UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division)

Transcription

1 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) ) In re: ) ) MODERN CONTINENTAL ) Chapter 11 CONSTRUCTION CO., INC., ) ) Case No (WCH) Debtor. ) ) FIRST INTERIM APPLICATION OF HANIFY & KING, PROFESSIONAL CORPORATION FOR ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED AS COUNSEL TO THE DEBTOR AND DEBTOR-IN-POSSESSION Name of Applicant: Authorized to Provide Professional Services to: Hanify & King, Professional Corporation Modern Continental Construction Co., Inc., debtor and debtor-in-possession Date of Retention: July 28, 2008 (effective to June 23, 2008) Period for Which Compensation and Reimbursement Is Sought: June 23, 2008 through September 30, % of Amount of Actual, Reasonable and Necessary Compensation: $341, % of Amount of Actual, Reasonable and Necessary Expense Reimbursements: $14, % Holdback Amount: $34, This is Hanify & King, Professional Corporation s first interim application. HANIFY & KING, PROFESSIONAL CORPORATION /s/ Harold B. Murphy Harold B. Murphy (BBO #326610) Christian J. Urbano (BBO #644471) HANIFY & KING, Professional Corporation One Beacon Street, 21st Floor Boston, MA Tel: (617) cju@hanify.com

2 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) ) In re: ) ) MODERN CONTINENTAL ) Chapter 11 CONSTRUCTION CO., INC., ) ) Case No (WCH) Debtor. ) ) FIRST INTERIM APPLICATION OF HANIFY & KING, PROFESSIONAL CORPORATION FOR ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED AS COUNSEL TO THE DEBTOR AND DEBTOR-IN-POSSESSION (June 23, 2008 through September 30, 2008) Pursuant to Sections 330 and 331 of Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code ), Rule 2016 of the Federal Rules of Bankruptcy Procedure, MLBR , and this Court s Administrative Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals (the Administrative Fee Order ), Hanify & King, Professional Corporation ( H&K ), counsel to Modern Continental Construction Co., Inc. (the Debtor ), respectfully submits this First Interim Application of Hanify & King, Professional Corporation for Allowance of Compensation for Services Rendered and Reimbursement of Expenses Incurred As Counsel to the Debtor and Debtor-in-Possession (the Application ) for the allowance of compensation in the amount of $341, and actual and necessary expenses in the amount of $14, for the period June 23, 2008 through and including September 30, 2008 (the Application Period ). Consistent with Paragraphs (5) and (7)(A) of the Administrative Fee Order, H&K also seeks payment of the unpaid balance of such fees and costs, totaling $34, (the Holdback Amount ). In support of the Application, H&K respectfully states as follows:

3 I. BACKGROUND AND AMOUNTS SOUGHT 1. On June 23, 2008 (the Petition Date ), the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Massachusetts (the Court ). The Debtor continues to manage its business and remains in possession of its property as a debtor-in-possession under Sections 1107 and 1108 of the Bankruptcy Code. 2. No trustee or examiner has been appointed in this case. On July 2, 2008, the United States Trustee for the District of Massachusetts appointed an official committee of unsecured creditors (the Committee ). A. Jurisdiction 2. This Court has jurisdiction to hear and determine this Application pursuant to 28 U.S.C and 157. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue in this district with respect to this proceeding and the Application is proper pursuant to 28 U.S.C and B. Events Leading to Chapter 11 Filing 3. The Debtor is a closely-held Massachusetts corporation formed in 1967 to perform general contracting services. At one time, the Debtor was the largest heavy civil construction company in the northeastern United States and one of the largest in the country. The Debtor served as the largest contractor (in terms of the dollar amount of contracts awarded), on the historic Big Dig Central Artery/Tunnel project in Boston, Massachusetts (the CA/T Project ). 4. The scope of the Debtor s construction expertise included heavy civil, marine, transportation, power, design/build and microtunneling projects. Some of the Debtor s more v1 2

4 prominent projects included the construction of the San Francisco-Oakland Bay Bridge Seismic Retrofit, Back Bay Station and the Southwest corridor in Boston, MBTA Silver Line Immersed Tube Tunnels, Route 3 reconstruction from Route 128 to the New Hampshire border (the Route 3 Project ), Terminal E at Boston Logan Airport, the Deer Island Inter-Island Tunnel and a major portion of the CA/T Project. 3. The filing of this bankruptcy petition was precipitated by the Debtor s failure to receive payment from Massachusetts Highway Department/Massachusetts Transportation Authority (the Authority ) for work previously performed on the CA/T Project, and for work that the Debtor continues to perform on the CA/T Project. C. Retention of H&K 4. On July 2, 2008, the Debtor filed an Application for Order Authorizing the Employment and Retention of Hanify & King, Professional Corporation As Counsel to the Debtor and Debtor-in-Possession (the H&K Retention Application ). On July 28, 2008, this Court entered an Order approving the H&K Retention Application. A copy of the Order is attached to this Application as Exhibit A. 5. On August 27, 2008, this Court entered the Administrative Fee Order. Pursuant to the Administrative Fee Order, this Court established procedures whereby professionals could be paid interim compensation on a monthly basis, in an amount of ninety percent (90%) of fees requested and one hundred percent (100%) of expenses reimbursed. See Administrative Fee Order, Exhibit A (Interim Compensation Procedures) at (5). The Administrative Fee Order also provides that [t]he remaining ten percent (10%) of fees for services rendered during any monthly period that is not paid by way of an Interim Payment (the 10% Holdback ) may be sought in an interim fee application as set forth in Section 7(A) below. Id. Section 7(A), in v1 3

5 turn, provides that [t]ogether with the request for the approval of the payments previously made pursuant to any Monthly Fee Statements in an Interim Fee Application, a Party may also seek approval for payment of the 10% Holdback in its Interim Fee Application. Id. at (7)(A). 6. In conjunction with the Debtor s use of cash collateral and debtor-in-possession financing approved by this Court, the Court approved various budgets (collectively the Budgets ), each of which included line items for the payment of professional fees. For the Application Period, the amount budgeted for H&K was $375,000 (the H&K Budgeted Cap ). H&K s request for compensation does not exceed the H&K Budget Cap. 7. During the Application Period, in accordance with the Administrative Fee Order and the H&K Budget Cap, H&K has served the following two (2) monthly fee statements, for which no objections have been raised: Monthly Fee 100% of Fees and 90% of Fees and Amount Paid Statement Date Period 100% of Expenses 100% of Expenses September 4, 06/23/08 $248, $224, $224, /31/08 October 9, /01/08 $107, $97, $97, /30/08 Totals: $356, $321, $321, By this Application, H&K requests an Order approving compensation in the amount of $321,009.33, representing the amounts already paid for professional services rendered and expenses incurred by H&K during the Application Period. H&K also seeks payment of the Holdback Amount (i.e., $34,166.75), in accordance with the Court s Administrative Fee Order, subject to final approval upon the filing of H&K s final fee application. See Administrative Fee Order, Exhibit A (Interim Fee Procedures) at (5)-(7). 9. In support of the Application, H&K submits chronological and detailed records of all of its time charges and summary of disbursement charges (attached as Exhibits D through N) for which H&K requests allowance and payment v1 4

6 THE APPLICATION 10. During the Application Period, H&K rendered services to the Debtor in the amount stated at its standard hourly billing rates of $341, for legal services, and incurred reimbursable expenses in the amount of $14,341.58, for a total amount of $356, The Application Period represents hours of legal services at a blended hourly rate of $ A statement containing the full names, initials, rates and total amount of services provided by each attorney or paraprofessional who provided services in this matter is attached as Exhibit B. A biographical description of each H&K attorney who provided services is attached as Exhibit C. The rates charged by H&K are competitive with the rates charged by other Boston law firms that maintain significant, business bankruptcy practices. 12. The primary services performed by H&K in this matter are summarized in this Application. Detailed summaries by category of the services rendered by H&K as counsel to the Debtor during the Application Period are attached Exhibits D through M. These detailed time records include: (i) the dates of all services rendered; (ii) detailed descriptions of the services rendered; (iii) the amount of time spent on the services, broken into detail; and (iv) the identity of the person rendering the services. 13. All services rendered by H&K for the Debtor during the Application Period were performed in connection with its representation of the Debtor in this Chapter 11 case. 14. H&K also requests reimbursement of expenses incurred in connection with its representation of the Debtor during the Application Period. Disbursements have been summarized into one billing category, and broken out by type and amount. A summary of disbursements is set forth in attached Exhibit M v1 5

7 SUMMARY OF SERVICES RENDERED 15. During the Application Period, H&K performed many varied bankruptcy services for the Debtor. Brief summaries of the significant services provided by H&K are set forth below. 16. Since the outset of this case, the Debtor has used the protections afforded under Chapter 11 to gain the breathing space necessary to permit the Debtor to continue the orderly completion of its remaining contracts and conclude the wind-up of its business while the Debtor fulfills its obligations to its employees, project owners, subcontractors, vendors and suppliers. In addition, the Debtor has sought to settle certain complex litigation in connection with the CA/T Project and the Route 3 Project, and certain allegations of illegal conduct raised by the federal government. Towards these ends, with H&K s advice and counsel, the Debtor has made significant strides. 17. With the assistance of H&K and the Debtor s other professionals, the Debtor has obtained approval for the continued use of cash collateral and later secured debtor-in-possession financing sufficient to achieve the aforementioned goals. H&K has advised the Debtor with respect to relief from the automatic stay sought by numerous personal injury plaintiffs and others, analyzing such motions and negotiating and seeking approval of settlement stipulations limiting stay relief to the extent of available insurance proceeds in appropriate instances. 18. Of significant importance to the Debtor during the Application Period, H&K secured (a) bar dates for the filing of prepetition claims against the Debtor, (b) an extension of exclusivity, (c) an extension of the deadline within which the Debtor must assume or reject its non-residential real property lease; and (d) an extension of time to remove cases under Rule 9027 of the Federal Rules of Bankruptcy Procedure. Throughout the Application Period, H&K v1 6

8 negotiated intensely with state-court litigants concerning the potential settlement of complex litigation regarding the CA/T Project, the Route 3 Project and has addressed other vendor, union, owner and subcontractor concerns surrounding the efficient and orderly completion of the Debtor s remaining projects. H&K has cooperated with counsel to the Committee to ensure that the Committee has been provided with the information it requested to, among other things, complete an investigation into the Debtor s prepetition equipment and other asset sales. as follows: 19. The categories of services performed by H&K during the Application Period are (1) Services Relating to Case Administration, Business Operations, and Meetings of Creditors (MLBR (d)(2)(C), (D) and (K)) (Exhibit D); (2) Services Relating to Financing (MLBR (d)(2)(I)) (Exhibit E); (3) Services Relating to Insurance (Including AIG Coverage Action) (MLBR (d)(2)) (Exhibit F); (4) Services Relating Relief from Stay Proceedings (MLBR (d)(2)(M)) (Exhibit G); (5) Services Relating to Employee Benefits and Pensions (MLBR (d)(2)(F)) (Exhibit H); (6) Services Relating to Fee Applications, Professional Compensation and Retention Issues (MLBR (d)(2)(G) and (H)) (Exhibit I); (7) Services Relating to Asset Analysis, Recovery and Disposition (MLBR (d)(2)(A) and (B)) (Exhibit J); (8) Services Relating to Claims Administration and Objections (MLBR (d)(2)(E)) (Exhibit K); (9) Services Relating to Resolution of Project Disputes and Ongoing Prepetition Litigation (MLBR (d)(2)(J)) (Exhibit L); and SERVICES RENDERED 20. A narrative description of the services performed by H&K follows v1 7

9 Category (1) Services Relating to Case Administration, Business Administration, and Meetings of Creditors (MLBR (d)(2)(C), (D) and (K)) (Exhibit D) 21. As required in virtually all Chapter 11 cases, H&K provided general legal services to the Debtor that are customary and usual in such cases. These services include: a. advising and representing the Debtor in connection with all aspects of its Chapter 11 case; b. drafting and seeking approval of various motions and pleadings not falling within the scope of one of the more specific categories listed in this Application, including, in particular, certain pleadings (and attending related hearings) associated with the first weeks of any Chapter 11 case such as (i) the Debtor s voluntary petition and related documents, (ii) the motion to pay prepetition employee wages and related benefits, as well as a motion to impound certain related information for privacy concerns, (iii) a motion to prevent utility providers from discontinuing service and establishing procedures to determine adequate protection for utility providers, (iv) a motion to maintain the Debtor s cash management system; (v) preparation of suggestions of bankruptcy, and (vi) securing an extension of time to file the Debtor s schedules and statement of financial affairs to ensure the accuracy of such documents; c. assisting the Debtor and the Debtor s financial advisors, UHY Advisors N.E., LLC ( UHY ) with respect to reporting and other obligations in bankruptcy and compliance with the requirements of the Office of the United States Trustee, including (i) preparation and participation at the Debtor s initial conference with representatives of the Office of the United States Trustee (the UST ); (ii) ensuring the establishment of appropriate debtor-in-possession bank accounts consistent with the Court s order approving the Debtor s motion to maintain its cash management system; (iii) preparing for and representing the Debtor in Section 341 meeting of creditors; (iv) reviewing the Debtor s monthly operating reports; (v) ensuring the currency of the Debtor s required insurance and other postpetition obligations; and (vi) representing the Debtor at the Committee formation meeting; d. addressing the termination or threatened termination of utility service by certain utility providers to ensure that such service was restored or remained uninterrupted; e. assisting the Debtor in preparing its schedules of assets and liabilities and statement of financial affairs (collectively, the Schedules ) for v1 8

10 compliance with the Bankruptcy Code; preparing and amending the Schedules upon the discovery of additional creditors or assets to ensure the Schedules contain complete and accurate information for the UST, the Court and all parties-in-interest; f. maintaining a case file of the pleadings and other relevant documents in the case; g. responding to a wide variety of inquiries and/or requests from creditors or parties in interest for information regarding case status or other issues affecting their rights and addressing general creditor issues; and h. reviewing and monitoring the docket periodically to ensure compliance with deadlines, notice and service obligations. H&K s services are also contained in this category when conferences or tasks performed pertained to multiple issues or those which fall under the case administration, business operations or meetings of creditors categories set forth in MLBR (d)(2)(C), (D) and (K). 22. In rendering services relating to Case Administration, Business Operations and Meetings of Creditors, H&K attorneys and paralegals expended hours for requested compensation at their adjusted and usual hourly rates of $83,876.00, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $31, Charles R. Bennett, Jr. CRB $ $4, Andrew G. Lizotte AGL $ $85.00 D. Ethan Jeffery DEJ $ $18, v1 9

11 Attorney Initials Hourly Rate Hours Amount Associates Christian J. Urbano CJU $ $33, Natalie B. Sawyer NBS $ $ TOTAL $88, Category (2) Services Relating to Financing (MLBR (d)(2)(I)) (Exhibit E) 24. During the Application Period, H&K performed work related to, among other things, the negotiation and finalization of the consensual use of cash collateral of its prepetition sureties holding first-priority security interests in substantially all of the Debtor s assets (collectively, the Lender ) to ensure that the Debtor had the funds necessary to continue operations in the first few weeks of the case. H&K assisted in the preparation of the cash collateral motions and led negotiations regarding the cash collateral budgets. H&K also participated in the hearings to approve the foregoing motions. By Orders dated June 25, 2008 and July 7, 2008 (the Cash Collateral Orders ), this Court authorized the Debtor to use the cash collateral from the Petition Date through July 25, H&K also led negotiations with the Lender regarding debtor-in-possession financing. H&K assisted in the preparation of the credit agreement, the financing motion, and attended the related hearings. H&K actively negotiated with the UST, the Committee and the Lender on the date of the hearing to arrive at a financing agreement acceptable to all such parties. By Orders dated August 7, 2008 and August 28, 2008, the Court approved the Debtor s proposed financing on an interim and final basis, respectively v1 10

12 26. As a result of securing cash collateral use and debtor-in-possession financing, the Debtor avoided ceasing its business operations, which would have resulted in a significant devaluation of its remaining assets and breach of its remaining construction projects to the detriment of the Debtor, its estate and creditors. 27. Services relating to Financing also included the negotiation with Flatiron and preparation by H&K of a motion, on an expedited basis, to secure insurance premium financing for certain of the Debtor s insurance policies. The Court subsequently approved the motion, ensuring that the Debtor s coverage under the related insurance policies remained in place. H&K also filed a supplemental motion to approve additional premium financing for the Debtor s Directors and Officers professional liability policy, which the Court subsequently approved. 28. In rendering services relating to Financing, H&K attorneys expended hours for requested compensation at their customary and usual hourly rates of $74,787.00, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $21, Charles R. Bennett, Jr. CRB $ $10, D. Ethan Jeffery DEJ $ $33, Associates Christian J. Urbano CJU $ $6, Christopher M. Condon CMC $ $ v1 11

13 Attorney Initials Hourly Rate Hours Amount Shareholders Natalie B. Sawyer NBS $ $2, TOTAL $74, Category (3) Services Relating to Insurance (Including AIG Coverage Action) (MLBR (d)(2)) (Exhibit F) 30. Prior to the Petition Date, H&K had been retained by the Debtor to represent it in a declaratory judgment action brought by National Union Fire Ins. Co. ( AIG ) after AIG disclaimed coverage for claims made by the Commonwealth of Massachusetts for property damage arising from the Interstate 90, airport tunnel connector ceiling collapse. H&K answered the AIG complaint and on behalf of the Debtor counterclaimed for coverage, breach of contract, breach of the covenant of good faith, and violations of Mass. Gen. Laws ch. 93A and 176D. AIG served a motion to dismiss the Debtor s counterclaims. While the case was stayed by the bankruptcy filing before a response was due, nonetheless, H&K worked on the Debtor s response to the AIG motion. H&K also reviewed and considered the impact various potential settlements between the Debtor and third parties could have on the insurance coverage action. 31. During the Application Period, H&K also addressed the nature and status of an insurance account deposit held by Crawford & Company and Broadspire Services Inc. (collectively Crawford ), an entity that administers insurance claims and distributes certain of those funds to attorneys representing the Debtor and its affiliates with respect to certain claims throughout the Northeast. H&K has engaged in discussions and negotiations with Crawford regarding releases of the deposit to the estate. H&K s efforts in this respect have continued through the Application Period v1 12

14 32. In rendering services relating to Insurance, H&K attorneys expended 63.7 hours for requested compensation at their customary and usual hourly rates of $29,285.50, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $2, Charles R. Bennett, Jr. CRB $ $9, David Lee Evans DLE $ $8, D. Ethan Jeffery DEJ $ $ Associates Philip H. Graeter PHG $ $8, Category (4) Services Relating to Relief from Stay Proceedings (MLBR (d)(2)(M)) (Exhibit G) TOTAL 63.7 $29, Prior to the Petition Date, the Debtor was a defendant in numerous state court tort and/or breach of contract actions pending before courts in New York, Massachusetts, and elsewhere. During the Application Period, H&K devoted attention to addressing and resolving motions for relief from the automatic stay brought by various personal injury plaintiffs and plaintiffs asserting breaches of contract. The vast majority of the personal injury plaintiffs bringing these motions for relief understood that there exists available insurance to cover judgments for damages against the Debtor, as well as the costs of defense. H&K, after v1 13

15 consultation with the Debtor and the Debtor s special counsel, Hinckley, Allen & Snyder, LLP ( Hinckley ), negotiated stipulations of settlement that would limit the plaintiff s recovery to available insurance proceeds. Furthermore, the plaintiffs agreed to waive any claim against the estate. As a result, these settlements were in the best interests the Debtor, the estate and its creditors. 35. H&K also addressed a motion for relief from the automatic stay that sought partial stay relief to proceed with discovery in a lawsuit against the Debtor and other defendants arising from the Interstate 90, airport tunnel connector ceiling collapse that resulted in the death of Milena Del Valle (the Tunnel Lawsuit ). The Tunnel Lawsuit involves personal injury and wrongful death claims and was pending in the Superior Court for Suffolk County, Massachusetts, on the Petition Date. H&K reviewed the objections filed by AIG, the Debtor s insurer providing coverage for the Tunnel Lawsuit, and Bechtel/Parsons Brinckerhoff, a codefendant in the Tunnel Lawsuit. H&K, after consultation with the Debtor and Hinckley, prepared a stipulation of settlement in which the Debtor agreed to the relief from stay requested provided that any adverse judgment against the Debtor be satisfied only to the extent of available insurance proceeds. 36. During the Application Period, Architectural Paving & Stone, Inc. ( AP&S ) sought relief from the automatic stay to continue prosecution against the Debtor s bonding companies of its state-court action for amounts due to AP&S for completed work on certain projects. H&K assisted counsel for the Lender and Hinckley in preparing a stipulation respecting agreed-upon relief from the automatic stay. H&K also prepared and filed a related motion to approve the stipulation, which provided, among other things, for relief from stay so that AP&S could proceed against the non-debtor parties and commence discovery against the v1 14

16 Debtor and/or the non-debtor parties, subject to the Debtor s right to seek a protective order or other relief from the Bankruptcy Court or the state court. 37. In rendering services relating to Relief from Stay Proceedings, H&K attorneys expended 66.6 hours for requested compensation at their customary and usual hourly rates of $26,030.50, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $4, Charles R. Bennett, Jr. CRB $ $ Andrew G. Lizotte AGL $ $85.00 D. Ethan Jeffery DEJ $ $12, Associates Christian J. Urbano CJU $ $6, Christopher M. Condon CMC $ $2, Category (5) Services Relating to Employee Benefits and Pensions (MLBR (d)(2)(F)) (Exhibit H) TOTAL 66.6 $26, This category pertains to services rendered by H&K in regard to various employment related issues that have arisen as a result of the Debtor s filing. In particular, at the outset of this case H&K prepared a motion in which the Debtor requested approval to pay certain prepetition wages to its employees to promote a stable environment in which to administer the v1 15

17 Debtor s business during the Chapter 11 case. H&K also advised the Debtor with respect to its prepetition employee severance and retention agreements and determined to disclose the nature of such agreements to the Court, the UST and all parties in interest notwithstanding that the Lender agreed to make any and all payments to current or former employees under such agreements pursuant to its prior commitments to do so. H&K further advised the Debtor with respect to issues relating to termination of employees and payment under the wage order for certain benefit payments to local unions or under workers compensation policies. 40. During the Application Period, H&K also advised the Debtor with respect to the ability to reimburse its current and former employees for legal fees paid in connection with ongoing prepetition litigation brought by or against the Debtor. H&K prepared the related motion, which was assented to by the Lender. The Court subsequently approved the motion. 41. In rendering services relating to Employee Benefits and Pensions, H&K attorneys expended 24.5 hours for requested compensation at their customary and usual hourly rates of $9,714.50, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $ Charles R. Bennett, Jr. CRB $ $ D. Ethan Jeffery DEJ $ $6, Associates Christian J. Urbano CJU $ $ v1 16

18 Attorney Initials Hourly Rate Hours Amount Shareholders Natalie B. Sawyer NBS $ $1, TOTAL 24.5 $9, Category (6) Services Relating to Fee Applications, Professional Compensation and Retention Issues (MLBR (d)(2)(G) and (H)) (Exhibit I) 43. During the Application Period, in order to comply with bankruptcy laws and local rules, H&K assisted in drafting applications to employ professionals for the Debtor in this case. In particular, H&K has drafted and filed applications with this Court to employ and related affidavits of H&K and UHY, the Debtor s financial advisors. H&K also assisted in the preparation of an application to employ Brown, Brown & Klass ( BB&K ) as special litigation counsel representing the Debtor in an insurance coverage action in California. H&K also reviewed the application to employ Hinckley as special counsel to the Debtor and conferred with Hinckley to avoid duplication of efforts and other matters for which Hinckley should have primary responsibility in the context of the Chapter 11 case. The Court approved each of the retention applications, including the application of BB&K, which was approved on a contingency fee basis. 44. During the Application Period, H&K prepared and obtained approval of the motion for the entry of the Administrative Fee Order. H&K maintained clear and accurate records of time and disbursements and, in connection with preparing its monthly fee statements, organized and set forth those records in accordance with the Administrative Fee Order, Fed. R. Bankr. P and MLBR In addition to preparing its own fee requests, H&K reviewed the monthly fee statements of UHY, Hinckley and the Committee counsel v1 17

19 45. In rendering services relating to Fee Applications, Professional Compensation and Retention Issues, H&K attorneys and paralegals expended 30.8 hours for requested compensation at their customary and usual hourly rates of $11,375.00, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $2, Andrew G. Lizotte AGL $ $85.00 D. Ethan Jeffery DEJ $ $3, Associates Christian J. Urbano CJU $ $5, Natalie B. Sawyer NBS $ $ TOTAL 30.8 $11, Category (7) Services Relating to Asset Analysis, Recovery and Disposition (MLBR (d)(2)(A) and (B)) (Exhibit J) 47. Over the four (4) years prior to the Petition Date, the Debtor and its non-debtor affiliates liquidated most of their assets (on which assets the Lender, among others, have and held liens) in an orderly fashion (the Equipment Sales ). The Debtor and its non-debtor affiliates paid the proceeds of such asset liquidations to the Lender, among other secured parties, to satisfy, in part, the liens on the assets. The Equipment Sales completed during the year prior to the Petition Date were reported in the Debtor s Statement of Financial Affairs v1 18

20 48. During the Application Period, the Committee began an investigation into the propriety of the Equipment Sales. The Committee requested that the Debtor provide it with all Equipment Sales documentation relating to equipment owned by the Debtor or its subsidiaries. H&K reviewed the relevant documents provided by the Debtor for attorney-client privilege and related doctrines. H&K produced documents responsive to the Committee s request outside of the Application Period. 49. In rendering services relating to Asset Analysis, Recovery, and Disposition, H&K attorneys expended 29.7 hours for requested compensation at their customary and usual hourly rates of $10,807.50, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $ D. Ethan Jeffery DEJ $ $5, Associates Christian J. Urbano CJU $ $1, Natalie B. Sawyer NBS $ $2, TOTAL 29.7 $10, Category (8) Services Relating to Claims Administration and Objections (MLBR (d)(2)(E)) (Exhibit K) 51. H&K s services performed under this category during the Application Period include the preparation and filing of the Debtor s motion for an order fixing a bar date for v1 19

21 holders of prepetition claims to file proofs of claim against the estate (the Bar Date ). By order dated July 11, 2008, this Court fixed August 22, 2008 as the Bar Date for individuals and nongovernmental entities and December 22, 2008 as the Bar Date for governmental entities. H&K also ensured that notice of the motion and the Bar Date order were served on all creditors and other parties-in-interest of the Debtors. In addition, H&K caused a copy of the Bar Date order to be served on all creditors listed on the Debtor s amended Schedules. 52. H&K also fielded various inquires and demands from creditors regarding their claims against the estate, including prepetition and postpetition labor union claims, environmental clean-up obligations, priority tax claims, and subcontractor claims. In connection with certain subcontractor claims, H&K analyzed the ability of subcontractors to assert mechanics liens under New York mechanic s lien laws on the property associated with the Fountain Avenue landfill project in New York and H&K advised the Debtor with respect to its options and obligations concerning payment of certain Fountain Avenue subcontractor claims. 53. In rendering services relating to Claims Administration and Objections, H&K attorneys expended 40.2 hours for requested compensation at their customary and usual hourly rates of $14,443.00, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $2, Charles R. Bennett, Jr. CRB $ $ v1 20

22 Attorney Initials Hourly Rate Hours Amount Shareholders D. Ethan Jeffery DEJ $ $3, Associates Christian J. Urbano CJU $ $2, Christopher M. Condon CMC $ $5, Natalie B. Sawyer NBS $ $ TOTAL 40.2 $14, Category (9) Services Relating to Resolution of Project Disputes and Ongoing Prepetition Litigation (MLBR (d)(2)(J)) (Exhibit L) 55. A substantial portion of the services performed by H&K during the Application Period relate to the resolution of litigation and other disputes relating to the Debtor s primary unfinished construction projects, including the CA/T Project and the Route 3 Project. Achieving settlements of these disputes will represent a major step toward the resolution of the Debtor s bankruptcy case. 56. Prior to the Petition Date, the Debtor entered into an agreement with certain agencies of the Commonwealth of Massachusetts (collectively, the Owner ) to reconstruct and expand the 21-mile stretch of Route 3 in northern Massachusetts. After the award of the contract to the Debtor, certain disputes arose between the Debtor and the Owner regarding, among other things, alleged inaccuracies in the Route 3 Project s requests for proposal, the Owner s interference in the design process, and the Owner s failure to abide by the terms of the contract. The Debtor asserted millions of dollars in damages to the Debtor resulting from the foregoing. In response, the Owner denied all liability and asserted claims against the Debtor, including set v1 21

23 off rights and millions of dollars in liquidated damages due to the Debtor s alleged delays in completing the Route 3 Project. 57. Prior to the Petition Date, the Debtor was also the largest general contractor on the CA/T Project, the largest and most complex highway and tunnel project in the nation s history. The Debtor was the general contractor on numerous separate construction projects that made up the CA/T Project, and remains the general contractor on fourteen such contracts. The Debtor subcontracted with various parties to provide goods and services to perform such contracts, and the Debtor s sureties provided performance and payment bonds on the contracts. The Lender, among others, provided further financing through certain loans to fund the Debtor s completion of the CA/T Project. 58. Numerous disputes involving millions of dollars in claims arose between the Debtor and certain government agencies of the Commonwealth of Massachusetts (the State Parties ), the Debtor and other third parties associated with the CA/T Project, and the Debtor s sureties, relating to claims for retainage, payments for repairs to tunnel leaks, change orders, design deficiencies, negligence and wrongful death tort claims, insurance coverage and reimbursement of defense cost disputes, and property damage claims relating to the Interstate 90 connector tunnel collapse. 59. During the Application Period, H&K expended considerable time reviewing proposed settlement terms and advising the Debtor regarding the impact its Chapter 11 case and the Bankruptcy Code may have on potential comprehensive settlements that may fully resolve all claims and disputes relating to the Route 3 Project and/or the CA/T Project. Due to the complexity of these disputes and the numerous parties affected by any such settlements, H&K has endeavored to analyze various settlement proposals and advise the Debtor with respect to the v1 22

24 impact its Chapter 11 filing may have on any settlement strategy. H&K continues to advise the Debtor in this respect. 60. During the Application Period, H&K also prepared and filed the Debtor s motion to extend the deadline to remove actions pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure to and including December 22, The Court subsequently granted the relief requested in the motion. 61. In rendering services relating to the issues concerning Resolution of Project Disputes and Ongoing Prepetition Litigation, H&K attorneys expended 173 hours for requested compensation at their customary and usual hourly rates of $77,200.00, for an average hourly rate of $ Pursuant to MLBR (d)(1), the following summary chart is provided in connection with this category of services: Attorney Initials Hourly Rate Hours Amount Shareholders Harold B. Murphy HBM $ $34, Charles R. Bennett, Jr. CRB $ $3, Andrew G. Lizotte AGL $ $ D. Ethan Jeffery DEJ $ $27, Associates Christian J. Urbano CJU $ $10, Natalie B. Sawyer NBS $ $ TOTAL $77, v1 23

25 DISBURSEMENTS 63. Pursuant to Section 330(b) of the Bankruptcy Code, the Court may authorize that H&K be reimbursed for actual, necessary expenses incurred. During the Application Period, H&K has incurred such expenses totaling $14, A summary of the expenses incurred for which reimbursement is herein sought is attached as Exhibit M. 64. H&K has advanced all expenses sought herein. H&K has included in the Application only those items that it normally charges its clients in addition to its customary and usual fees, which are not included in H&K s overhead. RELIEF SOUGHT IS REASONABLE 65. The requirements for the approval of professional fees and related expenses have been set forth in In re Boston & Maine Corp. v. Moore, 776 F.2d 2 (1st Cir. 1985) as well as in significant detail in In re Bank of New England Corp., 134 B.R. 450 (Bankr. D. Mass. 1991). Requested compensation must be reasonable and for actual and necessary services in compliance with 11 U.S.C. 330(a)(1). Boston & Maine Corp., 776 F.2d at 7. The United States Court of Appeals for the First Circuit has stated that it will determine the reasonableness of requested fees by utilizing the lodestar analysis. Id. at 6-7; see also Grendel s Den, Inc. v. Larkin, 749 F.2d 945, 950 (1st Cir. 1984). Under the lodestar analysis, a threshold point of reference or lodestar is established. This is the number of hours reasonably spent by each attorney multiplied by his or her reasonable hourly rate. This lodestar can then be adjusted upward or downward to reflect a variety of factors. Id. at H&K s compensation for the services rendered and reimbursement of expenses incurred in this matter are reasonable based on (i) the time and labor required, (ii) the complexity of the legal questions presented, (iii) the skill required to perform the legal services, (iv) the v1 24

26 customary compensation in this District, (v) the experience and ability of the attorneys providing services and (vi) the results achieved. See In re First Software Corp., 79 B.R. 108, (Bankr. D. Mass. 1987). 67. Pursuant to Section 330 of the Bankruptcy Code, the Bankruptcy Court is authorized to award fees for services rendered and expenses incurred by attorneys and other professional persons representing debtors or official committees of unsecured creditors. Pursuant to Section 331 and this Court s Administrative Fee Order, these awards may be made on an interim basis. 68. Section 330(a)(3) of the Bankruptcy Code sets forth factors to be considered by the Bankruptcy Court in reviewing the fees of professionals: (i) the time spent; (ii) the rates charged; (iii) whether the services were necessary and beneficial to the administration of the case; (iv) whether the services were performed in a reasonable amount of time when considering the complexity, importance and nature of the particular task; (v) whether compensation is reasonable based upon customary fees charges by comparably skilled professionals in cases other than bankruptcy cases. As described above, each of these factors has been satisfied. 69. Establishing the lodestar at H&K s hourly rates is appropriate because H&K s hourly rates are reasonable and competitive with, and often lower than, rates charged by firms performing comparable services in the District of Massachusetts. H&K performed its services expeditiously and in a cost effective manner and the number of hours spent by H&K was reasonable given the circumstances. H&K s services were necessary to the administration of the estate, and the estate derived a meaningful benefit from such services v1 25

27 NOTICE 70. In accordance with the Administrative Fee Order, Exhibit A (Interim Compensation Procedures) (8)(D), unless otherwise ordered by the Court, this Application and any notice of a hearing on this Application shall be served on: (a) the Notice Parties; (b) the Debtor s twenty (20) largest non-insider unsecured creditors; and (c) all parties who have filed a notice of appearance with the Clerk of this Court and requested such notice. H&K will file an appropriate certificate of service reflecting such service. CONCLUSION 71. Based upon the foregoing, H&K s fees and expenses are reasonable and should be approved by the Court. 72. This is H&K s first interim application for the allowance of fees and reimbursement for expenses. Although every effort has been made to include all fees and expenses for the Application Period in the Application, some fees and expenses may not have be included and H&K expressly reserves the right to make further application for fees and services not included herein. 73. This Application is being prepared and submitted before all of the services of H&K to the Debtor are complete. H&K anticipates that further services will be rendered and requests for payment made by further applications to be made to the Court. [The remainder of this page left blank intentionally.] v1 26

28 WHEREFORE, Hanify & King, Professional Corporation respectfully requests that this Court enter an Order: (i) (ii) (iii) Authorizing and approving payment on an interim basis to H&K in the amount of $356,009.08, representing fees of 341, for services rendered and reimbursable actual and necessary expenses of $14,341.58, incurred during the Application Period; Authorizing and directing the Debtor to pay H&K the Holdback Amount of $34, pursuant to this Court s Administrative Fee Order; and Awarding to H&K such other and further relief as this Court deems just and proper in the circumstances. Respectfully submitted, Dated: November 14, 2008 HANIFY & KING, Professional Corporation, counsel to Modern Continental Construction Co., Inc., /s/ Harold B. Murphy Harold B. Murphy (BBO #326610) D. Ethan Jeffery (BBO #631941) Christian J. Urbano (BBO #644471) HANIFY & KING Professional Corporation One Beacon Street, 21st Floor Boston, MA Tel: (617) Fax: (617) cju@hanify.com v1 27

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