11 U.S.C. §§ 327, 328, 330, 1103; Compensation of Professionals
In re Dan River, Inc., 2005 Bankr. LEXIS 2163 (04-10990) (Bankr. N.D. Ga. 2005)(Drake)
The Court had previously approved the Chapter 11 debtor’s application to employ a financial advisor, which application provided for a $150,000 per month flat fee, a restructuring fee, and for reimbursement of expenses. The restructuring fee, as originally proposed, consisted of 1% of the debtor’s debt securities and financial and trade indebtedness (as of a certain pre-petition date) that would be subject to restructuring, less an offset of $75,000 per month paid under the flat monthly fee. The restructuring fee would not have been paid in a conversion to Chapter 7. After a hearing on objections, the employment was approved under the terms previously approved with the exception that 75% of the monthly fee would be credited to the restructuring fee for the first 5 months, then 100% thereafter, and that the final restructuring fee would be reduced an additional $37,500. Further, had the debtor remained in bankruptcy for two years, the restructuring fee would have been reduced to zero.
The financial advisor subsequently filed its final fee application and requested that it be paid the entire restructuring fee, less the offset of the monthly fees. The creditors committee and the reorganized debtor filed objections to the application.
The issue presented was whether the advisor’s employment application and compensation structure were approved under § 330, which provides that the court may award compensation for actual and necessary services rendered and reimbursement of expenses, or whether the employment and compensation structure were approved pursuant to §328, which allows the court to approve employment “on any reasonable terms and conditions of employment
