Kohout v. United States Trustee, 513 B.R. 675

Debtor filed Chapter 11 on February 19, 2010; Kohout designated as local counsel, but no fee application filed at that time.
February 18, 2010 retainer of $100,000; Lampl Law Firm retained $76,000, $24,000 paid to Kohout; fee arrangement not in writing.
Debtor and Kohout agreed Kohout would serve as local counsel and litigate at least one adversary proceeding.
Bankruptcy court approved Debtor’s employment of Lampl and pro hac vice appearance with Kohout; Kohout never filed an employment application.
Trustee appointed July 21, 2010; case later converted to Chapter 7 on July 17, 2012; Johns remained trustee.
UST filed November 16, 2012 to examine Kohout’s compensation under § 329 and seek disgorgement of the $24,000 retainer; Kohout filed fee application and moved for nunc pro tunc employment on February 15, 2013.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Jurisdiction over the retainer	Kohout argues the fee was unrelated to the estate and court lacks jurisdiction.	Court has jurisdiction if related to the bankruptcy case and could affect estate.	Court has jurisdiction; fee related to the bankruptcy estate.
Timeliness of the UST’s objections	UST’s objections were untimely and should be disregarded.	No deadline in Code rules for objections; timeliness not a defect.	Untimeliness not a bar; objections permissible.
Nunc pro tunc employment	Extraordinary circumstances existed for retroactive approval.	Ignorance/oversight does not constitute extraordinary circumstances.	No extraordinary circumstances; nunc pro tunc employment denied.
Disgorgement and § 329 violation	Retainer reasonable; § 329 disclosure complied or excused by lack of knowledge.	§ 329 disclosure was violated, warranting disgorgement.	Disgorgement warranted; violation of § 329 and Rule 2016(b).

Spartan Mills v. Bank of America, 112 F.3d 1251 (4th Cir. 1997) (jurisdiction over proceedings related to bankruptcy case)
New Horizon of NY, LLC v. Jacobs, 231 F.3d 143 (4th Cir. 2000) (related-to-test for bankruptcy jurisdiction)
In re A.H. Robins Co., Inc., 86 F.3d 364 (4th Cir.1996) (focus on estate impact of proceedings)
Lamie v. United States Trustee, 540 U.S. 526 (2004) (prior approval required for compensation; retroactivity limits)
In re Keren Ltd. Partnership, 189 F.3d 86 (2d Cir.1999) (nunc pro tunc employment only with extraordinary circumstances)
In re Arkansas, 798 F.2d 645 (3d Cir.1986) (retroactive employment standards)
In re Land, 943 F.2d 1265 (10th Cir.1991) (extraordinary circumstances requirement for nunc pro tunc)
In re Jarvis, 53 F.3d 416 (1st Cir.1995) (retroactive employment standards)
In re Singson, 41 F.3d 316 (7th Cir.1994) (excusable neglect standard for retroactive employment)
In re Aultman Enterprises, 264 B.R. 485 (E.D. Tenn.2001) (oversight not warrant retroactive approval)
In re Walters, 868 F.2d 665 (4th Cir.1989) (fund source irrelevance to related-to estate)