group, Inc. and related reorganized debtors in a chapter 11 case.
- For the third interim period Deloitte sought $1,095,740.45 in fees and $17,953.64 in expenses; for the entire case, $2,003,421.05 in fees and $26,907.40 in expenses.
- At the May 25, 2011 hearing the court reduced the third interim fees by $3,500 for issues including block-billing and vagueness.
- The issue here is the time Deloitte charged for preparing, reviewing and editing fee applications, totaling $88,072.10 (8.04% of third interim period time).
- The court found the billing for preparing fee applications unreasonable and excessive and ordered an additional $44,000 reduction in the final fee award.
- The opinion discusses standards under 11 U.S.C. § 330, the Guidelines, and the court’s duty to scrutinize fee applications, including potential reductions for time entries that are duplicative or unnecessary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Deloitte Tax's time charges for preparing fee applications reasonable? | Deloitte Tax argues charges are reasonable and supported by detailed entries. | Court contends the preparation time is excessive and not reasonably likely to benefit the estate. | Yes, the preparation time was unreasonable and excessive; reduced by $44,000. |
| Should the court further reduce Deloitte Tax's third interim fee award due to excessive billing for fee applications? | Deloitte Tax maintains entries are compliant and customary. | Court finds continued reductions warranted to align with reasonableness standards. | Yes; additional reduction of $44,000 approved. |
| Does the court's standard under § 330 support reductions for time spent reviewing and editing time records? | Reviewing time records is compensable under § 330. | Entries reviewing time records are often non-compensable and excessive in this context. | Court allows reductions reflecting non-compensable review work and overall excessive billing. |
Key Cases Cited
- In re Keene Corp., 205 B.R. 690 (Bankr.S.D.N.Y.1997) (broadly interprets ‘necessary’ to benefit the estate)
- In re Ames Dept. Stores, Inc., 76 F.3d 66 (2d Cir. 1996) (reasonableness of services considered for estate benefit)
- In re Bennett Funding Grp., Inc., 213 B.R. 234 (Bankr.N.D.N.Y.1997) (court may award for time spent preparing fee applications and associated limits)
- In re New Boston Coke Corp., 299 B.R. 432 (Bankr.E.D. Mich.2003) (fee application review limitations and percentage considerations)
- In re Bass, 227 B.R. 103 (Bankr.E.D.Mich.1998) (limits on preparing fee applications; general 3–5% guidance)