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

(a)   Employment Applications Generally

A person (the “Applicant”) seeking Court approval of the employment of a professional person (the “Professional”) under 11 U.S.C. §§327, 1103(a), or 1114 shall file an application and a supporting affidavit or verified statement of the professional complying with Fed.R.Bankr.P. 2014 (an “Employment Application”) and submit a proposed order. The Employment Application shall state the proposed terms of employment. If employment is 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. After discovering any additional material information relating to the employment, 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 on the Service List, the Employment Application, the supporting affidavit or verified statement, and any supplemental affidavit.

(B)      Notice of Employment Application

The Applicant shall also send a 21-day Objection Notice to the Service List and other parties as directed by the Court. The notice shall include the name of the Professional sought to be employed, a summary of the terms of employment, and – if the Employment Application also requests approval of a periodic payment procedure under subparagraph (b)(4) or (5) of this rule – the proposed terms for periodic payment. The Applicant shall file a copy of the notice and a Certificate of Service.

(C)     Objections, Court Review, and Effective Date

An objection must be filed and served upon the Applicant, the Professional, the Service List and other parties as directed by the Court. If no objection is filed, the Court may grant the Employment Application and approve the proposed employment and a 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 the Court orders otherwise.

(2)     Conflicts

If a Professional seeks to resolve a potential conflict of interest, the Professional shall comply with applicable Rules of Professional Conduct. All consents or waivers of conflicts of interest shall be in writing. The Professional shall serve copies of all waivers upon the Applicant and the Service List with the Employment Application or following receipt by the Professional.

(3)     Treatment of Retainer

A proposed Professional shall obtain Court approval of the terms for applying a retainer to the payment of the Professional’s fees and expenses. Those terms may be similar to the following:

(A)      apply the retainer to satisfy the Professional’s fees and expenses as they are awarded by the Court under 11 U.S.C. §§330 and 331;

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

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

(D)     other Court-approved arrangements.  

(4)     Procedure for Periodic Payment from Retainer

The Court may approve a request by the Professional for a streamlined procedure for periodic payment of fees and expenses from a retainer, prior to Court award of interim or final fees and expenses. The proposed procedure shall provide for payment of no more than 80% of requested fees but may provide for payment of 100% of expenses.

(A)     If requested as part of the Application, the proposed procedure shall be summarized in the Objection Notice. 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 shall 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)     The Notice of Draw shall be distributed to the Service List and 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 allowance 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, subject to the provisions of subparagraph (b)(4) of this rule.