B-2014-1. EMPLOYMENT OF PROFESSIONAL PERSONS AND TREATMENT OF RETAINERS IN CHAPTER 11 CASES

(a)   Employment Applications Generally

Any person (the “Applicant”) seeking Court approval of the employment of a professional person (the “Professional”) pursuant to 11 U.S.C. §§327, 1103(a), or 1114 shall file with the Court an application and a supporting affidavit or verified statement of the professional complying with Fed.R.Bankr.P. 2014 (an “Employment Application”) and a proposed order on the Employment Application. The Employment Application shall describe the proposed terms of employment. If employment is to be at an hourly rate, the proposed hourly rates of all Professionals who will work on the case shall be provided. If employment is on a contingent fee basis, the percentages and triggering events shall be disclosed. Promptly after discovering any additional material information relating to such employment (such as additional potential or actual conflicts of interest) the Applicant and Professional shall file and serve a supplemental affidavit disclosing the additional information.

(b)   Employment Applications in Chapter 11 Cases

(1)     Service of Notice and Hearing

(A)     Service of Employment Application

The Applicant shall serve the Employment Application (including supporting affidavit or verified statement of the Professional and any supplemental affidavit) on the Service List.

(B)      Notice of Employment Application

The Applicant shall also send notice of the Employment Application to the Notice List. The notice shall include the name(s) of the Professional(s) sought to be employed, a summary of the terms of employment, and – if the Employment Application also requests approval of a periodic payment procedure pursuant to subparagraph (b)(4) or (5) of this rule – the proposed terms for such periodic payment. The notice shall allow twenty-one (21) days for objection. The Applicant shall file a copy of the notice and a certificate of service that complies with S.D.Ind. B-9013-2.

(C)     Objections, Court Review, and Effective Date

Any objection must be filed and served upon the Applicant, the Professional, and the Service List. If no objection is filed by the objection deadline, the Court may grant the Employment Application and approve the proposed employment and any periodic payment procedure without a hearing or further notice. If the Employment Application is granted, the employment shall be effective as of the date the Employment Application was filed unless otherwise ordered by the Court.

(2)     Conflicts

If a Professional seeks to resolve any potential conflict of interest concerning any other client or former client, the Professional shall comply with applicable Rules of Professional Conduct. All consents or waivers of conflicts of interest (“waivers”) shall be in writing. The Professional shall serve copies of all such waivers upon the Applicant and the Service List with the Employment Application or promptly following receipt by the Professional.

(3)     Treatment of Retainer

A proposed Professional shall obtain approval from the Court of an arrangement whereby a retainer paid by the Debtor to the Professional may be retained and applied to the satisfaction of such Professional’s fees and expenses. Those financial arrangements may include provisions similar to the following:

(A)      the retainer shall be applied to satisfy the Professional’s fees and expenses as they are approved by the Court pursuant to 11 U.S.C. §§330 and 331;

(B)      the Professional may hold the entire retainer without any application for payment of fees and expenses until final approval by the Court of such Professional’s final application for fees and expenses, with such allowed interim fees and expenses paid periodically from other estate assets;

(C)     pursuant to subparagraph (b)(4) of this rule, the Professional may draw against the retainer at specified intervals prior to the award of fees and expenses by the Court; and

(D)     any other arrangement approved by the Court.

(4)     Procedure for Periodic Payment from Retainer

The Court may approve a request by the Professional and the Debtor for a streamlined procedure for periodic payment of fees and costs from any retainer, prior to allowance by the Court. “Payment” includes any transfer of funds from the Debtor to the Professional after the filing date. Any proposed procedure shall provide for payment of no more than eighty percent (80%) of requested fees but may provide for payment of one hundred percent (100%) of expenses.

(A)     If requested as part of the Application, the proposed procedure shall be summarized in the notice of the Application required by subparagraph (b)(1)(B) of this rule.  If requested separately, the Applicant shall provide notice in the same manner as required by subparagraph (b)(1)(B) of this rule.

(B)     All such arrangements shall provide that prior to the fee draw the Professional must file with the Clerk a Notice of Draw which sets forth the amount of the proposed draw and contains, as an attachment, a copy of the periodic billing which supports the amount of the draw. (The CM/ECF event “Notice of Draw on Retainer/Payment of Fees or Expenses Pursuant to B-2014-1” should be used.)

(C)     A copy of the Notice of Draw shall be distributed to the Service List and, in addition, a copy of the relevant periodic billing shall be delivered to the UST. Failure of a party to object to the draw does not affect the party’s right to object to the final allowance of fees and expenses. Court approval of the draw procedure is not approval of fees and expenses. All fees and expenses drawn are subject to disgorgement until the Court allows the final fee application of the Professional.

(5)     Other Periodic Payment Procedure

The Court may approve procedures for periodic payment, other than from a retainer. Any such procedure is subject to the provisions of subparagraph (b)(4) of this rule.