UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION ) ) ) ) ) )

Transcription

1 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION IN RE: US FIDELIS, INC., Debtor. ) ) ) ) ) ) In Proceedings Under Chapter 11 Case No FINAL APPLICATION FOR ALLOWANCE OF FEES AND EXPENSES FILED BY SCOTT EISENBERG AND AMHERST PARTNERS, LLC, AS CHIEF RESTRUCTURING OFFICER AND FINANCIAL CONSULTANTS (Summary of Request) Name of Applicant Scott Eisenberg & Amherst Partners, LLC Date of Approval of Employment April 13, 2010 Identity of Party Represented CRO/Debtor Time Period Requested March 1, 2010 through September 12, 2012 Amount of Fees Requested $1,205, Amount of Expenses Requested $68, Previous Fee Orders First Interim, entered 9/27/2010 (Dkt. #404) Second Interim, entered 2/18/2011 (Dkt. #611) Third Interim, entered 7/26/2011 (Dkt. #825) Fourth Interim, entered 12/23/2011 (Dkt. #963) Interim or Final Application Final Application COME NOW Scott Eisenberg and Amherst Partners, LLC (collectively known as Amherst ), chief restructuring officer and financial consultants for Debtor US Fidelis, Inc. (the Debtor ), pursuant to 11 U.S.C. 328, 330 and 331, and file this Final Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the Amherst Final Application ). In support thereof, Amherst and the Debtor state as follows: v2

2 JURISDICTION 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C and 157 and E.D. Mo. L.R (B)(1). BACKGROUND 2. On March 1, 2010 (the Petition Date ), Debtor filed its Voluntary Petition for Relief under Chapter 11 of Title 11, United States Code (the Bankruptcy Code ). The Debtor continued managing its affairs as a debtor-in-possession pursuant to 1107(a) and 1108 of the Bankruptcy Code until the Effective Date (defined below). 3. On March 2, 2010, the Debtor filed its Application of Debtor-in-Possession for the Entry of an Order 11 U.S.C. 327(a) and Fed. R. Bankr. P. 2014(a) Authorizing the Employment of Amherst Partners, LLC as Financial Consultants for the Debtor-in-Possession and Scott Eisenberg as Chief Restructuring Officer (the Amherst Employment Application ). On April 13, 2010, the Bankruptcy Court entered its final order granting the Amherst Employment Application. 4. On August 28, 2012, the Court confirmed the First Amended Plan of Liquidation as Modified on July 13, 2012 (the Plan ). September 12, 2012 is the Effective Date under the Plan. 5. Under the Plan, a Liquidating Trust was funded on the Effective Date. The Liquidating Trust will pay all remaining professional fees. AMHERST S FEES AND EXPENSES 6. On August 16, 2010, Amherst filed its First Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the First Interim Application ) (Dkt. #358). On September 27, 2010, the Court entered its Order Granting First Interim v2 2

3 Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the First Interim Order ) (Dkt. #404) approving and allowing Amherst its request for fees totaling $412, and expenses totaling $28, for the first interim period from March 1, 2010 through July 31, Although Amherst s Invoice No was attached to the First Interim Application, the expenses of $2, in Invoice No were inadvertently omitted from the amount Amherst requested in the First Interim Application. The Debtor paid Amherst $2, for those expenses pursuant to the procedures set forth in L.B.R B. Accordingly, Amherst s request for expenses pertaining to the first interim period in this Final Application is $2, more than reflected in the First Interim Application. A copy of Amherst s Invoice No is attached to this Final Application as Exhibit A and incorporated herein by this reference. 7. On January 14, 2011, Amherst filed its Second Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. ( Second Interim Application ) (Dkt. #549). On February 18, 2011, the Court entered its Order Granting Second Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the Second Interim Order ) (Dkt. #611) approving and allowing Amherst its request for fees totaling $297, and expenses totaling $22, for the second interim period from August 1, 2010 through November 30, Amherst inadvertently included Invoice No in both the First Interim Application and the Second Interim Application. Invoice No covered services totaling $16, Amherst has confirmed that the Debtor paid Invoice No v2 3

4 43438 once. Accordingly, Amherst s request for fees pertaining to the second interim period in this Final Application is $16, less than reflected in the Second Interim Application. 8. On June 14, 2011, Amherst filed its Third Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. ( Third Interim Application ) (Dkt. #779). On July 26, 2011, the Court entered its Order Granting Third Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the Third Interim Order ) (Dkt. #825) approving and allowing Amherst its request for fees totaling $170, and expenses totaling $6, for the third interim period from December 1, 2010 through April 30, On November 21, 2011, Amherst filed its Fourth Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. ( Fourth Interim Application ) (Dkt. #936). On December 23, 2011, the Court entered its Order Granting Fourth Interim Application for Allowance of Fees and Expenses Filed by Scott Eisenberg and Amherst Partners, LLC as Chief Restructuring Officer and Financial Consultants for Debtor US Fidelis, Inc. (the Fourth Interim Order ) (Dkt. #963) approving and allowing Amherst its request for fees totaling $189, and expenses totaling $6, for the fourth interim period from May 1, 2011 through October 28, The Amherst Final Application covers the period from March 1, 2010 through and including September 12, 2012 (the Final Compensation Period ) v2 4

5 11. Amherst maintains detailed daily records in the ordinary course of its business. These time records are prepared contemporaneously with the rendition of services to the client. These time records describe the person performing the services, the date services are rendered, a detailed description of services, and the length of time spent delivering those services. These time records are kept in increments of tenths of an hour. 12. The services provided by Amherst during the Final Compensation Period have been actual and necessary. Reasonable compensation for such services based on the time, the nature, the extent and value of such services, and the costs of such services, other than in a case under the Bankruptcy Code, is $1,205, Amherst incurred expenses in this matter during the Final Compensation Period for which it seeks reimbursement in the aggregate sum of $68, During the course of this case, Amherst provided detailed budgets to the Creditors Committee, Mepco, and their respective counsel, and those budgets were included in various court filings. In total, Amherst s actual fees and expenses were $141,000 under the approved budgets. Savings were achieved by allocating work to US Fidelis employees, where possible, and by working off-site as much as practicable. 14. Amherst attached its invoices for fees and expenses as exhibits to each of the First Interim Application, the Second Interim Application, the Third Interim Application, and the Fourth Interim Application (collectively, the Prior Interim Applications ), covering the period from March 1, 2010 through October 28, 2011 (the Prior Interim Fee Period ). Because Amherst s invoices for the Prior Interim Fee Period are already part of the Court s record in this case, Amherst and the Debtor, in the interests of brevity and conservation, (a) are not attaching those invoices to this Amherst Final Application and (b) hereby incorporate those invoices for v2 5

6 the Prior Interim Fee Period into this Amherst Final Application. Exhibit B to this Amherst Final Application includes a summary of the hours, rate, and total compensation for each of Amherst s professionals during the Final Compensation Period. Exhibit C to this Amherst Final Application includes a summary of expenses by category for the expenses Amherst incurred during the Final Compensation Period. 15. Amherst and the Debtor attach to this Amherst Final Application copies of Amherst s invoices related to the period October 29, 2011 through September 12, 2012 (the Fifth Interim Period ) as Exhibit D. The fees billed by Amherst during the Fifth Interim Period totaled $152, Amherst incurred expenses in this matter during the Fifth Interim Period for which it seeks reimbursement in the aggregate sum of $2, A summary of Amherst s fees and expenses for the Fifth Interim Period is included in Exhibit E to this Amherst Final Application and incorporated by this reference. 16. During the Fifth Interim Period, Debtor has paid Amherst s fees and expenses pursuant to the procedure set forth in L.B.R B. A balance remains of approximately $46, in fees and $ in expenses (assuming that all requested fees and expenses are allowed). STATUS OF CASE 17. During the Final Compensation Period, Amherst has focused on the following projects: A. Case Administration: Amherst rendered services in several miscellaneous administrative areas, including analyzing the Debtor s records in order to determine the financial status of the Debtor and its potential to remain operable, along with assisting the Debtor with day-today operations; communications on behalf of the Debtor with the v2 6

7 Committee and the United States Trustee in order to lead efforts in pursuing litigation against the Debtor s principals, Darain and Cory Atkinson (the Atkinsons ); working with the Debtor and the Committee in developing a strategy to address the attorney general lawsuits and negotiating with the attorneys general in an effort to settle their claims in a manner that would benefit all creditors; collecting and reviewing historical documents and data to respond to requests by the Committee, Mepco, and representatives of the States Attorneys General; working on cash collateral budgeting and requests; ensuring the assets of the estate are properly insured; directing the wind-down of the Debtor s operations and ensuring that the Debtor s records and electronic data remain secure and available; preparing and filing monthly operating reports; responding to various requests for information by the Committee, Mepco, the States Attorneys General, and other parties in interest; addressing various consumer inquiries and claims; and working with outside professionals on the 401(k) plan audit and termination. B. Asset Analysis and Recovery: Amherst assisted in investigating the identity, location, and transfers of the assets of the Atkinsons and various affiliates of the Debtor in order to lead efforts in the recovery of funds for the bankruptcy estate; arranged for the storage/safekeeping of recovered physical assets and coordinated appropriate insurance coverage for those assets; assisted in the liquidation of the assets of the estate and assets recovered from the Atkinsons and various affiliates of the Debtor, v2 7

8 including the voting trust entities, in order to recover funds for the bankruptcy estate. C. Litigation Matters: Amherst provided extensive litigation support to the Debtor, the Committee, and their respective counsel; reviewed and approved various settlements proposed by the Committee and outside counsel; and reviewed, addressed, and approved the forms of Consent Judgment with the litigating states. D. Tax Issues. Amherst worked with the estate s tax professionals to analyze the Debtor s historical tax records and assisted in the preparation of complex State and Federal tax schedules. Amherst also analyzed draft tax returns, consulted with the estate s tax professionals regarding those returns, signed off on various final tax returns, filed appropriate documents, paid tax-related obligations and fees, and processed tax refunds. E. Mediation Support. Amherst provided support to the Committee and outside professionals in preparing for the mediation among the major constituents and ultimate global resolution of most of the major issues in the case. F. Plan of Liquidation and Wind Down. Amherst provided support to the Committee and outside professionals in the formulation, confirmation, and implementation of the Committee s Plan. 15. Amherst has accounted for its fees by using the foregoing projects. Because of the difficulty of characterizing time entries that could relate to more than one project, Amherst v2 8

9 has, in some instances, used its best judgment to assign a particular entry to one of the foregoing projects. INFORMATION REQUIRED BY LOCAL RULES 16. L.B.R B requires that all professional fee applications analyze the twelve factors (the Johnson Factors ) for allowance of compensation set forth in Johnson v. Georgia Highway Express, 388 F.2d 714 (5th Cir. 1974). See also P.A. Novelly v. Palans (In re Apex Oil Co.), 960 F.2d 728 (8th Cir. 1992); Chamberlain v. Kula (In re Kula), 213 B.R. 729, (B.A.P. 8th Cir. 1997); In re Grimes, 115 B.R. 639, (Bankr. D.S.D. 1990). 17. The Johnson Factors are as follows: A. The time and labor required. Amherst has described in detail the time spent and has included a complete description of the tasks performed. B. The novelty and difficulty of the questions. This case is complex and involves nationwide consumer claims and investigations by more than 40 States Attorneys General. C. The skill required to perform legal services properly. The Court is certainly the best judge of the skill demonstrated by Amherst in this engagement. Amherst, however, believes that it has demonstrated consistently the skill levels necessary in fulfilling its duties and responsibilities in this case. D. The preclusion of employment due to acceptance of the case. Acceptance of this case did not preclude other employment. E. The customary fee. The rates charged by Amherst in this case are commensurate with rates it charges similar clients in similar matters v2 9

10 F. Whether the fee is fixed or contingent. The fees requested herein are based on neither a fixed nor contingent fee basis. G. Time limitations imposed by the client or the circumstances. This case poses the normal time pressures inherent in any Chapter 11 case. H. The amount involved and the results obtained. Amherst submits that the fees requested are appropriate. I. The experience, reputation and ability of the attorneys. Amherst is a wellknown consultant and turnaround firm. J. The undesirability of the case. This is not an undesirable case. K. The nature and length of the professional relationship with the client. The Debtor selected Amherst as its Chief Restructuring Officer and Financial Consultants on March 1, L. Awards in similar cases. The fees requested in this case are in line with awards made in other chapter 11 cases. LOCAL COMPENSATION RULES AND U.S. TRUSTEE GUIDELINES 18. On January 30, 1996, the Office of the United States Trustee promulgated guidelines for compensation and reimbursement of expenses from a Bankruptcy estate (the U.S. Trustee Guidelines ). Reprinted at 28 C.F.R. Part 58, Appendix. The information requested under the U.S. Trustee Guidelines not otherwise disclosed herein is as follows: Review of Application Status of Plan Monthly Operating Reports This application will be sent to the Committee, the Debtor, and other parties. The Court confirmed the Committee s Plan on August 28, September 12, 2012 is the Effective Date of the Plan. Debtor is current in filing its Monthly v2 10

11 Quarterly Fees Unpaid Administrative Expenses Cash on Hand Unencumbered Funds Operating Reports. Debtor has made all quarterly fee payments due to the Office of the U.S. Trustee. None, other than professional fees and ordinary course of business liabilities Amherst holds retainer in the amount of $50, The Liquidating Trust has over $2.5 million in cash. All of the cash on hand is unencumbered WHEREFORE, AMHERST respectfully requests this Court to allow professional fees on a final basis in the amount of $1,205,512.15, expenses on a final basis in the amount of $68,520.40, authorizing and directing Debtor to pay all allowed fees and expenses that have not been paid to date under the local rules, and for such other and further relief as is just and equitable. Dated: October 8, 2012 Respectfully submitted, AMHERST PARTNERS, LLC By: /s/ Scott Eisenberg and LATHROP & GAGE LLP By: /s/ Laura Toledo Laura Toledo #56954MO 7701 Forsyth Blvd., Suite 400 Clayton, Missouri Telephone: (314) Telecopier: (314) ltoledo@lathropgage.com and v2 11

12 Brian T. Fenimore #41308MO 2345 Grand Boulevard, Suite 2200 Kansas City, Missouri Telephone: (816) Telecopier: (816) ATTORNEYS FOR DEBTOR US FIDELIS, INC. CERTIFICATE OF SERVICE The undersigned certifies that on October 8, 2012, a true and accurate copy of the foregoing Final Application for Allowance of Fees and Expenses filed by Scott Eisenberg and Amherst Partners, LLC, as Chief Restructuring Officer and Financial Consultants was served on all parties receiving notice through the Court s CM/ECF system. Service of the Notice of Hearing on the Application will be served later in conjunction with the other professionals. /s/ Laura Toledo Attorneys for Debtor US Fidelis, Inc v2 12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72