In re Riley, 577 B.R. 497

Background

Debtor filed a Chapter 13 case with counsel McBride, who used a "no-money-down" arrangement: he advanced prepetition costs (filing fee $310, credit counseling $24, credit report $33) and agreed to be repaid through the confirmed plan in addition to the District’s no-look fee.
District standing orders historically set a presumptive "no-look" fee that expressly included any prepetition advances; the 2017 standing order removed that express inclusion and is silent on most expense reimbursement (but permits limited postage reimbursement for plan modification notices).
McBride and other local counsel began filing plans after the 2017 order seeking repayment of such advances as administrative expenses of the estate in addition to the no-look fee.
The Chapter 13 Trustee requested clarification; the court took the matter under advisement at confirmation and later issued this decision disallowing reimbursement of the advances through the plan.
The court reasoned the filing fee, counseling fee, and credit report are debtor’s prepetition obligations (not estate obligations), the advances were made pursuant to a prepetition agreement, and the no-look fee framework was intended to encompass routine expenses unless a formal fee application is filed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether prepetition advances (filing fee, credit counseling, credit report) are administrative expenses under 11 U.S.C. § 503(b)(1)(A)	McBride: advances preserved the estate and prevented dismissal, so they are "actual, necessary costs of preserving the estate."	Court/Trustee: advances were debtor's prepetition obligations, made under a prepetition contract, and did not directly and substantially benefit the estate as a whole.	Held: Not administrative expenses under § 503(b)(1)(A); advances are personal debtor obligations and fail both prongs of the § 503 test.
Whether advances are recoverable as expenses/compensation under § 330(a) and thus administrative under § 503(b)(2)	McBride: § 330(a)(4)(B) (and case law) permits debtor’s counsel to recover reasonable expenses in Chapter 13; therefore advances should be reimbursable.	Court: § 330(a)(4)(B) allows reasonable compensation to debtor’s counsel but the no-look fee regime replaces the Rule 2016 application process; filing fees and routine prepetition costs should not be shifted to the estate absent formal application or statutory authority.	Held: Advances are not reimbursable under § 330(a)/§ 503(b)(2); counsel limited to the no-look fee or a full fee application for amounts beyond that.
Effect of the District’s no-look fee standing order on expense reimbursement	McBride: Omission in the 2017 order of the prior explicit exclusion of advances means counsel may again seek reimbursement.	Court: No-look fee is intended to be inclusive of routine expenses; absent a formal fee application, counsel who elect the no-look fee cannot recover additional prepetition advances through the plan.	Held: Counsel electing the no-look fee are limited to that fee; prepetition advances disallowed unless properly pursued through the formal fee-application process and authorized by statute/rule.

Key Cases Cited

Jack Wade Drilling, Inc. v. Jackson, 258 F.3d 385 (5th Cir. 2001) (two-part test for administrative expense: transaction with estate and direct, substantial benefit to the estate)
Lamie v. United States Trustee, 540 U.S. 526 (2004) (debtor’s counsel generally ineligible for § 330(a)(1) awards; § 330(a)(4)(B) governs Chapter 13 compensation)
In re Frazier, 569 B.R. 361 (Bankr. S.D. Ga. 2017) (advance of filing fee not an administrative expense; § 330(a)(4)(B) does not permit repayment of filing fee from the estate)
In re Jartran, Inc., 886 F.2d 859 (7th Cir. 1989) (expenditure must benefit the estate to qualify as administrative expense)
In re Cahill, 428 F.3d 536 (5th Cir. 2005) (lodestar method and requirement for detailed fee application review)
In re Eliapo, 468 F.3d 592 (9th Cir. 2006) (discussing benefits and purpose of presumptive/no-look fees)