EASTERN DISTRICT OF KENTUCKY
WALLACE G. WILKINSON CASE NO. 01-50281
OPINION AND ORDER
This matter is before the court upon the First Interim Application by Unsecured Creditors Committee for Administrative Expenses Incurred to Jay Alix & Associates. An objection was filed on August 2, 2001 by the debtor and a response and supplemental affidavit were filed by the applicant and committee on September 6, 2001. The matter was heard on October 4, 2001. Pursuant to the court=s request, the debtor amended its objection to the application by amendment dated October 9, 2001, and the Committee has filed its response on October 11, 2001.
The substance and resolution of the objections to this interim fee application follows.
The debtor first contends that compensation for two of the employees of the applicant, Kevin Montague and Michael F. Gingue, should be allowed at only $90 per hour, instead of their original hourly rates of $170 and $150, respectively. It should be kept in mind that these amounts have been reduced in the application by 10% in accordance with arrangements made by the applicant with the Unsecured Creditors Committee and approved by the court by earlier order. The substance of the debtor=s argument is that the services rendered by these two individuals was primarily clerical and should, therefore, be paid at a rate commensurate with that paid to a paralegal in a law firm, approximately $90 per hour as compensation for professional services in matters of this nature. The responsive affidavit filed on September 6, 2001 of Dawn Taylor, a chartered accountant with J. Alix & Associates, contradicts the assertion that the services were primarily clerical. That affidavit contends that the services were professional with only incidental clerical work was performed and required by the delays of the debtor in producing documents. The court is satisfied that the work performed by these individuals was professional in nature with only incidental clerical work performed, such as is required of any professional, attorney or otherwise, in performance of their professional duties. Therefore, the fee should be allowed as requested.
The debtor objects to the request for compensation of temporary workers made in the application in the amount of $15,348.53. The Taylor affidavit indicates that these were temporary personnel employed at the approximate rate of $25 per hour to enter data, and perform other administrative tasks, and that the availability of the temporary workers meant that debtors= personnel, all of whom would be paid higher rates than the temporary workers, were free to perform professional services. The debtor apparently does not challenge the fact that these expenses were incurred, but only their necessity and contends that regular staff should have been used. The court is satisfied by the Taylor affidavit that these expenses were necessary because of the very large volume of documents and data that has been produced, not always on a voluntary basis, in these proceedings and will allow the charges.
Originally, the debtor objected to certain ground transportation expenses in the amount of $873.25 and the application has been amended to delete that sum therefrom.
The matter before the court is an interim fee allowance and is subject to final review and approval by the court at a later time. The charges by the applicant in this matter appear to be commensurate with those of other professionals in this area in matters of this nature and appear to be fair and reasonable. A review of the expense charges leads the court to conclude that they are reasonable and necessary.
WHEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1) That the First Interim Application of Jay Alix & Associates for Compensation and Reimbursement of Expenses is allowed in the amount of $236,683.07 as compensation, and $61,003.50 as reimbursement for actual and necessary expenses for a total amount of $297,686.57.
2) That, as an interim allowance of fees, said sum shall remain subject to further review by the court in accordance with the provisions of the Bankruptcy Code upon filing of a final fee application.
3) That the debtor in possession shall pay to Jay Alix & Associates the aforesaid sum as compensation for professional services and reimbursement for actual and necessary expenses promptly upon receipt of this order.
Dated this day of November, 2001.
BY THE COURT
Robert J. Brown, Esq.
Elizabeth Lee Thompson, Esq.
W. Thomas Bunch, Esq.
Laura Delcotto, Esq.
Tracey N. Wise, Esq.
Gregory D. Pavey, Esq.