UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
LEXINGTON DIVISION
IN RE:
WALLACE
G. WILKINSON CASE NO. 01-50281
DEBTOR
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
JUDGE
COPIES TO:
Robert J. Brown, Esq.
Elizabeth Lee Thompson, Esq.
W. Thomas Bunch, Esq.
Laura Delcotto, Esq.
Tracey N. Wise, Esq.
Gregory D. Pavey, Esq.
U.S. Trustee