China Fishery Group Limited (Cayman) and Pacific Andes Enterprises (Hong Kong) Ltd.

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UNITED STATES BANKRUPTCY COURT 	NOT FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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In re:
CHINA FISHERY GROUP LIMITED
(CAYMAN), et al.
Debtors.1
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Chapter 11
Case No. 16-11895 (JLG)
(Jointly Administered)
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In re:
CFG PERU INVESTMENTS PTE.
LIMITED (SINGAPORE)
Debtor.
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Chapter 11
Case No. 16-11914 (JLG)
(Jointly Administered)
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MEMORANDUM DECISION AND ORDER RESOLVING FIRST AND FINAL
FEE APPLICATION OF FORMER CHAPTER 11 TRUSTEE WILLIAM A.
BRANDT, JR., FOR COMPENSATION FOR SERVICES RENDERED AS
CHAPTER 11 TRUSTEE FOR THE PERIOD FROM NOVEMBER 10, 2016
THROUGH AND INCLUDING JUNE 24, 2021, AND SECOND AND FINAL
APPLICATION OF FORMER CHAPTER 11 TRUSTEE WILLIAM A. BRANDT,
JR., FOR REIMBURSEMENT OF EXPENSES FOR THE PERIOD
MARCH 1, 2020 THROUGH AND INCLUDING JUNE 24, 2021
A P P E A R A N C E S :
BAKER & HOSTETLER LLP
Counsel for William A. Brandt, Jr. former Chapter 11 Trustee
600 Montgomery Street, Suite 3100
San Francisco, California 94111
By: 	Robert A. Julian, Esq. (admitted pro hac vice)
David J. Richardson, Esq. (admitted pro hac vice)
1 	The Debtors are China Fishery Group Limited (Cayman), Pacific Andes International Holdings Limited
(Bermuda), N.S. Hong Investment (BVI) Limited, South Pacific Shipping Agency Limited (BVI), China Fisheries
International Limited (Samoa), CFGL (Singapore) Private Limited, Chanery Investment Inc. (BVI), Champion
Maritime Limited (BVI), Growing Management Limited (BVI), Target Shipping Limited (HK), Fortress Agents
Limited (BVI), Ocean Expert International Limited (BVI), Protein Trading Limited (Samoa), CFG Peru Investments
Pte. Limited (Singapore), Smart Group Limited (Cayman), Super Investment Limited (Cayman), Pacific Andes
Resources Development Limited (Bermuda), Nouvelle Foods International Ltd., Golden Target Pacific Limited,
Pacific Andes International Holdings (BVI) Limited, Zhonggang Fisheries Limited, Admired Agents Limited,
Chiksano Management Limited, Clamford Holding Limited, Excel Concept Limited, Gain Star Management Limited,
Grand Success Investment (Singapore) Private Limited, Hill Cosmos International Limited, Loyal Mark Holdings
Limited, Metro Island International Limited, Mission Excel International Limited, Natprop Investments Limited,
Pioneer Logistics Limited, Sea Capital International Limited, Shine Bright Management Limited, Superb Choice
International Limited, Toyama Holdings Limited (BVI), and Pacific Andes Enterprises (Hong Kong) Limited.
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WHITE & CASE LLP
Counsel to the Creditor Plan Proponents
111 South Wacker Drive, Suite 5100
Chicago, Illinois 60654
By: 	Gregory F. Pesce, Esq. (admitted pro hac vice)
200 South Biscayne Boulevard, Suite 4900
Miami, Florida 33131
By: 	Evan Goldenberg, Esq. (admitted pro hac vice)
Varoon Sachdev, Esq. (admitted pro hac vice)
1221 Avenue of the Americas
New York, New York 10020
By: 	J. Christopher Shore, Esq.
Barrett Lingle, Esq. (admitted pro hac vice)
HON. JAMES L. GARRITY, JR.
U.S. BANKRUPTCY JUDGE
INTRODUCTION2
On June 30, 2016 (the “Petition Date”), CFG Peru Investments Pte. Limited (Singapore)
(“CFG Peru”) and fifteen affiliated entities filed voluntary petitions for relief under chapter 11 of
title 11 of the United States Code (the “Bankruptcy Code”) in this Court. Those debtors were part
of the “Pacific Andes Group” of companies controlled by members of the Ng Family and were
comprised primarily of investment holding companies and non-operating companies that had been
in the business of trading frozen seafood products and providing freight service.
CFG Peru is a non-operating holding company incorporated in Singapore whose principal
assets include its direct interest in CFG Investment S.A.C., a Peruvian entity (“CFG Investment”),
2 	Capitalized terms not defined in the Introduction shall have the meanings ascribed to them below. References to
“ECF No. __” are to filings entered on the docket in the main chapter 11 case, No. 16-11895. References to filings
entered on the docket in adversary proceedings will be to “[Name of Document], [AP No. ___], ECF No. ___.”
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and its indirect interest in Corporacion Pesquera Inca, S.A.C., a Peruvian entity (“Copeinca” and,
together with CFG Investment, the “Peruvian Opcos”). The Peruvian Opcos were the “crown
jewels” of the Pacific Andes Group. Together with Sustainable Fishing Resources S.A.C.
(“Sustainable Fishing Resources”), a Peruvian entity that is a direct subsidiary of CFG Peru, and
other entities, the Opcos operate an anchovy fishing and processing business in Peru (the “Peruvian
Business”). Peruvian Opcos and Sustainable Fishing Resources are not Debtors in the Chapter 11
Cases, and the Peruvian Opcos are not eligible to be debtors under the Bankruptcy Code.
As of the Petition Date, the Club Lenders and Senior Noteholders were the Peruvian Opcos’
largest creditors, holding unsecured claims of $650 million and $300 million, respectively. In an
effort to protect the value of the Peruvian Opcos and to wrest control of the Peruvian Opcos from
the Ng Family, shortly after the Petition Date, they moved for the appointment of a chapter 11
trustee for the Initial Debtors—with the expectation that any such trustee would assume control
over the non-debtor Opcos. The Court granted the motion and appointed William A. Brandt, Jr.
(“Mr. Brandt” or the “Trustee”) as chapter 11 trustee, but solely for CFG Peru. The Court’s
mandate in appointing the Trustee was that he maximize the value of the Peruvian Opcos while
attempting to distribute value to the Debtors. For more than five years, Mr. Brandt oversaw the
operations of the Peruvian Opcos. During that time the equity value in the Peruvian Opcos
significantly increased. On June 10, 2021, the Creditor Plan Proponents3 —who hold significant
interests in the Club Loan and Senior Notes, all of which they acquired after the Petition Date—
not Mr. Brandt, confirmed a chapter 11 plan for CFG Peru (the “CFG Peru Plan”).4 As relevant,
3 	The Creditor Plan Proponents consist of Burlington Loan Management DAC and Monarch Alternative Capital
LP, solely on behalf of certain advisory clients and related entities that hold claims. See CFG Peru Plan art. I.A.49.
4 	Creditor Plan Proponents’ Chapter 11 Plan for CFG Peru Investments Pte. Ltd. (Singapore), ECF No. 2564 (as
amended, supplemented, or modified from time to time).
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under that plan the Club Lenders and Senior Noteholders equitized their claims and now
effectively hold the stock of the Peruvian Opcos.
The matter before the Court is the Trustee’s (i) first and final application seeking
compensation for services rendered during the period from November 10, 2016, through and
including June 24, 2021 (the “Fee Application Period”),5 and (ii) second and final application
seeking reimbursement of expenses (collectively, the “Fee Application”), pursuant to sections 326,
330, 331 and 503 of title 11 of the United States Code (the “Bankruptcy Code”), Rule 2016 of the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), Rule 2016-1 of the Local
Bankruptcy Rules for the Southern District of New York (the “Local Bankruptcy Rules”), the
Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New
York Bankruptcy Cases (“General Order M-447”), promulgated pursuant to Local Bankruptcy
Rule 2016-1(a) (the “Local Guidelines”), and the United States Trustee’s Guidelines for
Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11
U.S.C. § 330 by Attorneys in Larger Chapter 11 Cases, effective as of November 1, 2013 (the
“U.S. Trustee Guidelines,” and, together with the Local Guidelines, the “Fee Guidelines”), to the
extent applicable, for the period from March 1, 2020, through and including June 24, 2021, plus
his costs for preparation of this Fee Application (the “Final Expense Period”), as well as final
approval of expenses already paid on an interim basis.6
5 	June 24, 2021, is the date of transition to the Plan Administrator’s term under the CFC Peru Plan. Consistent with
statements made to the Court, the Trustee has not sought fees for time spent in the Chapter 11 Cases after June 10,
2021.
6 	First and Final Fee Application of Former Chapter 11 Trustee William A. Brandt, Jr., for Compensation for
Services Rendered as Chapter 11 Trustee for the Period from November 10, 2016 Through and Including June 24,
2021, and Second and Final Application of Former Chapter 11 Trustee William A. Brandt, Jr., for Reimbursement of
Expenses for the Period March 1, 2020 Through and Including June 24, 2021, ECF No. 2712 (“Application”). In
support of the Fee Application, the Trustee submitted the Declaration of William A. Brandt, Jr. in Support of First
and Final Fee Application of Former Chapter 11 Trustee William A. Brandt, Jr., for Compensation for Services
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The Trustee contends that where a chapter 11 trustee is appointed for a parent company
and oversees the operations of the overall enterprise, the calculation of the cap on commissions
payable to the trustee under section 326(a) of the Bankruptcy Code (the “Statutory Cap”) includes
disbursements of all subsidiaries (both debtors and non-debtors) and all the value that a chapter 11
trustee’s estate distributes to creditors under a plan, whether the distribution is accomplished
directly by the trustee or by a subsequent plan administrator or plan trustee. Consistent with that
position, the Trustee contends that the Statutory Cap on commissions payable to him for his service
as chapter 11 trustee totals approximately $88.6 million (i.e., 3% of $2.95 billion). By this Fee
Application, the Trustee requests allowance and payment of a commission in the form of (i) a
lodestar of $11,958,625.00 arising from the Trustee’s time spent on the case through to June 10,
2021, all billed at his hourly rate in effect in 2021 (the “Trustee’s Lodestar”); (ii) a fee
enhancement in the form of a 2.09 multiplier applied to the Trustee’s Lodestar, for a total requested
commission of $25 million; (iii) final approval of $355,051.93 in interim expenses previously
allowed and paid; and (iv) approval and payment of allowable expenses in the amount of
$409,382.02 incurred in the period from March 1, 2020, through June 24, 2021 (including his
expenses for preparation of this Fee Application). The Office of the United States Trustee (the
“U.S. Trustee”) did not take a position on the Fee Application. However, Mr. Brandt reports that,
at the U.S. Trustee’s request, he forwarded a draft of the Fee Application to the U.S. Trustee for
review and comment. In that draft, the Trustee sought approval of the Trustee’s Lodestar enhanced
Rendered as Chapter 11 Trustee for the Period from November 10, 2016 Through and Including June 24, 2021, and
Second and Final Application of Former Chapter 11 Trustee William A. Brandt, Jr., for Reimbursement of Expenses
for the Period March 1, 2020 Through and Including June 24, 2021, ECF No. 2713 (the “Brandt Decl.” or “Brandt
Declaration”) and the Declaration of Patrick J. O’Malley in Support of First and Final Fee Application of Former
Chapter 11 Trustee William A. Brandt, Jr., for Compensation for Services Rendered as Chapter 11 Trustee for the
Period from November 10, 2016 Through and Including June 24, 2021, and Second and Final Application of Former
Chapter 11 Trustee William A. Brandt, Jr., for Reimbursement of Expenses for the Period March 1, 2020 Through
and Including June 24, 2021, ECF No. 2714 (the “O’Malley Decl.”).
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by a 2.5 multiplier, for a total commission of approximately $29.9 million. He advises that, after
discussions with the U.S. Trustee, he reduced his requested commission to $25,000,000. Fee
Application at 2.
The Creditor Plan Proponents filed the only objection to the Fee Application (the
“Objection” or “Obj.”).7 Briefly, they challenge the Trustee’s calculation of the Statutory Cap,
contending that the cap does not include the disbursements by the Peruvian Opcos or the equity
distributed to the Club Lenders and Senior Noteholders under the CFG Peru Plan. They assert that
the Statutory Cap does not exceed the sum of $2,967,938.43 (i.e., 3% of approximately $100
million). They request that the Court either (a) deny the Fee Application to the extent it seeks a
commission in excess of $2,967,938.43, plus reasonable expenses, or (b) to the extent that the
Court finds that the Statutory Cap is in excess of the Trustee’s Lodestar, deny Mr. Brandt’s request
for any multiplier or other fee enhancement, limit his hourly rate to the rate in existence at the time
the hours were recorded, and establish a process by which the Court may objectively assess the
reasonableness of the hours that the Trustee charged in this case. Obj. ¶ 14. The Trustee filed a
reply in further support of the Fee Application (the “Reply”).8 The Plan Administrator appointed
7 	The Creditor Plan Proponents’ Objection to the First and Final Fee Application of Former Chapter 11 Trustee
William A. Brandt, Jr., for Compensation for Services Rendered as Chapter 11 Trustee for the Period from
November 10, 2016 Through and Including June 24, 2021, and Second and Final Application of Former Chapter 11
Trustee William A. Brandt, Jr., for Reimbursement of Expenses for the Period March 1, 2020 Through and Including
June 24, 2021, ECF No. 2813. In support of the Objection, the Creditor Plan Proponents filed the Declaration of
Bradley Jordan in Support of The Creditor Plan Proponents’ Objection to the First and Final Fee Application of
Former Chapter 11 Trustee William A. Brandt, Jr., for Compensation for Services Rendered as Chapter 11 Trustee
for the Period from November 10, 2016 Through and Including June 24, 2021, and Second and Final Application of
Former Chapter 11 Trustee William A. Brandt, Jr., for Reimbursement of Expenses for the Period of March 1, 2020
Through and Including June 24, 2021, ECF No. 2814 (the “Jordan Declaration”).
8 	Reply Brief in Support of First and Final Fee Application of Former Chapter 11 Trustee William A. Brandt, Jr.,
for Compensation for Services Rendered as Chapter 11 Trustee for the Period from November 10, 2016 Through and
Including June 24, 2021, and Second and Final Application of Former Chapter 11 Trustee William A. Brandt, Jr., for
Reimbursement of Expenses for the Period March 1, 2020 Through and Including June 24, 2021, ECF No. 2829 (the
“Reply”).
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under the CFG Peru Plan submitted a statement (the “Plan Administrator Statement”)9 regarding
the Fee Application, the Objection and the Reply.
The Court reviewed the Fee Application, the Objection, the Reply, the Plan Administrator
Statement, and all filings submitted with or in support of those documents. The Court conducted
a hearing on the Fee Application. The Court finds that the Fee Application, together with the
attachments thereto, substantially complies in all material respects with the Bankruptcy Rules,
Local Bankruptcy Rules, and the Fee Guidelines. For the reasons stated herein, the Court awards
the Trustee a commission in the form of (i) an adjusted lodestar of $10,905,914.00 arising from
the Trustee’s 13,667 hours of time spent on this case at the hourly rates charged when he recorded
the hours, (ii) a fee enhancement in the form of a 1.5 multiplier applied to the Lodestar for a total
commission of $16,358,871.00, and (iii) expenses in the amount of $326,622.52 incurred in the
Final Expense Period, and directs the parties identified in the CFG Peru Plan as being responsible
for payment of the Trustee’s commission and expenses to pay the commission and expenses. The
Court approves, on a final basis, the $355,051.93 in interim expenses previously allowed and paid.
9 	The Plan Administrator’s Statement Regarding: (I) the First and Final Fee Application of Mr. William A. Brandt,
Jr., for Compensation for Services Rendered as Chapter 11 Trustee for the Period from November 10, 2016 Through
and Including June 24, 2021; (II) the Creditor Plan Proponents’ Objection Thereto; and (III) the Reply in Support of
First and Final Fee Application of Mr. William A. Brandt, Jr. as Chapter 11 Trustee, ECF No. 2842 (the “Plan
Proponent Statement”).
In the Plan Proponent Statement, the Plan Administrator takes no position on the Fee Application, but he asks the
Court to “disregard any statements made by Mr. Brandt with respect to the state of [CFG Peru and the Peruvian Opcos]
as of and after the Confirmation Date . . . .” Id. at 17. The Court has done so.
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JURISDICTION
The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334,
and the Amended Standing Order of Reference dated January 31, 2012 (Preska, C.J.). This is a
core proceeding pursuant to 28 U.S.C. § 157(b).
BACKGROUND10
The Chapter 11 Cases
On the Petition Date, CFG Peru and fifteen affiliated entities (the “Initial Debtors”)11 filed
voluntary petitions for relief under chapter 11 of the Bankruptcy Code in this Court. Those debtors
were comprised primarily of investment holding companies and non-operating companies that had
been in the business of trading frozen seafood products and providing freight services. Over the
next eleven months, a total of twenty-one affiliates of the Initial Debtors (the “Affiliated Debtors”
and, together with the Initial Debtors, the “Debtors”) filed voluntary chapter 11 petitions,
commencing their chapter 11 cases herein (collectively, the “Chapter 11 Cases”).12 With the
10 	Except as stated, the Background facts are not in dispute. In setting forth these facts, the Court relies on the Brandt
and Jordan Declarations, the Declaration of Ng Puay Yee Pursuant to Rule 1007-2 of the Local Bankruptcy Rules for
the Southern District of New York and in Support of Debtors’ First Day Motions and Applications, ECF No. 2 (the
“First Day Decl.” or “First Day Declaration”), and the Memorandum Decision and Order Granting Motion for the
Appointment of A Chapter 11 Trustee, ECF No. 203 (the “Trustee Decision and Order”). The Court takes judicial
notice of the First Day Declaration and the Trustee Decision and Order. See Little Hearts Fam. II LP v. Carter (In re
305 East 61st Street Grp.), 644 B.R. 75, 80 n.6 (Bankr. S.D.N.Y. 2022) (“The Court is permitted to take judicial notice
of public filings on its own docket in a bankruptcy case.” (citing Fed. R. Evid. 201)); see also Teamsters Nat’l Freight
Indus. Negotiating Comm. v. Howard’s Express, Inc. (In re Howard’s Express, Inc.), 151 F. App’x. 46, 48 (2d Cir.
2005) (summary order) (stating that courts are empowered to take judicial notice of public filings, including a court's
docket).
11 	The Initial Debtors consist of: China Fishery Group Limited (Cayman), Pacific Andes International Holdings
Limited (Bermuda), N.S. Hong Investment (BVI) Limited, South Pacific Shipping Agency Ltd. (BVI), China Fisheries
International Limited (Samoa), CFGL (Singapore) Private Limited, Chanery Investment Inc. (BVI), Champion
Maritime Ltd (BVI), Growing Management Limited (BVI), Target Shipping Limited (Hong Kong), Fortress Agents
Limited (BVI), Ocean Expert International Limited (BVI), Protein Trading Limited (Samoa), CFG Peru Investments
Pte, Ltd. (Singapore), Smart Group Limited (Cayman) and Super Investment Limited (Cayman).
12 	The Affiliated Debtors filed their voluntary chapter 11 petitions, as follows:
September 29, 2016: Pacific Andes Resources Development Ltd. (Bermuda).
March 27, 2017: Golden Target Pacific Limited (BVI) and Nouvelle Foods International Ltd. (BVI).
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exception of CFG Peru, the Debtors remained in possession and control of their business and assets
as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. As discussed
below, by order dated November 10, 2016, the Court appointed Mr. Brandt as the chapter 11
trustee of CFG Peru. He served in that capacity until June 24, 2021.
The Structure of CFG Peru, Its Affiliates, and Their Creditors
The Debtors comprise a portion of the Pacific Andes Group of companies that, as of the
Petition Date, collectively constituted the world’s twelfth-largest fishing company. First Day
Decl. ¶ 29. Members of the Ng family (the “Ng Family”) controlled the group’s operations. See
Brandt Decl. ¶ 15. CFG Peru is a holding company incorporated in Singapore whose principal
assets include its direct interest in CFG Investment, a Peruvian entity, and its indirect interest in
Copeinca, also a Peruvian entity, which together comprise the Peruvian Opcos. CFG Peru is an
indirect subsidiary of Pacific Andes International Holdings Limited (“PAIH”) and Pacific Andes
Resources Development Limited (“PARD”). As of the Petition Date, PAIH and PARD were listed
on the main board of the Stock Exchange of Hong Kong Limited (the “HK Stock Exchange”), and
the 	main 	board 	of 	the 	Singapore 	Exchange 	Securities 	Trading 	Limited 	(the 	“Singapore
Exchange”), respectively. First Day Decl. ¶ 31. Together with Sustainable Fishing Resources
(a Peruvian entity that is a direct subsidiary of CFG Peru) and other entities, the Peruvian Opcos
operate the anchovy fishing and processing business that constitutes the Peruvian Business. The
Peruvian Opcos and Sustainable Fishing Resources are not Debtors in the Chapter 11 Cases.
April 17, 2017: Pacific Andes International Holdings (BVI) Limited and Zhonggang Fisheries
Limited (BVI).
May 2, 2017: Admired Agents Limited (BVI), Chiksano Management Limited (BVI), Clamford
Holding Limited (BVI), Excel Concept Limited (BVI), Gain Star Management Limited (BVI),
Grand Success Investment (Singapore) Private Limited, Hill Cosmos International Limited (BVI),
Loyal Mark Holdings Limited (BVI), Metro Island International Limited (BVI), Mission Excel
International Limited (BVI), Natprop Investments Limited (Cook Islands), Pioneer Logistics
Limited (BVI), Sea Capital International Limited (BVI), Shine Bright Management Limited (BVI),
Superb Choice International Limited (BVI), and Toyama Holdings Limited (BVI).
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As of the Petition Date, the Peruvian Opcos comprised the main operating entities of the
Peruvian Business. Id. ¶ 38. Together, they hold the largest quota for the harvest of anchovy in
Peru and, together with their affiliates, are among the world’s largest producers of fish meal and
fish oil. Id. ¶ 37. The operating assets of the Peruvian Business include ten plants located in eight
towns and villages in Peru and sixty-six vessels ranging in size from 197 to 807 tons. Id. ¶ 37. The
business employs approximately 2,800 people, of which 2,400 employees are based in Peru,
including crew on the vessels, who are retained by a crewing agent and not directly employed by
the Peruvian Opcos. Id. ¶ 52. Sustainable Fishing Resources owned a fleet of seven fishing vessels
used to catch blue-water fish for human consumption, such as mackerel. Id. ¶ 49. As of the Petition
Date, Sustainable Fishing Resources had not operated for approximately two years. Id. ¶ 50.
The two creditor groups holding the largest claims against the Peruvian Opcos are (i) the
Club Lenders (comprised of the Club Lender Parties13 and the Hongkong and Shanghai Banking
Corporation (“HSBC-HK”)) and (ii) the Senior Noteholders. Brandt Decl. ¶ 21. The Senior
Noteholders’ claims arise under certain 9.75% senior notes in the principal amount of $300 million
that were due in 2019 (the “Senior Notes”), issued under that certain indenture dated as of July 30,
2012 (the “Senior Notes Indenture”), by and among CFG Investment, as issuer, the Senior Notes
trustee, and various guarantors, including CFG Peru and Sustainable Fishing Resources. Trustee
Decision and Order at 12; Brandt Decl. ¶ 21.
The 	Club 	Lenders’ 	claims 	arise 	under 	an 	unsecured 	facility 	agreement 	dated
March 20, 2014 (as amended from time to time, the “Club Facility”), which provided Debtor China
Fisheries International Limited (Samoa) (“CFIL”) and the Peruvian Opcos (collectively, the “Club
13 	The Club Lender Parties consist of: Coӧperatieve Rabobank U.A. (“Rabobank”), Standard Chartered Bank (Hong
Kong) Limited (“Standard Chartered Bank”), China CITIC Bank International (“China CITIC”) and DBS Bank (Hong
Kong).
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Borrowers”) with $650,000,000 in financing. Brandt Decl. ¶ 22. China Fishery Group Limited
(Cayman) (“CFGL”) guaranteed the Club Facility. Trustee Decision and Order at 9-10. The Club
Lenders are not creditors of CFG Peru.
Events Leading to the Filing of the Chapter 11 Cases
Within a month of the closing of the Club Facility, the Club Borrowers began to seek
amendments and waivers of their obligations under the facility. Id. at 14-15. Over the next eighteen
months, the Club Lenders entered into eight Amendment and Waiver Agreements with the Club
Borrowers. Id. at 15. The Club Borrowers breached each such agreement. To obtain the Eighth
Amendment and Waiver, the Club Borrowers agreed, in part, to retain an investment banker to
assist them with the sale of the Peruvian Opcos. Id. at 18-19. On November 25, 2015, shortly after
the expiration of the Eighth Amendment and Waiver Agreement, HSBC-HK, as a Club Lender
acting on its own account, filed winding up petitions and related applications for the appointment
of joint provisional liquidators against CFGL and CFIL in Hong Kong. Id. at 19. On November 27,
2015, HSBC-HK filed winding up petitions and related applications for the appointment of
provisional liquidators against each of those entities in the Cayman Islands. Id. Each of the Hong
Kong and Cayman Courts granted the winding up petitions on an interim basis and appointed the
same three individuals from KPMG as joint provisional liquidators (the “KPMG JPLs”). Id.
The Club Lender Parties opposed HSBC-HK’s commencement of the winding up
proceedings. In December 2015, they entered into a Deed of Undertaking with PAIH, PARD, and
the Hong Kong Court, pursuant to which the Club Lender Parties agreed to support efforts to
dismiss the winding up petitions filed against CFGL and CFIL, in consideration for PAIH and
PARD agreeing to provide greater transparency into the operations of the Peruvian Business, and
to move forward with a sale process for the Peruvian Opcos. Id. at 21-22. With the Club Lender
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Parties’ support, CFGL and CFIL successfully petitioned the Hong Kong Court for an order
dismissing the winding up petitions against them (the “Hong Kong Order”). Id. Thereafter,
HSBC-HK advised the Club Lender Parties that it intended to appeal the Hong Kong Order and to
proceed with the winding up proceedings against CFGL and CFIL in the Cayman Islands. Id. To
resolve those matters, in January 2016, CFGL and CFIL entered into a Deed of Undertaking with
HSBC-HK (the “2019 Deed of Undertaking”). Without limitation, and in substance, under that
deed, HSBC-HK agreed (i) not to appeal the Hong Kong Order, (ii) to withdraw the Cayman
Islands winding up petitions, and (iii) to dismiss the KPMG JPLs in Hong Kong and the Cayman
Islands, in consideration for the companies’ agreements to implement a sale process for the
Peruvian Opcos that called for the Opcos to be sold by July 15, 2016. Id. at 22-23. CFGL and CFIL
also consented to the immediate reappointment of the KPMG JPLs by the Cayman Court if they
failed to sell the Peruvian Opcos by July 15, 2016. Id. at 24.
The Commencement of the Chapter 11 Cases and Related Proceedings
On June 30, 2016, less than two weeks before the July 15 deadline for selling the Peruvian
Opcos under the 2019 Deed of Undertaking, the Initial Debtors, including CFGL and CFIL, filed
their voluntary chapter 11 petitions herein. Id. at 30. The commencement of those cases violated
the 2019 Deed of Undertaking and terminated the sale process called for thereunder. The next day,
PARD voluntarily filed an application under section 210(1) of the Singapore Companies Act,
Chapter 50 of the Laws of the Republic of Singapore, to stay all actions against it and certain of
its affiliates (the “Singapore Proceedings”). Id. The High Court of the Republic of Singapore
granted the stay. Id. After PARD failed to persuade the High Court to extend the stay beyond
Singapore’s borders, PARD voluntarily discontinued the Singapore Proceedings. On September
29, 2016, it filed a voluntary petition under chapter 11 in this Court. Id. at 30 n.33.
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The National Institute for the Defense of Competition and Protection of Intellectual
Property (“INDECOPI”) is the Peruvian administrative and regulatory authority that adjudicates
and supervises the restructuring and liquidation of Peruvian companies that are subject to
proceedings under Peruvian insolvency law. As of the Petition Date, the Peruvian Opcos were not
eligible under Peruvian law to commence voluntary insolvency proceedings because those entities
did not have audited financial statements. Prior to the Petition Date, management of the Peruvian
Opcos approached three “friendly” creditors in Peru and arranged with them to file involuntary
petitions against each of the Peruvian Opcos and against Sustainable Fishing Resources. Id. at
30-31. On the Petition Date, the creditors commenced those proceedings (the “Peruvian Insolvency
Proceedings”). The Peruvian Opcos and Sustainable Fishing Resources did not file chapter 11
petitions. However, on the Petition Date, the putative “foreign representatives” of those entities
filed petitions for recognition of the Peruvian Insolvency Proceedings under chapter 15 of the
Bankruptcy Code (the “Recognition Petitions”).14 See id. at 31.
Other Insolvency Proceedings Affecting the Pacific Andes Group
CFG Peru’s affiliates span the globe. As of the Petition Date, certain of those entities faced
insolvency proceedings, as follows:
The German Insolvency Proceedings
In December of 2015, a group of companies commonly referred to as the “Pickenpack
Group” requested that the Local Court of Lüneberg, Germany, open an insolvency proceeding
14 	Verified Petition of Francisco Paniagua as Foreign Representative of the Above Captioned Debtors in a Foreign
Proceeding, for (I) Recognition of a Foreign Main Proceeding pursuant to 11 U.S.C. §§ 1515 and 1517, and (II) Relief
Pursuant to 11 U.S.C. 1520 and 1521, No. 16-11891, ECF No. 4; Verified Petition of Francisco Paniagua as Foreign
Representative of the Above Captioned Debtors in a Foreign Proceeding, for (I) Recognition of a Foreign Main
Proceeding pursuant to 11 U.S.C. §§ 1515 and 1517, and (II) Relief Pursuant to 11 U.S.C. 1520 and 1521,
No. 16-11892, ECF No. 4; Verified Petition of Francisco Paniagua as Foreign Representative of the Above Captioned
Debtors in a Foreign Proceeding, for (I) Recognition of a Foreign Main Proceeding pursuant to 11 U.S.C. §§ 1515
and 1517, and (II) Relief Pursuant to 11 U.S.C. 1520 and 1521, No. 16-11893, ECF No. 4.
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under the German Insolvency Act. Brandt Decl. ¶ 44. Based largely on a report by the preliminary
insolvency administrator, the German Court found the Pickenpack Group to be insolvent and
over-indebted and appointed a preliminary insolvency administrator over the Pickenpack Group
assets (the “Pickenpack Administrator”). Id.
The BVI Liquidation Proceedings
Both before and after the Petition Date, a series of applications was filed before the High
Court of Justice of the British Virgin Islands (the “BVI Court”), requesting the appointment of
provisional liquidators for a number of companies in the Pacific Andes Group. Id. ¶ 33. As relevant
to the Fee Application, the most significant of these proceedings began on September 26, 2016,
when Bank of America, N.A. (“Bank of America”) applied for the appointment of provisional
liquidators for Pacific Andes Enterprises (BVI) (“PAE (BVI)”), Parkmond Group Limited (BVI)
(“Parkmond”) and PARD Trade Limited (BVI) (“PARD Trade”), each a non-Debtor affiliate of
PAIH and PARD. Id. A month later, Rabobank and Standard Chartered Bank sought similar relief
with respect to PAE (BVI). Id. In December 2016 and January 2017, respectively, a trade creditor
and Malayan Banking Berhad, Hong Kong Branch (“Maybank”) each filed an application for the
appointment of provisional liquidators for Europaco Limited (BVI) (“Europaco”), also a non-
Debtor affiliate of PAIH and PARD. Id.
The BVI Court appointed three individuals affiliated with FTI Consulting Inc. as
liquidators for PAE (BVI), Europaco, Parkmond, and PARD Trade (the “FTI Liquidators”).15
Id. ¶ 34. Through liquidation applications to the BVI Court in the names of entities already within
15 	Although the joint provisional liquidators were affiliated with FTI Consulting, Inc., the consulting company had
no involvement in the BVI Liquidation Proceedings or the later affiliated proceedings in Hong Kong. See Brandt
Decl. ¶ 34 n.7. The use of “FTI” is for convenience in identification of the liquidators and proceedings related to them
and has been used throughout the CFG Peru case, including in Court filings.
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their control, the FTI Liquidators subsequently were appointed to serve in the same capacity for
Richtown Developments Ltd. (“Richtown”) and Metro Win, Inc., Ltd. (Hong Kong), and for five
additional entities that were outside the Pacific Andes Group, 16 and alleged to be controlled by
members of the Ng Family (together with PAE (BVI), Europaco, Parkmond, and PARD Trade,
the “FTI Liquidation Entities”). Id. All such entities were purported to be participants in trade
finance fraud. Id. Additionally, the FTI Liquidators replaced the directors of certain Pacific Andes
Group entities—which were wholly owned subsidiaries of some of the FTI Liquidation Entities—
with FTI Director Services, an affiliate of FTI Consulting, Inc. Id. ¶ 34.17
The Appointment of a Chapter 11 Trustee
The Club Lender Parties Seek the Appointment of a Chapter 11 Trustee
As of the Petition Date, members of the Ng Family owned most of the Debtors’ equity
interests, and through those interests they controlled CFG Peru and the Peruvian Opcos. Shortly
after the Petition Date, the Club Lender Parties made clear their lack of confidence in the Ng
Family’s control of the Debtors, and particularly of the Peruvian Opcos. In their initial filing in the
Chapter 11 Cases, the Club Lender Parties informed this Court that they
intend[ed] to file a motion seeking the appointment of a trustee in these
Chapter 11 cases to ensure independent fiduciary oversight to preserve the
estates’ equity stakes in a lucrative fishery business and processing plants in
Peru operated by certain non-Debtor affiliates (the “Peruvian Business”).
The Debtors’ equity stakes in the Peruvian Business—which is operated by
certain 	affiliates 	whose 	only 	connections 	to 	the 	United 	States 	are
professional retainers and a New York bond indenture, and are the subject to
[the] coordinated [Peruvian Insolvency Proceedings]—comprise the single
16 	The non-Pacific Andes Group entities, sometimes referred to as “Agent Companies,” are Solar Fish Trading Ltd.
(“Solar Fish”), Palanga Ltd. (“Palanga”), Zolotaya Orda Ltd. (“Zolotaya”), Alatir Ltd. and Perun, Ltd. See id. ¶ 34 n.8.
17 	The Pacific Andes Group entities to which FTI Director Services was appointed include Europaco (AP) Limited
(BVI), Europaco (BP) Limited (BVI), Europaco (EP) Limited (BVI), Europaco (GP) Limited (BVI), New Millennium
Group Holdings, Ltd. (BVI), Pacos Processing Ltd. (Cayman) and Pacos Trading Ltd. (Cayman). See id. ¶ 34 n.9.
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most valuable asset of the Debtors’ estates, the proceeds of which will dictate
recoveries in these chapter 11 cases.
Club Lender Parties’ Statement at 5.18 The Club Lender Parties advised that they and other
significant creditors remained “very concerned that the valuable Peruvian Business is outside the
Chapter 11 estates and that local management may take precipitous action to destroy the value
under the direction of the Debtors’ sponsors.” Id. at 11.
On August 9, 2016, the Club Lender Parties filed the Trustee Motion.19 The motion enjoyed
support among the largest creditors in the Chapter 11 Cases, as the Senior Noteholders,20
Maybank,21 Bank of America,22 and the Pickenpack Administrator 23 all filed statements with the
Court in support of the motion. Those opposing the Trustee Motion included the Peruvian Opcos
and Sustainable Fishing Resources,24 whose objection was supported by Francisco Paniagua (the
18 	Club Lender Parties’ Statement, Limited Objection and Reservation of Rights to the Debtors’ First Day Motions,
and Request for a Scheduling Conference, ECF No. 13 (the “Club Lender Parties’ Statement”).
19 	Club Lender Parties’ Motion for the Entry of an Order Directing the Appointment of a Chapter 11 Trustee
Pursuant to 11 U.S.C. § 1104(a)(2), ECF No. 57 (the “Trustee Motion”).
20 	Statement of Senior Noteholder Committee Regarding Club Lender Parties’ Motion for Entry of an Order
Directing the Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. Section 1104(a)(2), ECF No. 62.
21 	Maybank’s Joinder in Respect of the Club Lender Parties’ Motion for the Entry of an Order Directing the
Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. Section 1104(a)(2), ECF No. 61.
22 	Joinder to the Club Lender Parties’ Motion for Entry of an Order Directing the Appointment of a Chapter 11
Trustee, ECF No. 63.
23 	Joinder of the Insolvency Administrator of the Pickenpack Group to the Club Lender Parties’ Motion for the
Entry of an Order Directing the Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. § 1104(a)(2), ECF No. 65.
24 	Objection to the Club Lender Parties’ Motion for the Entry of an Order Directing the Appointment of a Chapter
11 Trustee, ECF No. 103.
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general manager of the Peruvian Opcos),25 Gustavo Miró-Quesada Milich (the Peruvian Opcos’
legal advisor),26 and the Ng Family.27
In connection with the commencement of the Chapter 11 Cases, Ng Puay Yee (then-CEO
of CFGL) submitted a supportive declaration. First Day Decl. ¶ 1. Ms. Ng maintained that “the
purpose of these chapter 11 cases is simple—to provide the Debtors with a breathing spell in order
to implement a restructuring of their businesses and utilize the automatic stay to prevent creditors
from forcing a fire sale [of the Peruvian Opcos], which would preclude structurally subordinated
creditors and shareholders [i.e., the Initial Debtors’ creditors and shareholders] from realizing
values.” Id. ¶ 20. The Club Lender Parties had other plans for the Debtors. They sought the
appointment of a chapter 11 trustee: (i) to cause the Peruvian Opcos to contest and dismiss the
Peruvian Insolvency Proceedings, and thereafter (ii) to cause the Debtors to sell the Peruvian
Opcos, pay off the creditors of the Peruvian Opcos, and distribute the net proceeds from the sale
to the Debtors’ creditors and shareholders in accordance with their rights and priorities. See Trustee
Motion ¶¶ 1-2.
In granting the Trustee Motion, the Court found that the Club Lender Parties established
grounds for the appointment of a chapter 11 trustee under section 1104(a)(2) by clear and
convincing evidence. Trustee Decision and Order at 47. In reaching that conclusion, and in
considering the “prospects for the Debtors’ rehabilitation,” the Court noted that
only minimal income is expected to be received in the ordinary course of
business in the near term because, among other things, the CF Group debtors
rely on the Peruvian Opcos for substantially all of their income, and any
25 	Declaration Of Francisco Paniagua, ECF No. 99.
26 	Declaration of Gustavo Miró-Quesada Milich, ECF No. 104.
27 	Declaration of Ng Puay Yee in Opposition to the Lenders’ Motion for the Entry of an Order Directing the
Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. § 1104(a)(2), ECF No. 105.
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income from the Peruvian Opcos is speculative and may not occur anytime
soon due to the involuntary petitions against the Peruvian Opcos in Peru.
Id. at 43. In appointing a chapter 11 trustee for CFG Peru, the Court noted that CFG Peru “is
the 100% direct and indirect owner of the Peruvian Opcos” and that “[i]n the course of any
restructuring (standalone or otherwise), that Debtor must, among other things, assess the value of
its interests in the Peruvian Opcos and determine how to apply that value in furtherance of the
restructuring.” The Court’s mandate for the chapter 11 trustee was: “to evaluate the optimal way
to maximize the value of the Peruvian Business and to determine how to realize that value for the
benefit of the Debtors’ estates and creditors.” Id. at 47-48. In so ruling, the Court
reject[ed] the [Club Lender Parties’] contention that they are entitled to the benefit
of their prepetition bargain with the Debtors and that the trustee should work
towards 	causing 	the 	Peruvian 	Opcos 	to 	dismiss 	the 	Peruvian 	Insolvency
Proceedings in favor of the sale of the Peruvian Business.
Id. Moreover, consistent with its mandate, the Court directed the trustee “in furtherance of his or
her fiduciary duties, without limitation, to assess the highest and best use of those assets in the
context of the resolution of these Chapter 11 cases and the means for the Debtors to realize
maximum benefits from those assets.” Id. at 48-49.
The Appointment of Mr. Brandt as the Chapter 11 Trustee
On November 10, 2016, the U.S. Trustee sought approval of Mr. Brandt as the chapter 11
trustee of CFG Peru.28 On that same date, the Court entered an order approving the selection of
Mr. Brandt as the trustee.29 At that time, Mr. Brandt was the Executive Chairman and founder of
Development Specialists, Inc. (“DSI”), a restructuring and financial advisory firm that specializes
28 	Application for Order Approving the Appointment of a Chapter 11 Trustee in Debtor CFG Peru Singapore,
ECF No. 218.
29 	Order Approving the Appointment of Chapter 11 Trustee, ECF No. 219.
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in interim management, turnaround consulting, operational due diligence, creditor advisory
services, and financial and operational restructuring. Brandt Decl. ¶ 2. By order dated April 28,
2017, the Court granted the Trustee’s application to retain DSI as accountant to the Trustee, nunc
pro tunc to November 10, 2016. 30 For services rendered during the case, CFG Peru paid DSI
approximately $8.2 million in fees.31
There are two additional items to note in connection with Mr. Brandt’s retention as Trustee
in this case. First, at the U.S. Trustee’s request, he agreed to forego seeking interim compensation
during his tenure as Trustee, and to seek compensation only in his final fee application. See Fee
Application at 53. Mr. Brandt has not received any interim compensation awards in this case.32
Second, in what he describes as being “in aid of a transparent process,” Mr. Brandt explains that,
at the U.S. Trustee’s request, during his tenure, he filed Monthly Operating Reports (“MORs”) for
the CFG Peru debtor that disclosed the disbursements by CFG Peru to its creditors, as well as the
disbursements by the Peruvian Opcos to their creditors (the “MOR Disbursements”). Fee
Application at 31. He explains that an MOR that covered only the disbursements by CFG Peru
would have provided no useful information to creditors, the U.S. Trustee, or this Court, as such an
MOR would disclose only administrative payments by CFG Peru such as professional fees and
30 	Order Granting Chapter 11 Trustee’s Application for Entry of an Order Authorizing Retention of Development
Specialists, Inc. as Accountant to the Trustee Nunc Pro Tunc to November 10, 2016, ECF No. 491.
31 	Thirteenth Interim and Final Fee Application of Development Specialists, Inc. for Compensation for Services
Rendered and Reimbursement of Expenses as Accountant to the Chapter 11 Trustee for (I) the Thirteenth Interim
Period from November 1, 2020 through and Including June 10, 2021 and (II) the Entire Case Period from November
10, 2016 through and Including June 10, 2021, ECF No. 2663.
32 	However, on November 20, 2020, the Trustee, with the consent of the U.S. Trustee, requested an interim payment
for reimbursement of out-of-pocket expenses for the interim period from November 10, 2016 through February 29,
2020 in the amount of $ 355,051.93. See First Interim Application of the Chapter 11 Trustee, William A. Brandt, Jr.,
for Reimbursement of Expenses for the Period from November 10, 2016 Through and Including February 29, 2020,
ECF No. 2231. On December 20, 2020, the Court granted this interim application. See Order Granting Application
for Reimbursement of Expenses, ECF No. 2272
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quarterly U.S. Trustee fees. Id. Instead, the MORs that the Trustee filed accounted for the
operations and financial transactions carried out by both CFG Peru and the Peruvian Opcos—the
entities that hold the value in the CFG Peru enterprise—the same value the Trustee had been
appointed to protect, preserve and enhance. Id. CFG Peru paid quarterly fees to the U.S. Trustee
based on the entire CFG Peru enterprise, as reflected in the MOR Disbursements. That was
consistent with the Trustee’s view of the calculation of the Statutory Cap on his commission. 33
The Trustee Embraces the Court’s Mandate and Promptly Resolves the CFG Peru Financial Crisis
The Court directed the Trustee “to evaluate the optimal way to maximize the value of the
Peruvian Business and to determine how to realize that value for the benefit of the Debtors’ estates
and creditors.” Trustee Order and Decision at 47-48. The Trustee fully embraced that mandate and
quickly addressed a “gating issue,” the resolution of which was critically important to the Trustee’s
successful operation of CFG Peru and its assets.
The Trustee inherited a financial crisis at CFG Peru and the Peruvian Opcos that he had to
resolve quickly in order to have any opportunity to preserve, if not maximize, the value of the
Peruvian Opcos for the benefit of the Debtors’ estates. CFG Peru is a holding company that has
no material assets other than its equity interests in the Peruvian Opcos. As of the Petition Date,
33 	As the Trustee explained early in these cases:
The issue is what applies under 326. The bookies might say, if you were at a racetrack, that 326 is
the handle; in other words, all monies turned over, disbursed by the estate, which includes, not just
sale proceeds, but all of the obvious revenue and distributions by the subsidiary companies. The
number here will be impossibly large. And no one in their right mind . . . would ever think of
awarding it that way. But there has to be some measure along the continuum, from the bottom to the
top, of asking for some enhancement, if necessary, of the lodestar, or simply the awarding of the
lodestar, including myself and the other members of my firm. But yes, Your Honor, for the purposes
of the Code, if you read it literally, it would include the . . . handle, which is not just the sums derived
from a sale, but all other sums that flow upward or are disbursed. And indeed, as we've sat down
with the U.S. Trustee and prepared the monthly operating reports, that was the request they made of
us, that we provide a roll-up for transparency for the creditors.
Transcript Regarding Hearing Held on April 12, 2017, ECF No. 474 (“April 12, 2017 Hr’g Tr.”) at 81:10-82:6.
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CFG Peru had no income of its own to satisfy even the most basic financial demands on a chapter
11 debtor, such as the payment of quarterly U.S. Trustee fees or the fees of professionals engaged
in the case, and the Peruvian Opcos (the principal source of that income) were mired in the
Peruvian Insolvency Proceedings. See Brandt Decl. ¶ 56. The Peruvian Opcos did not have access
to financing because their $125 million line of credit had been revoked in the wake of the
prepetition interim appointment of the KPMG JPLs for CFGL and CFIL in Hong Kong and
Cayman, and the commencement of the Peruvian Insolvency Proceedings against the Peruvian
Opcos. Id. The Peruvian Opcos could not commence a fishing season without financing as their
business typically was financed by a line of credit that was repaid when the catch was processed
and sold. Id. Thus, when the Trustee arrived on the scene, the Peruvian Opcos did not have access
to the financing they needed to operate their business or access to the cash they needed to resolve
the claims of the petitioning creditors in the Peruvian Insolvency Proceedings. See id.
The Trustee quickly determined that litigating the involuntary insolvency petitions against
the Peruvian Opcos and Sustainable Fishing Resource before INDECOPI in Peru and the
Recognition Petitions in this Court would be both expensive and detrimental to his fledgling
relationship with local management and creditors of the Peruvian Opcos, and with Peruvian civic
leaders. See id. ¶ 38. In an effort to facilitate a consensual resolution of the Peruvian Insolvency
Proceedings, the Trustee reached out to the Peruvian Opcos’ management, and their legal and
financial advisors, and consulted with political contacts and civic leaders with whom he is
acquainted. See id. ¶¶ 38-39. At the same time, the Trustee sought financing for the Peruvian
Business. To obtain such financing, the Trustee, with the assistance of his DSI professionals,
turned first to the Peruvian Opcos’ traditional lenders, as well as to the lenders under the Club
Facility, certain large institutional lenders, and smaller local lenders in Peru. Those efforts were
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unsuccessful, as none of those entities would extend credit to CFG Peru. See id. Thereafter, the
Trustee successfully reached out to the Peruvian Opcos’ longstanding customers in Japan and
China to obtain financing in anticipation of their future purchases. See id. ¶ 57. Significantly, that
financing agreement evolved into a long-term financing commitment. The Trustee’s negotiations
with the customers were successful enough to permit the Peruvian Opcos to continue operations
and to begin accumulating cash that ultimately permitted them to operate their businesses without
any third-party financing. The Trustee managed to operate a billion-dollar business for more than
four years without traditional outside financing. See id.
With access to the negotiated financing, and with the cooperation and assistance of the
Peruvian Opcos’ management and the local petitioning creditors, the Trustee quickly and
successfully resolved the issues connected with the Peruvian Insolvency Proceedings. Pursuant to
a stipulation dated on or about November 23, 2016, 34 in exchange for the satisfaction of the
petitioning 	creditors’ 	debts, 	and 	the 	Trustee’s 	and 	management’s 	commitment 	to 	work
collaboratively toward their shared goals of restoring and preserving the health and viability of the
Peruvian Opcos, the petitioning creditors dismissed the Peruvian Insolvency Proceedings, and the
respective foreign representatives of Sustainable Fishing Resources and the Peruvian Opcos
withdrew the Recognition Petitions.35 In an effort to protect CFG Peru’s interests in the Peruvian
34 	Stipulation By and Among the Chapter 11 Trustee, CFG Investment S.A.C., Corporacion Pesquera Inca S.A.C.,
and Sustainable Fishing Resources S.A.C., ECF No. 244.
35 	Complete resolution of the Peruvian Insolvency Proceedings required further action by the Trustee, as one of the
Club Lender Parties, China CITIC, without notice to other parties, had filed a further involuntary proceeding with
INDECOPI against the Peruvian Opcos in September 2016, prior to the Trustee’s appointment. The Trustee filed a
motion against China CITIC to enforce the automatic stay and to have the bank’s filing declared void ab initio, upon
which China CITIC withdrew the remaining INDECOPI proceedings. See Chapter 11 Trustee’s Motion for the Entry
of an Order Pursuant to Sections 105(a) and 362 of the Bankruptcy Code to Enforce the Automatic Stay, ECF No.
268; Notice of Withdrawal of Chapter 11 Trustee’s Motion for the Entry of an Order Pursuant to Sections 105(a) and
362 of the Bankruptcy Code to Enforce the Automatic Stay Scheduled for December 21, 2016 at 11:00 a.m., ECF No.
279.
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Opcos, the Trustee moved this Court for an order confirming that the automatic stay applied to any
collection actions pursued in Peru by holders of claims under the Club Facility and holders of the
Senior Notes, and by CFG Peru’s affiliate, CFIL.36 The Court granted the Trustee’s request.37
After the Trustee obtained financing for the Peruvian Opcos, he was able to address CFG
Peru’s financing needs. The Trustee negotiated an intercompany loan agreement with CFG
Investment, a Peruvian Opco, pursuant to section 364(c)(1) of the Bankruptcy Code (the
“Superpriority Loan”),38 that was funded, in part, by proceeds of sales of Sustainable Fishing
Resources’ assets, primarily fishing vessels (described below). The Trustee received Court
approval of the Superpriority Loan.39
Trustee Adopts a Plan for Maximizing the Value of CFG Peru’s Assets
After addressing the Peruvian Opcos’ financial problems and securing the dismissal of the
Peruvian Insolvency Proceedings, the Trustee focused on the challenge of how to maximize the
value of CFG Peru and to realize that value for the benefit of the Debtors’ estates and creditors.
As a holding company, CFG Peru had no material assets other than its equity interests in the
Peruvian Opcos. The Trustee determined that the only feasible way to comprehensively maximize
and monetize the value of CFG Peru was to maximize the value of the Opcos and sell the equity
36 	Motion of William A. Brandt, Jr., Chapter 11 Trustee for CFG Peru Investments Pte. Ltd. (Singapore), Pursuant
to 11 U.S.C. §§ 105(a), 362(a), and 541(a)(1), for Entry of an Order Confirming Applicability of Automatic Stay to
Any Collection Actions Pursued in Peru by Holders of Club Facility and Senior Notes Claims and by Debtor CFIL
against Peruvian Operating Companies, ECF No. 743.
37 	Order Granting Motion of William A. Brandt, Jr., Chapter 11 Trustee for CFG Peru Investments Pte. Ltd.
(Singapore), Pursuant to 11 U.S.C. §§ 105(a), 362(a), and 541(a)(1), for Entry of an Order Confirming Applicability
of Automatic Stay to Any Collection Actions Pursued in Peru by Holders of Club Facility and Senior Notes Claims
and by Debtor CFIL against Peruvian Operating Companies, ECF No. 809.
38 	Motion for an Order (I) Authorizing the Chapter 11 Trustee to Obtain Intercompany Postpetition Financing on
a Superpriority Administrative Claim Basis, and (II) Granting Related Relief, ECF No. 548.
39 	Order (I) Authorizing the Chapter 11 Trustee to Obtain Intercompany Postpetition Financing on a Superpriority
Administrative Claim Basis, and (II) Granting Related Relief, ECF No. 585.
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of CFG Investment (the “CFGI Equity Interests”). Brandt Decl. ¶ 61. A purchaser of the CFGI
Equity Interests would acquire the stock, and with it, the assets and liabilities of the Peruvian
Opcos. Thus, the proceeds from the sale of the CFGI Equity Interests necessarily would first be
applied to satisfy the debts of the Peruvian Opcos, including the obligations under the Senior Notes
and Club Facility, in full in cash. Only the remaining proceeds could be used to pay creditors of
CFG Peru and the other Debtors.
In broad strokes, in formulating his plan to market and sell the CFGI Equity Interests, the
Trustee determined that a prospective purchaser of these interests would need to be comfortable
with the quality and value of the Peruvian Opcos’ operations and have certainty regarding the
extent of their liabilities. See id. Accordingly, after obtaining the financing necessary to put CFG
Peru and the Peruvian Opcos on firm financial grounds, and in furtherance of the sale process, the
Trustee essentially simultaneously focused his attention on three things: (i) restoring and
strengthening the value of the Peruvian Opcos, (ii) managing/reducing the liabilities of CFG Peru
and the Peruvian Opcos, and (iii) marketing the CFGI Equity Interests. The Court considers those
matters below.
Restoring and Strengthening the Value of the Peruvian Opcos
Restructuring the Peruvian Opcos’ Business Operations
Throughout his tenure, the Trustee spent the time and resources necessary for him to
acquire an understanding of applicable international and maritime laws and become a near-expert
on the highly regulated fishing industry in Peru, the fish meal and fish oil production process, and
the global market for the Peruvian Opcos’ products. Brandt Decl. ¶ 52. In the thirty months
preceding the Petition Date, the financial condition of the Peruvian Opcos had deteriorated largely
because of the predominating El Niño weather pattern between 2014 to 2016, which negatively
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impacted the anchovy fishing industry. First Day Decl. ¶ 99. With the assistance of DSI, the
Trustee conducted an in-depth review of the Peruvian Opcos’ books and records, audit reports,
industry reports, and myriad other sources to understand underlying issues with the Peruvian
Opcos’ operations that were exacerbated by the effects of El Niño. On the strength of those efforts,
the Trustee was able to take steps to rationalize and restructure the assets of the Peruvian Opcos in
a manner that would stabilize the businesses and restore their profitability. See Brandt Decl.
¶¶ 52-53. For example, as of the Petition Date, audits for the Peruvian Opcos had not been finished
for 2015, 2016, and 2017. The Trustee worked with Deloitte in Peru to resurrect the audit practice,
obtain prompt audits for the open years, and ensure annual compliance thereafter. Id. ¶ 49.
Moreover, the Trustee oversaw the establishment of a computer system for the Peruvian Opcos
that was separate and independent from operations of the other Ng Family-owned Pacific Andes
Group entities in Hong Kong to preserve the integrity of the data. The establishment of a separate
computer system in Peru ensured control over data entry and certainty over data such as receivables
and payables, ensuring the integrity of financial information shared with this Court, with creditors,
and with prospective purchasers. See id. ¶ 55.
At the outset of his tenure, the Trustee correctly recognized that his relationships with
creditors, and with the Ng Family that owned most of the Debtors’ equity interests, would be
critical to a successful restructuring of the Peruvian Opcos, particularly given the complex web of
guarantees and intercompany debts among the various Debtors and affiliated entities. Id. ¶ 15.
Those same guarantees meant that some creditors of the Peruvian Opcos were also creditors of the
CFG Peru estate, and that any of the Trustee’s restructuring efforts that benefited the Peruvian
Opcos would also provide direct benefits to the estate of CFG Peru. Id. Accordingly, Mr. Brandt
addressed the issues relating to the operations of the Peruvian Opco while conducting regular
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meetings with creditors and equity holders in Hong Kong, Singapore, New York, and the United
Kingdom, roughly at intervals of every six weeks prior to the COVID-19 shutdown, and elsewhere
as required. Id. In doing so, he provided transparency to all stakeholders, particularly those that
might be less familiar with the chapter 11 process or less able to have their voices heard in this
Court. Id.
Sale of Non-Core Assets
In the course of his review of the Peruvian Business operations, the Trustee learned that
the CFG Peru subsidiaries owned assets that they did not need to operate CFG Peru’s core Peruvian
anchovy fishing and processing business, and which the Trustee determined should be sold (the
“Non-Core Assets”). Brandt Decl. ¶ 64. Those assets included residential real property and
commercial real property, and a number of fishing vessels owned/controlled by Sustainable
Fishing Resources. Id. ¶ 65. When the Trustee sold the first of the Non-Core Assets, he developed
procedures that would permit the Non-Core Assets to be sold on a notice-only basis, with an
opportunity for interested parties to object, which relieved the estate from the expense of preparing
and filing a motion for each Non-Core Asset sale and eliminated the need for hearings on the sales,
while safeguarding the rights of interested parties, including creditors, and ensuring continued
transparency. Id. ¶ 64. The Trustee obtained the Court’s approval of those protocols within six
months of his appointment.40
40 	See Order Granting Chapter 11 Trustee’s Motion for Order Pursuant to Bankruptcy Code Sections 105(a),
363(b), 541(a)(1), and 1108 and Bankruptcy Rules 2002, 6004, and 9006 Authorizing and Approving Procedures for
(A) the Sale or Transfer of Certain Non-Debtor Assets and (B) Taking All Desirable or Necessary Corporate
Governance Actions in Connection Therewith, ECF No. 482; Order Granting Chapter 11 Trustee’s Motion for Order
Pursuant to Bankruptcy Code Sections 105(a) and 1108 and Bankruptcy Rule 2002 Authorizing and Approving
Procedures for (A) the Sale or Transfer of Certain Additional Non-Debtor Assets and (B) Taking All Desirable or
Necessary Corporate Governance Actions in Connection Therewith, ECF No. 584.
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The $47 million aggregate proceeds from the sale of the Non-Core Assets provided much-
needed cash to fund the administrative expenses of CFG Peru, released the Peruvian Opcos and
other CFG Peru subsidiaries from the ongoing operating expenses of (in some cases) out-of-use
assets and, in turn, provided the groundwork for returning the Peruvian Opcos to profitability. See
id. ¶ 69. The Trustee’s management and sale of Non-Core Assets was instrumental to the improved
health of the Peruvian Opcos and to the administration of the CFG Peru estate. Indeed, within two
years of his appointment as Trustee, the Peruvian Opcos transformed from bleeding cash to
accumulating cash—as a self-funding business free from third-party financing. See id. ¶ 70.
In part due to these efforts, during the period beginning with the Trustee’s appointment
through the entry of the Confirmation Order, CFG Peru’s equity value improved significantly. A
summary of CFG Peru’s balance sheets in a 2021 declaration filed by the Plan Administrator
demonstrates that CFG Peru had negative $9,123,000 in total equity as of December 2016. 41 That
same declaration states that CFG Peru had positive total equity of $26,951,000 as of May 31, 2021.
Id.
Trustee Pursues Claims for the Benefit of the Peruvian Opcos
HSBC-HK’s appointment of the KPMG JPLs in Hong Kong and the Cayman Islands,
described above, came as a “surprise” to the Club Lenders, who considered it a “premature” and
“drastic” move. Trustee Decision and Order at 20. The Club Lender Parties and CFGL
acknowledged that HSBC-HK’s efforts had a negative impact on the Peruvian Opcos due to
actions taken in Peru by the KPMG JPLs upon their appointment.42 Shortly after his appointment,
41 	Brandt Declaration, Exhibit H (Affidavit of Michael Foreman), ¶ 36.
42 	For example, the Club Lender Parties stated: As a consequence of the protective measures in the December 2015
Undertaking having been implemented, thereby ensuring transparency, management scrutiny and independent
oversight, the Club Lenders agreed to support the dismissal of the JPLs in both Hong Kong and the Cayman Islands.
The intention being to remove the obvious stigma of an insolvency process depressing the value of the business.
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the Trustee sought Bankruptcy Rule 2004 discovery from HSBC-HK, which the Court approved
over HSBC-HK’s objection.43 The Trustee obtained his requested discovery from HSBC-HK, and
subsequently commenced an adversary proceeding against HSBC-HK alleging, among other
things, tortious interference with the Peruvian Opcos’ business and equitable subordination, or
disallowance of HSBC-HK’s claims under the Club Facility (the “HSBC-HK/Trustee Litigation”).
See Complaint ¶ 9.44
Managing/Reducing the Liabilities of the Peruvian Opcos
The Netting Agreement
As of the Petition Date, the Debtors’ business enterprise was burdened by a complex web
of more than $7 billion in intercompany claims—approximately $650 million of which flowed
through CFG Peru and its subsidiaries, including the Peruvian Opcos and their subsidiaries. Brandt
Decl. ¶ 71. Chief among that category was a single $459 million claim asserted by CFIL, a Debtor,
Declaration of Guy Isherwood in Support of the Club Lender Parties’ Motion for the Entry of an Order Directing the
Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. § 1104(a)(2), ECF No. 58 ¶ 37.
CFGL further explained how the consequences of HSBC-HK’s actions far exceeded an “obvious stigma” that
was “depressing the value” of the Peruvian Opcos, in a filing before this Court:
The appointment of the JPLs had an adverse impact on the Prepetition Sale Process and further
exacerbated financial difficulties already being experienced by the CFGL Group by deterring key
participants from collaborating with the Peruvian Business. Parties integral to the success of the
Peruvian Business, including, among others, local banks, suppliers, employees, and crew, declined
to continue doing business with the Peruvian Opcos in light of the JPLs’ appointment. Moreover,
potential investors in the Peruvian Business conveyed to the Pacific Andes Group’s management
team that they were no longer interested in purchasing the Peruvian Business in light of the JPLs’
appointment and/or their interest was conditioned upon the JPLs being dismissed.
Disclosure Statement for Joint Chapter 11 Plan of Reorganization of China Fishery Group Limited (Cayman), Pacific
Andes Resources Development Limited (Bermuda), and Certain of Their Affiliated Debtors, ECF No. 800 at 24.
43 	Memorandum Decision and Order Granting Trustee’s Motion for Order Authorizing Issuance of Subpoenas to
Hongkong Shanghai Banking Corporation Limited, ECF No. 634.
44 	Complaint, Adv. Pro. No. 18-01575, ECF No. 1 (the “Complaint”).
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against 	CFG 	Investment—CFG 	Peru’s 	wholly 	owned 	non-debtor 	Peruvian 	Opco 	(the
“$459m Intercompany Claim”). Id.
Under Peruvian law, insider claims are not subordinate to the claims of other creditors.
Further, because CFG Investment was not a Debtor in the Chapter 11 Cases, the $459m
Intercompany Claim could neither be discharged nor judicially subordinated, meaning that it stood
pari passu with the claims of the Senior Noteholders. The equal footing meant that any sale of
CFGI Equity Interests (or a creditor-led restructuring of the Debtors) would require a sale price
sufficient to satisfy all claims—i.e., those of the Senior Noteholders, Club Lenders, the
$459m Intercompany Claim, other intercompany claims, and all other claims. Id. ¶ 72. That is so
because any sale that could not cover these liabilities would leave the buyer exposed to any unpaid
amounts.
Through extended and complex negotiations beginning in early 2018, the Trustee reached
a settlement with the various affected corporate entities and creditors to remove CFG Investment’s
intercompany debt from its balance sheet and to remove other intercompany claims from CFG
Investment’s balance sheet (the “Netting Agreement”). Id. ¶ 73. The Netting Agreement
consolidated intercompany claims owed by subsidiaries of CFG Peru into one claim owed by CFG
Peru to CFIL. The effect of the agreement was to structurally subordinate intercompany claims.
The agreement facilitated either a sale of the CFGI Equity Interests or a restructuring and ensured
that the Peruvian Opcos would not be susceptible to further involuntary insolvency proceedings in
Peru by removing the blocking position that large insider claims could hold in such a proceeding.
See id. ¶¶ 72-73. In sum, the Netting Agreement cleared an obstacle to the sale of the CFGI Equity
Interests, simplified the intercompany claims, and channeled liabilities of the Peruvian Opcos to
CFG Peru. Id. ¶ 74. It helped to pave the way for the Debtors to be restructured or sold by protecting
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the interests of other creditors. Id. ¶ 73. The Trustee filed a joint motion for approval of the Netting
Agreement with the other Debtors.45 The Netting Motion drew initial objections from the Senior
Noteholders and Bank of America.46 The Trustee resolved these objections, and on April 26, 2018,
the Court entered its order approving the Netting Agreement.47
The FTI Liquidators’ Claims
The FTI Liquidators and FTI Director Services filed more than 200 proofs of claim totaling
some $4.2 billion in the Chapter 11 Cases, including against CFG Peru. Nearly all of these claims
rested on the same foundation: allegations of a massive trade finance fraud scheme. Brandt Decl.
¶ 35. The FTI Claimants48 (under the FTI Liquidators’ control) asserted that PAE (BVI) and
Europaco obtained approximately $5.57 billion in trade finance facilities from various financial
institutions between September 2010 and August 2015. Id. They contended that instead of using
those funds to supply fish (as represented), PAE (BVI) and Europaco allegedly circulated the funds
through various companies within the Pacific Andes Group and among so-called “Agent
Companies” allegedly controlled by the Ng Family, and then recirculated them back to PAE (BVI)
and Europaco. Id.
45 	Joint Motion for an Order Approving the Settlement Agreement Netting Intercompany Claims Among and
Between CFG Peru Singapore, the Other Debtors, and the Nondebtor Affiliates, Including the CFG Peru Singapore
Subsidiaries, ECF No. 993 (the “Netting Motion”).
46 	Senior Noteholder Committee’s Limited Objection to Chapter 11 Trustee and the Other Debtors’ Joint Motion
for an Order Approving the Settlement Agreement Netting Intercompany Claims Among and Between CFG Peru
Singapore, the Other Debtors, and the Nondebtor Affiliates, Including the CFG Peru Singapore Subsidiaries, ECF
No. 1020; Objection of Bank of America, N.A. to the Chapter 11 Trustee and the Other Debtors’ Joint Motion for an
Order Approving the Settlement Agreement Netting Intercompany Claims Among and Between CFG Peru Singapore,
the Other Debtors, and the Non-Debtor Affiliates, Including the CFG Peru Singapore Subsidiaries, ECF No. 1021.
47 	Order Approving the Settlement Agreement Netting Intercompany Claims Among and Between CFG Peru
Singapore, the Other Debtors, and the Non-Debtor Affiliates, Including the CFG Peru Singapore Subsidiaries, and
Approving Stipulation with Bank of America, N.A., ECF No. 1112.
48 	The “FTI Claimants” are PAE (BVI), Solar Fish and Parkmond.
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In March 2019, the Trustee objected to the original proofs of claim filed against CFG Peru
by the FTI Claimants. The Trustee sought to expunge the claims on the merits, but in response to
that objection, the FTI Claimants withdrew the claims with prejudice.49 The withdrawal of the
claims did not end the matter, as the FTI Liquidators pursued the $152 million claim directly
against CFG Investment in Hong Kong via an action filed in the names of five of the FTI
Liquidation Entities (the “FTI Hong Kong Litigation”).50 In that action, the claimants alleged the
same factual circumstances and legal theories set forth in the FTI Claimants’ proofs of claim
against CFG Peru. The FTI Liquidators had already commenced an action in Hong Kong, in the
names of certain FTI Liquidation Entities,51 against certain members of the Ng Family and various
companies alleged to be controlled by them. In the summer of 2020, the two litigation matters
were consolidated. As described below, pursuant to the Trustee’s motion, the Court referred the
FTI Hong Kong Litigation to mediation and the Trustee reached a mediated settlement of the
litigation with the FTI Liquidators.
49 	See Letter dated July 16, 2019, from Clifford Chance to the Hon. James L. Garrity, Jr., ECF No. 1650.
50 	The plaintiffs in the FTI Hong Kong Litigation (Action No. 2019-836) are PAE (BVI), Solar Fish, Europaco,
Palanga, and Zolotaya.
51 	The Plaintiffs in the earlier FTI litigation (Action No. 2019-688) are PAE (BVI), Solar Fish, Richtown, Parkmond,
and Europaco.
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The Pickenpack Administrator’s Claims
The Pickenpack Administrator filed numerous proofs of claim in these Chapter 11 Cases,
including claims against CFG Peru that totaled $283 million. Upon review of the claims, the
Trustee engaged in discussions with the Pickenpack Administrator’s New York counsel to address
his concerns about the claims. Ultimately the Pickenpack Administrator voluntarily withdrew $283
million in claims.52
Miscellaneous Claims
The Trustee also worked with his professionals to clean up CFG Peru’s claims register, as
follows:
The Trustee disallowed and expunged claims asserted against CFG Peru by holders
of PARD’s 8.5% bonds due in 2017, on which CFG Peru is not an obligor. See
Order Granting the Chapter 11 Trustee’s First Omnibus Objection to No Liability
Claims (PARD Bonds), ECF No. 1420.
The Trustee negotiated and coordinated with counsel to the other Debtors to clean
up their respective claims registers, which culminated in the Trustee and the other
Debtors entering into the Stipulation By and Between Certain Debtors and
Chapter 11 Trustee Withdrawing Proofs of Claim Nos. 145, 171, 350, 371, 1517,
1527, 1528, 1771, and 1773 and Withdrawing PAIH Debtors’ Objection to Such
Claims, ECF No. 1336.
At the time of his appointment, there were two criminal investigations pending
against the Peruvian Opcos in Peru. The Trustee resolved those matters without any
charges ever being filed against the Peruvian Opcos or any of their management.
See Brandt Decl. ¶ 79.
The only proof of claim remaining against CFG Peru, other than its guarantee of the Senior
Notes and its obligations for intercompany claims, was a $1.1 million claim by Rabobank. Id. ¶ 80.
52 	Withdrawal of Claim, ECF No. 1498 at 1-16.
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Instituting a Sale Process for the CFGI Equity Interests
Promptly upon his appointment, the Trustee began to formulate a process for marketing
the CFGI Equity Interests. Elements of the process included the acquisition and review of due
diligence information, completion of a preliminary analysis of the market, identification of
potential buyers, consideration of alternative means for selling the Peruvian Opcos, establishment
of a virtual data room (“VDR”), and the allocation of responsibilities for implementation of the
sale process. Brandt Decl. ¶ 59. The Trustee tasked his DSI professionals with key components of
this effort to alleviate the financial burden on the estate while ensuring that the process reflected
the Trustee’s vision. Id. At the Trustee’s direction, DSI professionals facilitated the sale process
by:
 	Traveling to Peru to inspect each of the processing plants owned by CFG
Investment and Copeinca and, to the extent possible, their fishing vessels. DSI
professionals met with onsite management teams to review processing plant
financials, operations, assets, inventory, and production, and worked closely with
the production managers and senior management on review of production. DSI staff
also monitored daily fishing and production reports produced in the ordinary
course;
 	Developing a start-to-finish collection of sale and marketing materials, including
marketing literature designed to introduce prospective purchasers to the CFGI
Equity 	Interests 	and 	CFG 	Investment 	and 	Copeinca 	more 	generally; 	a
comprehensive confidential information memorandum that provided essential
information on the CFGI Equity Interests like company background, operations and
performance data, accompanied by appropriate nondisclosure agreements that
would protect the estate; and presentation materials with even more detailed
information for use during in-person meetings in Lima, Peru, with prospective
purchasers;
 	Creating and maintaining the VDR to ensure prospective purchasers received the
most current information possible; and
 	Facilitating prospective purchasers’ tours of the Peruvian Opcos’ vessels and
processing plants, which were located along nearly the whole of the Peruvian
coastline.
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Id. ¶ 60. Further, the Trustee tasked his legal advisors to draft a purchase and sale agreement,
including seller disclosure schedules, that would serve as the baseline for negotiations with
potential buyers. Id. ¶ 61. Because two of CFG Peru’s indirect parents—PAIH and PARD—are
publicly listed companies, a sale of an Opco, or a Non-Core Asset, required consents from the HK
Stock Exchange and Singapore Exchange. The Trustee obtained such consents. Id. ¶ 62. Finally,
the Trustee sought approval of bid procedures in advance of a sale by filing his Bid Procedures
Motion.53 The Trustee revised the proposed procedures to address objections to the motion. On
October 21, 2020, the Trustee withdrew the Bid Procedures Motion at the Court’s request due to
the passage of time and the fact that portions of it had been superseded by other events.54
Through that process and, pursuant to his discussions with prospective purchasers of the
CFGI Equity Interests, the Trustee identified two “gating” issues relating to the sale of the equity.
First, the Peruvian Opcos’ books and records reflected amounts due and owing to the Opcos by
certain of their affiliates. Prospective purchasers sought confirmation of those amounts. Over a
twelve-month period, the Trustee and his professionals produced audited financial statements
addressing the issue. Brandt Decl. ¶ 59. Prospective buyers also sought comfort regarding potential
tax liabilities associated with their acquisition of the CFGI Equity Interests. The Trustee and the
Peruvian Opcos’ tax counsel worked with the Peruvian regulators to develop a tax structure for
the transaction that they believed was acceptable to Peruvian tax authorities. See id.
53 	Chapter 11 Trustee’s Motion for an Order (I) Approving Bidding Procedures, (II) Approving the Form and
Manner of Notice Thereof, and (III) Granting Related Relief on July 26, 2017, ECF No. 646 (the “Bid Procedures
Motion”).
54 	Notice of Withdrawal of Chapter 11 Trustee’s Motion for an Order (I) Approving Bidding Procedures,
(II) Approving the Form and Manner of Notice Thereof, and (III) Granting Related Relief on July 26, 2017, ECF No.
2200.
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The Trustee Fails to Locate a Buyer
Notwithstanding his efforts, Mr. Brandt did not locate a buyer for the CFGI Equity
Interests. No bidder emerged that was willing and able to provide sufficient cash to pay off, inter
alia, the Peruvian Opcos’ third-party debt.
The Creditors Explore Other Exit Strategies
At the outset of the Chapter 11 Cases, an unofficial “Senior Noteholder Committee”
appeared in these cases.55 Members of the committee held or acted as investment manager of or
advisor to certain funds, controlled accounts, and/or other entities that held or were beneficial
owners of the Senior Notes. Over time, membership of that committee expanded (the “Ad Hoc
Group”) to include entities that held or that acted as investment manager of or advisor to certain
funds, controlled accounts, and/or other entities that hold or are beneficial owners of the Senior
Notes and the holders of claims under the Club Facility.
The Creditor Plan Proponents explain that while the Ad Hoc Group and other creditors
supported the approval of the bidding procedures in August 2017, in the fall of 2018, after more
than a year of sale efforts and repeated assurances from Mr. Brandt that a sale of the Peruvian
Opcos was on track and forthcoming, the Creditor Plan Proponents began to have real concerns
with the lack of demonstrable progress and determined that a course correction was warranted. See
Jordan Decl. ¶ 10. The Ad Hoc Group as constituted at that time sought greater involvement with
the sale process and began to develop a self-supported, self-funded backstop transaction. See id.
¶ 11. As part of those efforts, the Ad Hoc Group expanded its ranks to include Alternative Capital
LP (including certain affiliated funds), a significant holder under both the Senior Notes and Club
55 	See Verified Statement of the Senior Noteholder Committee Pursuant to Bankruptcy Rule 2019, ECF No. 80.
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Facility.56 To facilitate those efforts, in 2018, the expanded Ad Hoc Group—which included the
Creditor Plan Proponents—engaged Houlihan Lokey (“Houlihan”) to assist in the creditors’
review of potential restructuring alternatives. See id.
In November 2018, the Ad Hoc Group presented a proposal to the Trustee pursuant to
which the Ad Hoc Group and certain other creditors of the Debtors would act as the “stalking horse
bidder” in a sale of the CFGI Equity Interests, subject to a competitive sale process under section
363 of the Bankruptcy Code and overseen by the Trustee. See id. The Trustee rejected the proposal.
The Creditor Plan Proponents understand that the Trustee did not accept the proposal because:
(a) the Ad Hoc Group, as then constituted, was not large enough; (b) the proposal contemplated
resolution of the Intercreditor Dispute (as defined below)—which was not then resolved; and
(c) Club Lender HSBC-HK did not support the proposal. See id.
The Creditor Plan Proponents assert that the Ad Hoc Group worked to address the Trustee’s
stated concerns and further develop a potential creditor-backed proposal that could lead to a
transaction and resolve CFG Peru’s restructuring. See id. ¶ 12. They say that the creditors focused
on (i) seeking to resolve the Intercreditor Dispute, and (ii) developing other aspects of a potential
creditor-led solution, including providing for necessary financing to complete a transaction. See
id. By late 2020, the Ad Hoc Group had garnered support for a revised reorganization proposal
(including a $150-million committed exit facility) from creditors holding 56% of the principal
amount of the Senior Notes and 71% of the principal amount of the Club Facility. Accordingly,
the Ad Hoc Group once again sought the engagement of Mr. Brandt to seek his support for that
transaction. See id. ¶ 13.
56 	See Amended Verified Statement of the Ad Hoc Group Pursuant to Bankruptcy Rule 2019, ECF No. 2380.
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In December 2020, the Ad Hoc Group presented a proposed restructuring support
agreement to the Trustee that contemplated the provision of a new money financing facility to the
CF Group and an exchange of the Club Facility and Senior Notes for new notes and equity in CFG
Investment. This proposal also was not accepted by the Trustee. Id.
Interim Distributions to Peruvian Opco’s Creditors
By early 2019, on the strength of the Trustee’s management of the Peruvian Opcos, there
was excess cash in the Peruvian Opcos’ accounts (the “Excess Cash”). The Trustee determined
that interim distributions of some of the Excess Cash to the Club Lenders and the Senior
Noteholders would benefit CFG Peru and the Debtors by reducing the amounts of those claims
and the interest that was accruing thereon. Brandt Decl. ¶ 81. On February 15, 2019, the Trustee
filed a motion to effectuate such distributions.57 The Interim Cash Distribution Motion called for
the Peruvian Opcos—CFG Investment and Copeinca—to distribute their allocated portions of
Excess Cash to their respective financial creditors. The Club Lenders and Senior Noteholders were
third-party financial creditors at CFG Investment. Under the Trustee’s proposal, they would
receive pro rata distributions of the Excess Cash allocated to CFG Investment, based on the size
of the claims. The Club Lenders were the only third-party financial creditors at Copeinca. Thus,
under the proposal, the Club Lenders would receive 100% of the Excess Cash allocated to
Copeinca.
57 	Chapter 11 Trustee’s Motion for an Order Pursuant to Bankruptcy Code Sections 105(a) and 363(b) and
Bankruptcy Rules 2002 and 6004 Authorizing Taking Corporate Governance Actions to Enable an Interim
Distribution of Excess Cash to Certain Creditors by Non-Debtor CFG Investment S.A.C., ECF No. 1490 (the “Interim
Cash Distribution Motion”).
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Bank of America and certain Senior Noteholders (who came to be known in Court filings
as the Kasowitz Noteholders)58 raised informal objections to the motion, with the latter indicating
that they intended to file a formal objection to the motion. The core of the Kasowitz Noteholders’
objection (the “Intercreditor Dispute”) centered on language in the Senior Notes Indenture that the
Kasowitz Noteholders said required Copeinca to execute a guarantee of the Senior Notes (the
“Copeinca Guarantee”), which, as of the Petition Date, had not been done. Without the Copeinca
Guarantee, the Senior Noteholders would not receive any distribution from Copeinca; their
recovery under the Senior Notes would come solely from CFG Investment. The Kasowitz
Noteholders acknowledged that the Senior Noteholders did not hold a guarantee from Copeinca,
but asserted that Copeinca should have executed the Copeinca Guarantee and, in any event, that
the absence of the Copeinca Guarantee was not relevant because CFG Investment and Copeinca
were de facto substantively consolidated. Brandt Decl. ¶ 82. For his part, the Trustee was neutral
before the Court with respect to the Intercreditor Dispute.
On June 10, 2019, the Trustee withdrew his motion.59 On August 27, 2019, he filed his
Renewed Motion60 for authorization to make an interim distribution, believing the Intercreditor
Dispute was not only ripe for the Court’s determination, but also presented a gating issue that
would impede progress in the case if not addressed. The Kasowitz Noteholders objected to the
58 	The term “Kasowitz Noteholders” developed organically as a means of distinguishing the objecting Senior
Noteholders from the group as a whole and is distinguished by the name of the group’s counsel, Kasowitz Benson &
Torres LLP.
59 	Notice of Withdrawal of Chapter 11 Trustee’s Motion for an Order Pursuant to Bankruptcy Code Sections 105(a) and
363(b) and Bankruptcy Rules 2002 and 6004 Authorizing Taking Corporate Governance Actions to Enable an Interim
Distribution of Excess Cash to Certain Creditors by Non-Debtor CFG Investment S.A.C., ECF No. 1613.
60 	Chapter 11 Trustee’s Renewed Motion for Order Pursuant to Bankruptcy Code Sections 105(a) and 363(b) and
Bankruptcy Rules 2002 and 6004 Authorizing Taking Corporate Governance Actions Necessary to Enable an Interim
Distribution of Excess Cash to Certain Creditors by Non-Debtor CFG Investment S.A.C., ECF No. 1710 (the
“Renewed Motion”).
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Renewed Motion. In the end, the Court authorized an interim distribution to the Senior Noteholders
from CFG Investment, but not Copeinca.61 Ultimately, the Trustee did not make that distribution,
as news of COVID-19 began to emerge. Shortly thereafter, the nascent epidemic had transitioned
to a global pandemic, severely impacting Peru. The Trustee determined that the ability of the
Peruvian OpCos to continue normal operations was in doubt, making an expenditure of the excess
cash imprudent. Id. ¶ 83.
Mediated Settlements of the Intercreditor Dispute and FTI Hong Kong Litigation
The Intercreditor Dispute and the FTI Hong Kong Litigation were plainly barriers to CFG
Peru’s exit from its chapter 11 case. In December 2019, the Trustee filed his Mediation Motion,62
pursuant to which he sought to compel the mediation of the Intercreditor Dispute and the FTI Hong
Kong Litigation. In support of his motion, the Trustee explained that
Despite his best efforts, the Chapter 11 Trustee has not been able to bring the
relevant parties to the table to resolve these issues. Instead, the parties have moved
farther apart, with the FTI Liquidators now preparing for protracted litigation in
Hong Kong, and certain of the Objecting Noteholders laying the groundwork for
protracted discovery against the Chapter 11 Trustee through the 2004 Motion.
These strategies will hinder the Debtor’s prospects for exiting chapter 11 while
resulting in the incurrence of significant costs. By this Motion, the Chapter 11
Trustee seeks the Court’s help to avoid protracted litigation by compelling the
relevant parties to negotiate and resolve the [FTI Hong Kong Litigation] and the
[Intercreditor Dispute] before a mediator . . . to carve a path forward in this case.
Mediation Motion ¶ 2. TMF Trustee Limited, as successor trustee under the Senior Notes Indenture
(the “Indenture Trustee”), “strongly support[ed] the Motion by the Chapter 11 Trustee,” noting
61 	Order Pursuant to Bankruptcy Code Sections 105(a) and 363(b) and Bankruptcy Rules 2002 and 6004
Authorizing Taking Corporate Governance Actions Necessary to Enable an Interim Distribution of Excess Cash to
Certain Creditors by Non-Debtor CFG Investment S.A.C., ECF No. 1939.
62 	Chapter 11 Trustee’s Emergency Motion for Entry of an Order (A) Appointing a Mediator, (B) Directing the
Proposed Mediation Parties to Participate in Mediation, and (C) Authorizing Taking Corporate Governance Actions
Necessary to Enable Non-Debtor CFG Investment S.A.C. to Participate in Mediation, ECF No. 1859 (the “Mediation
Motion”).
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that “[m]ediation in this case is necessary and appropriate, and is the best (if not the only) path to
a value-maximizing exit for stakeholders collectively.” Indenture Trustee’s Response ¶ 1.63 The
Indenture Trustee observed that
Despite 	exceptional 	and 	diligent 	efforts 	by 	the 	Chapter 	11 	Trustee, 	large
intercreditor disputes in the case are unresolved, and will remain unresolved, unless
all key creditor constituencies work together to resolve them. The impasse
described in the Motion reduces the prospects for a successful exit from chapter 11
without massive litigation costs. In the Motion, the Chapter 11 Trustee seeks the
Court’s help to avoid expensive and protracted litigation by compelling the relevant
parties to participate in mediation. This is the best chance of achieving the best
creditor outcome in this case.
Id. ¶ 2.
The Court granted the motion over the objection of the Kasowitz Noteholders and the FTI
Liquidators, and on February 12, 2020, the Court appointed the Honorable Robert D. Drain to
conduct the mediation (the “Drain Mediation”).64 Through the mediation, the Trustee reached a
settlement with the FTI Liquidators over the FTI Hong Kong Litigation.65 The plaintiffs in that
case agreed to dismiss the action with prejudice in exchange for, inter alia, a single, $12 million
cash payment from CFG Investment. The Drain Mediation also successfully resolved the
Intercreditor Dispute.
The Restructuring Support Agreement
63 	TMF Trustee Limited’s Response in Support of Chapter 11 Trustee’s Emergency Motion for Entry of an Order
(A) Appointing a Mediator, (B) Directing the Proposed Mediation Parties to Participate in Mediation, and
(C) Authorizing Taking Corporate Governance Actions Necessary to Enable Non-Debtor CFG Investment S.A.C. to
Participate in Mediation, ECF No. 1867 (the “Indenture Trustee Response”).
64 	Order Appointing a Mediator, ECF No. 1957.
65 	Motion of Chapter 11 Trustee Pursuant to 11 U.S.C. §§ 105(A) and 363 and Fed. R. Bankr. P. 9019 for Order
(I) Approving 	Settlement 	Agreement 	Resolving 	Hong 	Kong 	Action 	with 	Certain 	Liquidation 	Companies
HCA 836/2019, (II) Authorizing Corporate Governance Actions, and (III) Granting Related Relief, ECF No. 2352.
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Following several months of discussions regarding potential restructuring transactions, and
in the wake of the successful mediation of the Intercreditor Dispute, on March 1, 2021, members
of the Ad Hoc Group, then comprised of holders of 56% of the principal amount of the Senior
Notes and 71% of the principal amount of the Club Facility (the “Consenting Creditors”), executed
the Restructuring Support Agreement. Obj. ¶ 23.66 That agreement contemplated a comprehensive
restructuring and recapitalization for certain of the Debtors and the Peruvian Opcos. On March 16,
2021, the Creditor Plan Proponents—on behalf of the parties to the Restructuring Support
Agreement—filed a chapter 11 plan for CFG Peru and Smart Group Limited (Cayman)67 which,
in broad strokes, gave effect to the Restructuring Support Agreement. To facilitate the
confirmation process, the Creditor Plan Proponents engaged Epiq Corporate Restructuring, LLC
as claims and noticing agent for purposes of the solicitation process and filed a motion to approve
the adequacy of the Disclosure Statement and establish a confirmation schedule.68
After filing the chapter 11 plan, in March 2021, the Creditor Plan Proponents engaged with
HSBC-HK—the largest single Club Lender—to obtain its support for the Restructuring Support
Agreement. See Jordan Decl. ¶ 15. On May 6, 2021, those discussions resulted in HSBC-HK’s
entry into the Restructuring Support Agreement, subject to certain limited, non-material
66 	See, e.g., Declaration of Andrew J. Herenstein [of Monarch Alternative Capital LP] in Support of the Creditor
Plan Proponents’ Chapter 11 Plan for CFG Peru Investments Pte. Ltd. (Singapore), ECF No. 2541 ¶¶ 8-9 (describing
the mediation as successful and noting that the restructuring support agreement was built on the momentum of that
success); see also Creditor Plan Proponents’ Brief in Support of Confirmation of the Creditor Plan Proponents’
Chapter 11 Plan for CFG Peru Investments Pte. Ltd. (Singapore), ECF No. 2557 ¶ 55 (“Intercreditor Mediation and
Mediated Intercreditor Settlement were critical to the development of the Restructuring Support Agreement and the
consensus achieved on the Plan.”).
67 	Creditor Plan Proponents’ Chapter 11 Plan for CFG Peru Investment Pte., Ltd. (Singapore) and Smart Group
Limited (Cayman), ECF No. 2382.
68 	Order Authorizing Epiq Bankruptcy Solutions, LLC to Solicit Acceptances of the Creditor Plan Proponents’
Chapter 11 Plan For CFG Peru Investment Pte., Ltd. (Singapore) and Smart Group Limited (Cayman), ECF No.
2442.
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modifications. At that point, Consenting Creditors holding approximately 88% of the principal
amount of the Senior Notes and approximately 94% of the principal amount of the Club Facility
had executed the Restructuring Support Agreement. The amended Restructuring Support
Agreement did not resolve the HSBC-HK/Trustee Litigation. In April 2021, the Trustee and
HSBC-HK agreed to mediate their disputes with the Honorable Sean H. Lane acting as mediator.69
On June 8, 2022, the Trustee and HSBC-HK entered into a settlement of the HSBC-HK/Trustee
Litigation, which the Court approved on June 10, 2021.70 Pursuant to that settlement, the Trustee
agreed to withdraw the adversary proceeding and the claims submitted therein with prejudice, in
exchange for HSBC-HK’s agreement to waive $11.3 million of expense claims and $13.5 million
of Club Facility claims, and to limit the portion of its fees paid in cash to $5.5 million.
The terms of the stipulation were included in the final version of the CFG Peru Plan. In
broad strokes, and as relevant to this discussion, the CFG Peru Plan, as finally amended and
modified, called for:
 	A change in ownership of the Peruvian Opcos through a transfer of the equity
in CFG Investment to NewCo;
 	The recapitalization of the Peruvian Opcos through the provision of the
committed $150 million New Money Facility to fund working capital and
transaction costs;
 	The exchange of the Club Facility and Senior Notes for $300 million of New
Notes; and
 	The distribution of the equity interests in NewCo and the New Notes between
Holders of Senior Notes Claims and Club Lenders in accordance with their
agreement under the Restructuring Support Agreement.
69 	Stipulation and Order (A) Referring Matters to Mediation and (B) Governing the Disclosure of Confidential
Documents, AP No. 18-1575, ECF No. 58.
70 	Stipulation and Consent Order (A) Dismissing Adversary Proceeding With Prejudice Pursuant to Fed. R. Civ. P.
7041(a)(2) and Fed. R. Bankr. P. 7041 and (B) Reflecting Settlement By and Among William A. Brandt, Jr., Chapter
11 Trustee, and the Hong Kong and Shanghai Banking Corporation Limited, AP No. 18-1575, ECF No. 61.
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CFG Peru Plan, art. IV.
On June 10, 2021, the Court confirmed the CFG Peru Plan.71 Between June 10, 2021, and
June 24, 2021, Mr. Brandt transitioned control of CFG Peru and its assets (including its bank
accounts and CFGI Equity Interests) to Mr. Foreman. Mr. Brandt is clear that these transfers are
the disbursements for which he seeks to be compensated for under the Fee Application. See Brandt
Dep. 72:11-73:22. Post-confirmation, the Plan Administrator has worked with the Creditor Plan
Proponents and their advisors to effectuate the CFG Peru Plan.
THE FEE APPLICATION
In the Fee Application, the Trustee is seeking the payment of the $25 million commission under
section 326(a) of the Bankruptcy Code (the “Proposed Commission”), for the services he provided
during his tenure as Trustee. He is also seeking final approval of $355,051.93 in interim expenses
previously allowed and paid, and approval and payment of allowable expenses in the amount of
$409,382.02 incurred in the period from March 1, 2020, through June 24, 2021 (including his
expenses for preparation of this Fee Application).
The Trustee bases his Proposed Commission on a lodestar of $11,958,625.00 arising from the
Trustee’s 13,667 hours spent on the case through to June 10, 2021, all billed at his hourly rate in
effect in 2021 (the “Trustee’s Lodestar”), and a fee enhancement in the form of a 2.09 multiplier
applied to the Trustee’s Lodestar. In addition to the out-of-pocket expenses for which chapter 11
trustees are typically reimbursed (e.g., airfare, lodging, travel meals and expenses, photocopies,
postage), the Trustee is seeking payment of the attorney’s fees he incurred in connection with the
Fee Application. The three components to those charges are: (i) the Trustee’s engagement of Baker
& Hostetler, LLP (“Baker Hostetler”) to prepare the Fee Application; (ii) the involvement of DSI’s
71 	Order Confirming Creditor Plan Proponents’ Chapter 11 Plan For CFG Peru Investments Pte. Ltd. (Singapore),
ECF No. 2569.
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in-house counsel in preparation of the Fee Application; and (iii) the costs of a document review
service that has reviewed Mr. Brandt’s time records to remove information subject to privilege
and, with respect to potential buyers of the CFGI Equity Interests, subject to confidentiality
agreements.
The Court reviews the Fee Application below.
ANALYSIS
“Bankruptcy courts enjoy wide discretion in determining reasonable fee awards.” In re
Cenargo Int’l, PLC, 294 B.R. 571, 596 (Bankr. S.D.N.Y. 2003); see also Zeisler & Zeisler, P.C.
v. Prudential Ins. Co. of Am. (In re JLM, Inc.), 210 B.R. 19, 23 (B.A.P. 2d Cir. 1997) (“Bankruptcy
courts enjoy wide discretion in determining reasonable fee awards, which discretion will not be
disturbed by an appellate court absent a showing that it was abused.” (citing Dickinson Indus. Site
v. Cowan, 309 U.S. 382, 389 (1940))). The Trustee bears the burden of demonstrating his request
for compensation is reasonable under section 330(a) of the Bankruptcy Code. See, e.g., Howard &
Zukin Cap. v. High River Ltd. P’ship, 369 B.R. 111, 115, (S.D.N.Y. Apr. 24, 2007); In re JLM,
Inc., 210 B.R. 19, 24 (B.A.P. 2d Cir. 1997); In re Keene Corp., 205 B.R. 690, 695 (Bankr.
S.D.N.Y. 1997).
The Lodestar Calculation
Section 330(a)(1) of the Bankruptcy Code regulates court awards of professional fees. See
In re MACCO Properties, Inc., 540 B.R. 793, 845 (Bankr. W.D. Okla. 2015) (“Section 330(a)(1)
is the general provision governing the process of compensating estate professionals.”). As relevant,
this section states the general rule that “[a]fter notice . . . and a hearing, and subject to section[]
326 . . . the court may award to a trustee . . . reasonable compensation for actual, necessary services
rendered by the trustee . . . and reimbursement for actual, necessary expenses.” 11 U.S.C.
§ 330(a)(1). Section 326(a) caps the compensation payable to trustees appointed under chapters 7
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and 11 of the Bankruptcy Code.72 It authorizes a court to “allow reasonable compensation under
section 330 [of the Bankruptcy Code]” to a chapter 11 trustee, for such “trustee’s services” in an
amount
not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in
excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess
of $50,000 but not in excess of $1,000,000, and reasonable compensation not to
exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys
disbursed or turned over in the case by the trustee to parties in interest, excluding
the debtor, but including holders of secured claims.
11 U.S.C. § 326(a).
“While Bankruptcy Code § 326(a) sets a maximum limit on the compensation that may be
awarded to a trustee, § 330 still operates to limit the compensation of trustees to a reasonable
amount.” In re The 1031 Tax Grp., LLC, No. 07-11448, 2009 WL 4806199, at *1 (Bankr. S.D.N.Y.
Dec. 9, 2009) (citing In re Brous, 370 B.R. 563, 568-69 (Bankr. S.D.N.Y. 2007)). In calculating
reasonable professional fees, courts typically apply the “lodestar” method, which involves
multiplying the number of hours reasonably spent by the professional by a reasonable hourly rate.
See Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551-52 (2010); Millea v. Metro-North R.R.
Co., 658 F.3d 154, 166 (2d Cir. 2011); In re Northwest Airlines Corp., 382 B.R. 632, 645
(S.D.N.Y. 2008). That calculus is relevant in fixing a chapter 11 trustee’s compensation. Section
330(a)(3) applies only to chapter 11 trustees and lists the factors courts must consider in
determining such a trustee’s “reasonable compensation.” It states that
[i]n determining the amount of reasonable compensation to be awarded to
[a] . . . trustee under chapter 11 . . . the court shall consider the nature, the extent,
and the value of such services, taking into account all relevant factors, including—
(A) the time spent on such services;
(B) the rates charged for such services;
72 	Section 326(a) does not apply to a trustee appointed under subchapter V of chapter 11. See 11 U.S.C. § 326(a).
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(C) whether the services were necessary to the administration of, or
beneficial at the time which the service was rendered toward the
completion of, a case under this title;
(D) whether the services were performed within a reasonable
amount of time commensurate with the complexity, importance and
nature of the problem, issue, or task addressed;
(E) with respect to a professional person, whether the person is
board certified or otherwise has demonstrated skill and experience
in the bankruptcy field; and
(F) whether the compensation is reasonable based on the customary
compensation charged by comparably skilled practitioners in cases
other than cases under this title.
11 U.S.C. § 330(a)(3). “Section 330 of the Bankruptcy Code incorporates the lodestar analysis by
requiring that the bankruptcy court consider the time spent upon legal services and the rate charged
for those services.” D.A. Elia Constr. Corp. v. Damon and Morey, LLP (In re D.A. Elia Constr.
Corp), No. 04-cv-975A, 2006 WL 1720361, at *5 (W.D.N.Y. Jun.19, 2006). “Fee applications are
to be evaluated in light of all ‘relevant factors’ as set forth in section 330(a)(3) of the Bankruptcy
Code.” In re Value City Holdings, Inc., 436 B.R. 300, 306 (Bankr. S.D.N.Y. 2010); see also
Connolly v. Harris Tr. Co. (In re Miniscribe Corp.), 309 F.3d 1234, 1241 (10th Cir. 2002) (“[A]
court awarding trustee fees must begin by assessing reasonableness under § 330(a) before applying
the percentage-based cap under § 326(a).”).
Pursuant to section 330(a)(7), “[i]n determining the amount of reasonable compensation to
be awarded to a trustee, the court shall treat such compensation as a commission, based on
section 326.” 11 U.S.C. § 330(a)(7). This section “applies to all trustees, whether they are
administering chapter 7 or chapter 11 cases.” In re Clemens, 349 B.R. 725, 733 (Bankr.
D. Utah 2006). For a chapter 11 trustee, that means the court “may be called upon in those cases
to determine whether there exists a rational relationship between the amount of the commission
[calculated under section 326(a)] and the type and level of services rendered.” Hopkins v. Asset
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Acceptance LLC (In re Salgado-Nava), 473 B.R. 911, 921 (B.A.P. 9th Cir. 2012). That
“determination necessarily requires consideration of the § 330(a)(3) factors, and also ordinarily
includes a lodestar analysis.” Id.; see also In re Clemens, 349 B.R. at 731 (“[T]he plain meaning
of § 330(a)(7) requires the Court to consider the provisions of § 326 as a part of its reasonableness
inquiry. In essence, the addition of § 330(a)(7) to the Code serves to now supplement the Court’s
Lodestar analysis.” (emphasis in original)); In re Bank of New England Corp., 484 B.R. 252, 283
(Bankr. D. Mass. 2012) (“The statute is clear that the 3% is not an entitlement, nor is it presumed
to be reasonable. It is a statutory cap that the court is to consider as part of its reasonableness
inquiry.” (footnotes omitted)); 3 COLLIER ON BANKRUPTCY ¶ 330.02[1][a] (noting that while “the
compensation of a chapter 11 trustee is, as is the case with other trustees, treated as a ‘commission,
based on section 326,’ the application of the listed factors [in section 330(a)(3)] is mandatory in
assessing the reasonableness of that compensation.” (quoting 11 U.S.C. § 330(a)(7)).
Thus, in applying sections 326(a), 330(a)(3) and 330(a)(7) to the Fee Application, the Court
will fix the Trustee’s commission as “reasonable compensation” payable pursuant to section
330(a)(3) of the Bankruptcy Code, subject to the limits set forth in section 326(a) of the Bankruptcy
Code. See In re Brous, 370 B.R. at 568-69 (“By its terms, § 326(a) sets a maximum limit, but does
not create right to or standard for awarding compensation. Instead, it permits the Court to allow
‘reasonable compensation under section 330,’ the same provision that governs the compensation
of attorneys and other professionals. Accordingly, the court must begin by assessing the
reasonableness of the trustee's compensation under § 330 before applying the § 326(a) cap.”
(citations omitted)); see also In re Salgado-Nava, 473 B.R. at 919 (“Notwithstanding the
applicability of paragraph (7) to chapter 11 trustees, they are still specifically included in
paragraph (3) with its litany of reasonableness factors.”); In re Golden Park Ests., LLC,
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No. 14-12253, 2015 WL 5785756, at *4 (Bankr. D.N.M. Oct. 2, 2015) (“Chapter 11 trustees are
limited to ‘reasonable compensation’ up to the statutory cap [in section 326(a) of the Bankruptcy
Code].”).
The Trustee’s Lodestar—$11,958,625—is the product of 13,667 hours of time accrued
over five years, between 2016 and 2021,73 all charged at the Trustee’s $875/hour billing rate in
effect in 2021. Fee Application at 8, 71. In reviewing the Fee Application, the Court first applies
section 330(a)(3) to the lodestar calculation.74 The first factor listed in section 330(a)(3) for
determination of the reasonableness of a chapter 11 trustee’s compensation is subparagraph (A),
“the time spent on such services.” This factor is related to subparagraph (C) (“whether the services
were necessary to the administration of, or beneficial at the time at which the service was rendered
toward the completion of, a case under this title”), and subparagraph (D) (“whether the services
were performed within a reasonable amount of time commensurate with the complexity,
importance, and nature of the problem, issue, or task addressed”).
In their Objection, the Creditor Plan Proponents explain that in light of the “dire straits”
that CFG Peru faced as of the Petition Date, “creditors broadly supported the appointment of a
chapter 11 trustee to provide stability to the process.” Obj. ¶ 2. Moreover, they assert that creditors
73 	Those hours are summarized, as follows:
2016 	409.7 hours
2017 	3,272.8 hours
2018 	3,471.7 hours
2019 	3,426.5 hours
2020 	1,949.2 hours
2021 	1,137.1 hours
Brandt Decl. ¶ 10.
74 	Section 330(a)(3)(E) is not relevant to the analysis of section 330(a)(3) because it pertains solely to the
qualifications of a “professional person,” which is a term that is distinct from a “trustee” and other categories of
officers compensable under section 330. See 11 U.S.C. § 330(a)(1)(A) (identifying “reasonable compensation for
actual, necessary services rendered by the trustee, examiner, ombudsman, professional person”).
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generally supported the Trustee’s initial efforts to stabilize the Peruvian Business by: (a) obtaining
dismissal of the Peruvian Insolvency Proceedings; (b) netting intercompany claims away from the
Peruvian Opcos to protect the cash proceeds available for creditor distributions; (c) commencing
the sale process for the CFGI Equity Interests; and (d) obtaining liquidity through the Non-Core
Asset sales and funding from the Peruvian Opcos. Id. Indeed, the Creditor Plan Proponents do not
contest that Mr. Brandt is entitled to reasonable compensation in accordance with sections 326(a)
and 330 of the Bankruptcy Code for the work he did in the early stages of his tenure. Id. ¶ 3. The
principal issue that they have with the Fee Application is with respect to the Trustee’s actions after
he stabilized the operations of the Peruvian Business. They contend that the $25 million Proposed
Commission far exceeds what is reasonable based upon the events that transpired during that
period. Id.
The Creditor Plan Proponents complain first that the number of hours that the Trustee billed
is excessive. In substance, they question whether he actually worked 13,667 hours over the nearly
five-year period serving as the chapter 11 trustee of CFG Peru, including nearly an average of
3,400 hours per year between 2017 and 2019. Obj. ¶ 40. They note that the Trustee spent 1.86 times
the total hours billed in the aggregate throughout the case by the six Senior Managing Directors
and Managing Directors employed by DSI as Mr. Brandt’s financial advisors throughout the case.
Id.75 They say that they are “particularly concerned with the aggregate time Mr. Brandt alleges he
spent administering these cases while he concurrently served as the chapter 11 trustee of the cases
styled In re San Luis and Rio Grande R.R., Inc., et al., No. 19-18905 (Bankr. D. Col.) (the ‘San
75 	See Thirteenth Interim and Final Fee Application of Development Specialists, Inc. for Compensation for Services
Rendered and Reimbursement of Expenses as Accountant to the Chapter 11 Trustee for (I) the Thirteenth Interim
Period from November 1, 2020 Through and Including June 10, 2021 and (II) the Entire Case Period from November
10, 2016 Through and Including June 10, 2021, ECF No. 2663 at A-12 to A-13 (stating that DSI’s Senior Managing
Directors and Directors billed a combined total of 7,330.4 hours during Mr. Brandt’s tenure as Trustee).
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Luis Cases’).” Id. They assert that in 2020, the Trustee billed 1,949 hours in this case and an
additional 1,725 hours in the San Luis Cases—a total of nearly 3,675 hours in 2020. Id.76 The
Creditor Plan Proponents say that “something is amiss” because this would imply that in 2020,
solely in respect of CFG Peru’s case and the San Luis Cases, Mr. Brandt worked on average over
ten hours every day, for 365 days, or nearly fourteen hours per day, excluding weekends and
holidays. Id. They also note that, during this period, the Trustee took more than sixty international
business trips for which he did not bill non-working travel time, and that he participated in “a lot”
of speaking engagements during the course of this case. Id. (citing Brandt Dep. at 12:17-19).77
The Creditor Plan Proponents also assert that by 2018, it was clear that the Trustee’s sale
process was doomed to fail. They maintain that, given the way in which the sales process dragged
out, there is no rational explanation for Mr. Brandt’s refusal to adapt to changed circumstances,
engage with key creditors, and abandon his strategy to find a cash buyer for the CFGI Equity
Interests. Obj. ¶ 4. They complain that in the three years after the Ad Hoc Group first proposed an
alternative path forward in 2018, Mr. Brandt billed a total of approximately $5.6 million for 6,512
hours of work, some of which he spent fighting a creditor-backed restructuring process. They
assert that the Court should determine the portion, if any, of those fees that represents work
“necessary,” “beneficial,” or “commensurate” to the ultimate outcome achieved here—an
equitization of debt at substantial losses to creditors. Id. ¶ 40. They also assert that the Trustee’s
alleged unwillingness to change course ultimately imposed significant unnecessary costs on CFG
Peru’s estate and its creditors. They contend that CFG Peru incurred more than $40 million in
professional fees (exclusive of any ultimate trustee commission) through June 2021, and that
76 	Copies of the fee applications filed by Mr. Brandt in the San Luis Cases are annexed as Exhibit F to the Objection.
77 	“Brandt Dep.” refers to the transcript of the November 5, 2021, deposition of Mr. Brandt taken by the Creditor
Plan Proponents. It is annexed as Exhibit B to the Objection.
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millions of dollars in professional fees and expenses were incurred after creditors began to demand
a course correction. Id. ¶ 4. They also maintain that because CFG Peru is a corporate shell with no
hard assets, the delay (and its attendant professional fee burn) caused the estate to fall deeper into
debt to its Peruvian affiliates, which had provided an interest-bearing line of credit to fund estate
administrative costs. Id.
The Trustee defends the amount of time he worked on this case by citing his mandate from
the Court to protect the Debtors’ “crown jewels” and only considerable assets—the Peruvian
Opcos. He contends that for five years, he operated CFG Peru and its sprawling subsidiaries and
assets in a manner equivalent to the CEO of an international enterprise. Fee Application at 53. He
contends that doing so necessitated constant, nearly round-the-clock work from the day he was
appointed Trustee, as he could not simply be a passive shareholder awaiting an “as-is” purchaser
for CFG Peru’s equity interests in subsidiaries that were embroiled in their own Peruvian
Insolvency Proceedings. Id. He further contends that his efforts to preserve and reorganize the
Peruvian Business—work that required him to organize and attend a bevy of world-wide meetings
and personally oversee an international web of managers and businesses—were necessary to
preserve and maximize the value of such assets for the benefit of creditors, including those
creditors of the Peruvian Opcos who sought the appointment of a chapter 11 trustee specifically to
protect the Peruvian Opcos. See id. at 31, 53.
In analyzing the reasonableness of the fee request, the Court considers whether the actions
that the Trustee took in furtherance of his appointment were reasonable at the time that he took
them. See In re Brous, 370 B.R. at 570 (“A decision reasonable at first may turn out wrong in the
end. The test is an objective one, and considers ‘what services a reasonable lawyer or legal firm
would have performed in the same circumstances.’” (quoting In re Ames Dep’t Stores, Inc., 76
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F.3d 66, 72 (2d Cir. 1996))). The Trustee’s detailed time records reflect that, during his tenure, he
worked on this case virtually every day, including weekends and holidays. It is plain from the
events that have transpired over the course of the Chapter 11 Cases, and from the hours that the
Trustee has recorded in his time records (which this Court credits), that throughout his tenure, he
devoted vast amounts of time to the oversight of the operations of the Peruvian Opcos. As Trustee,
Mr. Brandt had full responsibility for CFG Peru and the operation of its assets—the Peruvian
Opcos. That presented multiple challenges. First, prior to his appointment, the Ng Family—as
equity owners—controlled the operation of the Peruvian Opcos. They were active “hands-on”
shareholders who acted as “general managers” of the Peruvian Opcos.78 Through the Trustee
Motion, the Creditor Plan Proponents sought to oust the Ng Family from that position of authority
and insert a fiduciary to assume oversight control of the Peruvian Opcos. With the appointment of
the Trustee (over the objection of the Ng Family), they got what they asked for: as the record
reflects, and as discussed above, that the Trustee spent the time necessary to become expert on the
operation of the Peruvian Business and, thereafter, to rehabilitate and grow the business. Through
78 	At the evidentiary hearing that preceded this Court’s ruling on the Motion to Appoint Trustee, the Court heard
the following testimony from Francisco Paniagua:
Q. 	And Mr. Paniagua, members of the Ng family are also general managers at the fishmeal
companies, right?
A. 	Yes.
Q. 	And you and Mr. Tirado coordinate with members of the Ng family regarding the operation of
the fishmeal companies, right?
A. 	Yes.
Transcript Regarding Hearing Held on August 30, 2016, ECF No. 159 at 275:8-14.
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his “hands on” approach, he effectively acted as the CEO of the Peruvian Opcos.79 Moreover, the
Trustee has demonstrated that there was good reason for him to spend the time and effort to
develop a sound working relationship with the Ng Family. Through their equity interests, the Ng
Family controlled entities in the Pacific Andes Group corporate structure, like PAIH and PARD,
that indirectly held governance rights in CFG Peru. A number of the actions that the Trustee took
on behalf of CFG Peru and the Peruvian Opcos required shareholder approval. He was able to
obtain the requisite consents, in part due to the relationship he developed with the Ng Family. Mr.
Brandt also needed to develop a working relationship with the manager of the Peruvian Opcos and
with local civic officials with oversight responsibility for entities operating in the Peruvian fishing
industry, like the Peruvian Opcos. Finally, the Peruvian Business is substantial. As noted, it
employs approximately 2,800 people (2,400 in Peru), and its operating assets include sixty-six
fishing vessels and ten plants located in eight towns and villages in Peru. See First Day
Decl. ¶ 37, 52. It was also in poor financial shape when Mr. Brandt was appointed Trustee. The
79 	For example, Mr. Brandt’s undisputed testimony is that he operated the Peruvian Opcos as their effective CEO
and made the decisions that determined salaries and bonuses, sales of non-core assets, resolution of operational
disputes, and budgets that determined operations impacting vendors:
A 	. . . I gave orders and instructions and budgets as to what would be paid. I ran this company, so,
ultimately, these decisions rest on my desk, yes.
Q 	Were you a manager or general manager of any non-debtor entities in the group?
A 	I was effectively the CEO. I replaced the people who had been managing the larger business
from Hong Kong. The local managers in Peru had reported to Hong Kong both on accounting and
on managerial and I replaced that.
Q 	So what supervisory authority did you exercise over payroll at subsidiary entities?
A 	Total. I sat with the payroll and did a review every year. I did all the adjustments. I gave out
the bonuses. They were all run past me. My decisional authority as to payroll between both the
union and non-union employees and the employee bonuses was solely [sic].
Brandt Dep. at 114:5-23.
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record shows that during his tenure, Mr. Brandt spent the time, and expended the effort, necessary
to stabilize and rehabilitate the business.
The record is clear that throughout his tenure, Mr. Brandt acted “as the fiduciary for the
estate. He [was] the estate’s chief executive officer and its chief financial officer with . . . full
responsibility for the assets and affairs of the estate, a responsibility that he [could not]
delegate.” Connolly v. Harris Tr. Co. (In re Miniscribe Corp.), 241 B.R. 729, 749 (Bankr. Colo.
1999); see also In re Cardinal Indus., 151 B.R. 843, 845 (Bankr. S.D. Ohio 1993) (noting that the
nature of the chapter 11 trustee’s “services encompassed the role of a chief executive officer. He
also had the fiduciary duties of a trustee under the Bankruptcy Code.”); Wall v. Wilson (In re
Missionary Baptist Found.), 77 B.R. 552, 554 (Bankr. N.D. Tex. 1987) (“the Trustee was not
engaged in a liquidation, but rather a reorganization and continuing operation of [an] [on]going
business. The Trustee occupies the position of a chief executive officer of a business which
requires a myriad of items over the course of the business day.”). Moreover, Mr. Brandt’s time
spent properly includes matters such as administration, personnel and human resources, strategy
and other such tasks that would not appear on a legal bill. See In re Greenley Energy Holdings,
Inc., 102 B.R. 400, 405 (E.D. Pa. 1989) (suggesting that trustees need not keep billing records
given the significant difference in their tasks versus an attorney).
The Court finds that Mr. Brandt has demonstrated that his mandate as Trustee necessitated
the monumental hours of time he spent on this case—practically from the day he was appointed,
including on weekends and holidays. See, e.g., Brandt Decl. ¶ 13 (“preservation of the value of the
Peruvian Opcos required immediate and delicate action . . . . [Such action included] spending
the 2016 Thanksgiving holiday in Peru laying the groundwork.”). In reviewing the Trustee’s time
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records,80 the Court finds that the Trustee exercised appropriate billing judgment, delegated work
to DSI as necessary,81 and otherwise has demonstrated that the tasks he performed required the
around-the-clock commitment he assumed as Trustee over more than half a decade. The Court
finds that the Trustee performed those tasks within a reasonable amount of time commensurate
with the complexity, importance and nature of the particular problems, issues, or tasks addressed.
As set forth in detail above, in addition to operating the Peruvian Business, these tasks included,
among other things, (i) resolving the Peruvian Insolvency Proceedings and the chapter 15
Recognition Petitions filed herein, Brandt Decl. ¶¶ 36-42; (ii) establishing a process to sell the
Peruvian 	Opcos’ 	Non-Core 	Assets, 	id. 	¶¶ 64-70; (iii) negotiating the 	Netting Agreement,
id. ¶¶ 71-75; (iv) negotiating and resolving proofs of claim filed against CFG Peru, id.; and
(v) coordinating the mediation of the Intercompany Disputes, the FTI Hong Kong Litigation and
the HSBC-HK/Trustee Litigation. Id. ¶¶ 84-85. The fact that the Trustee failed to locate a cash
buyer for the CFGI Equity Interests does not detract from the work he did to market the assets and
to restore and maximize the value of the Peruvian Business. The Trustee performed this work
professionally and did so in the unique context of facing a mandate from this Court to preserve
and enhance the value of the Debtors’ non-debtor “crown jewels”—the Peruvian Opcos—a task
that entailed serving as the de facto CEO of an enterprise with employees and operations that
80 	Throughout the course of his tenure, the Chapter 11 Trustee regularly provided in-court status reports on all
aspects of these cases generally, and particularly with regard to the operation of the Peruvian Business and the process
for marketing and selling the CFGI Equity Interests. Moreover, as described herein, the Trustee frequently sought
relief of this Court in connection with matters relevant to the case. The time records comprise approximately 5,218
pages. The Court has not reviewed every page of the time records. Rather, it reviewed what it believes to be a
representative sample of the records. The Court finds that review of the time records, coupled with the Trustee’s
presentations to the Court, have provided the Court with a very clear picture of the Trustee’s efforts during these cases
and the benefits derived by the estate from those efforts.
81 	There is nothing odd about the fact that the Trustee spent far more time addressing his fiduciary duties as Trustee
of CFG Peru than the senior DSI personnel did in supporting his efforts.
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stretched from Hong Kong to Peru. See, e.g., Brandt Dep., 114:4-23; 127:16-23. The Court finds
that overseeing and performing this work, and the context in which Mr. Brandt did so, necessitated
the vast hours Mr. Brandt accumulated as Trustee.
The Creditor Plan Proponents also focus on the CFG Peru Plan confirmation process and
contend that since they first proposed an alternative path forward in 2018 (i.e., a restructuring for
the Debtors that did not entail a sale), Mr. Brandt fought the proposal, including after it evolved
into the proposed reorganization plan. See Obj. ¶¶ 25, 40. They note that on April 14, 2021, the
Trustee filed an objection to Disclosure Statement Motion.82 Pursuant to the Disclosure Statement
Objection, Mr. Brandt sought a unilateral two-month extension of the plan confirmation schedule
to permit him to restart the marketing process. The next day, April 15, 2021, Mr. Brandt filed a
new bidding procedures motion.83 The Creditor Plan Proponents say that those actions were
“counterproductive,” and that Mr. Brandt obstructed confirmation of the CFG Peru Plan. Obj. ¶ 26.
The Court attaches no weight to those complaints. Ultimately, the Creditor Plan Proponents agreed
to a process that afforded the Trustee an opportunity to find a cash buyer for the business without
extending the proposed confirmation schedule. See Apr. 21, 2021 Hr’g Tr. at 55:4-13 (“we agree
with the process that was laid out [i.e., whereby the Trustee will inform the Court if it obtained a
qualified bid to sell the Peruvian Opcos] . . . . [I]f Mr. Brandt is successful in finding a bidder that
can pay us, . . . in full in cash . . . we’re interested in supporting that[.]”). Moreover, the Chapter
11 Trustee did not “obstruct” confirmation of the plan. The Trustee opposed certain terms of the
plan. To that end, the Trustee expressed concerns about (i) the release that the Creditor Plan
82 	Chapter 11 Trustee’s Limited Objection to the Motion of Movants for Entry of an Order Approving (I) the
Adequacy of the Disclosure Statement; (II) Solicitation and Notice Procedures; (III) Form of Ballots and Notices in
Connection Therewith; and (IV) Certain Dates With Respect Thereto, ECF No. 2401 (the “Disclosure Statement
Objection”).
83 	Chapter 11 Trustee’s Emergency Motion for an Order (I) Approving Bidding Procedures, (II) Approving the
Form and Manner of Notice Thereof, and (III) Granting Related Relief, ECF No. 2409.
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Proponents gave to the Ng Family, and (ii) plan terms that left non-consenting creditors able to
pursue their rights in a manner that, in the Trustee’s estimate, could disrupt the plan. Reply at 9.
He also expressed his concerns about the wisdom of funding an interim distribution in advance of
confirmation. Id. The Court declines to discount the number of hours underlying the Fee
Application. The Court finds the 13,667 hours billed by Mr. Brandt to be reasonable, necessary to
the administration of the Debtor’s estate, and commensurate with the complexity, importance, and
nature of the particular problems, issues, or tasks that he addressed during his tenure.
The second and sixth prongs applied in assessing the reasonableness of the Trustee’s fee
under section 330(a)(3) are related. Section 330(a)(3)(B) addresses “the rates charged for such
services,” and section 330(a)(F) addresses “whether the compensation is reasonable based on the
customary compensation charged by comparably skilled practitioners in cases other than cases
under this title.” Pursuant to those provisions, in calculating the lodestar amount, the Court must
assess whether the Trustee’s hourly rate is “in line with those [rates] prevailing in the community
for similar services by [professionals] of reasonably comparable skill, experience, and reputation.”
Nisselson v. Empyrean Inv. Fund, L.P. (In re MarketXT Holdings Corp.), No. 04-12078,
2006 WL 2583644, 	at 	*4 	(Bankr. 	S.D.N.Y. 	July 	21, 	2006) 	(quoting 	Blum 	v. 	Stenson,
465 U.S. 886, 896 n.11 (1984)). The Trustee’s hourly rate has varied over his five years—six
calendar years—on this case, from $695/hour in 2016, to $875/hour in 2021. Fee Application at
66. The Trustee has not been paid any compensation at any time in this case (other than limited
expense reimbursement). He calculates his lodestar based on the rate in effect in 2021—$875 per
hour. Id. at 10. The Creditor Plan Proponents assert that even assuming the reasonableness of each
of the 13,667 hours that the Trustee worked, the proposed lodestar amount reflects a retroactive
and entirely unprecedented change to Mr. Brandt’s billing rate—which was set at $695 per hour
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in 2016, when his engagement began—to his 2021 billing rate of $875 per hour. Obj. ¶ 6. Thus,
he has applied his 2021 billing rate to every hour he has worked in these cases, rather than the rate
in effect when the services were rendered. It is undisputed that the rate change alone increases the
purported lodestar amount by nearly $1.1 million, which in turn increases the Proposed
Commission by over $2.2 million using the proposed 2.09x “multiplier.” Id. ¶ 6.
As part of its business plan, DSI sets the rates of its professional—including Mr. Brandt—
that permit it to remain competitive for middle-market restructurings. In this case, Mr. Brandt set
his hourly rate in accordance with DSI’s hourly billing rates. See Brandt Decl. ¶¶ 8, 92. In arguing
that his $875/hour rate is more than “reasonable,” the Trustee cites to three bankruptcy cases in
the Southern District of New York in which the hourly rates charged by the court-appointed
chapter 11 trustees (and their counsel) dwarf the $875/hour rate that the Trustee asks the Court to
apply, even though many of the timekeepers at those rates have fewer years of experience in
restructuring than the Trustee. See Fee Application at 68-69. The Trustee makes those comparisons
to demonstrate that his current hourly rate is more than reasonable in relation to comparable market
rates and is the appropriate rate for calculation of his lodestar amount. Id. The Court finds that the
Trustee’s standard billing rates over the course of his tenure in this case are reasonable in relation
to comparable market rates and are the appropriate rates for calculation of his lodestar amount. See
In re McKenna, 93 B.R. 238, 239 n.1 (Bankr. E.D. Cal. 1988) (noting that “when [a trustee] seeks
more than [a] standard billing rate, there is a ‘strong presumption’ that a fee award at the attorney’s
standard billing rate at or near the time services are rendered affords reasonable compensation”
(quoting In re Manoa Fin. Co., 853 F.2d 687, 692 (9th Cir. 1988))).
As noted, at the outset of his tenure, the Trustee agreed with the U.S. Trustee not to seek
interim compensation. As such, the Trustee has not been paid any compensation in these cases. He
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asserts that “[i]t is precisely in circumstances such as these” that courts generally, and the Second
Circuit in particular, have applied a trustee’s current rate in the lodestar calculation for all years of
service. Fee Application 66-67. As support, the Trustee cites to Missouri v. Jenkins ex rel. Agyei,
491 U.S. 274 (1989), and its progeny. In Jenkins, the Supreme Court reasoned that an award of
attorney’s fees under the Civil Rights Attorney’s Fees Award Act, 42 U.S.C. § 1988, could be
appropriately enhanced “whether by the application of current rather than historic hourly rates or
otherwise” in order to compensate an attorney for the “delay in payment”—i.e., the gap between
when services are rendered and paid for—of awards under the statute.84 491 U.S. at 283-84. As
the Creditor Plan Proponents contend, the civil rights context is inapplicable on the facts here and,
indeed, to the bankruptcy context more generally. Obj. ¶ 44. That is because the risks of
non-payment are far greater in the civil rights litigation context than in chapter 11 because a civil
rights attorney’s compensation is wholly dependent upon litigating a claim to judgment or settling
a dispute. See Jenkins, 491 U.S. at 282 (noting that when “entitlement to attorney’s fees depends
on success, [a plaintiff’s] lawyers are not paid until a favorable decision finally eventuates, which
may be years later” (quoting Pennsylvania v. Del. Valley Citizens’ Council, 483 U.S. 711, 716
(1987))). In contrast, trustees have the option to receive payment on an interim basis, before a
contested matter is resolved, a transaction closes, or the trustee monetizes other property of the
estate. See 11 U.S.C. § 331. Moreover, as the Creditor Plan Proponents note, chapter 11 trustees
in the Southern District of New York routinely receive interim compensation.85 Moreover, Mr.
84 	The Civil Rights Attorney’s Fees Award Act provides that courts may award the “prevailing party . . . reasonable
attorney’s fees.” 42 U.S.C. § 1988(b). By use of the word “prevailing”, the statute makes clear that any award will be
made only at the conclusion of a litigation—potentially years after it commenced. See Jenkins, 491 U.S. at 283
(“Clearly, compensation received several years after the services were rendered—as it frequently is in complex civil
rights litigation—is not equivalent to the same dollar amount received reasonably promptly as the legal services are
performed, as would normally be the case with private billings.”).
85 	See, e.g., Order Authorizing Interim Compensation to the Trustee in Partial Satisfaction of His Reasonable
Compensation Under Section 326 of the Bankruptcy Code, In re Firestar Diamond, Inc., No. 18-10509 (Bankr.
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Brandt confirmed in his deposition that no creditor induced him not to file an interim application,
and that he did not revisit the U.S. Trustee’s expectation that he not seek interim compensation
until 2020—more than four years into his trusteeship. See Brandt Dep. 43:22-25.86 Mr. Brandt
relinquished that right pursuant to his agreement with the U.S. Trustee. That voluntary undertaking
is not akin to the express statutory requirement that fee awards under 42 U.S.C. § 1988 may not
occur until the conclusion of a litigation. See Jenkins, 491 U.S. at 283.87
S.D.N.Y. Dec. 21, 2018), ECF No. 648; Order Granting (I) Second Interim Application of Togut, Segal and Segal
LLP as Bankruptcy Counsel for the Chapter 11 Trustee for Allowance of Compensation for Services Rendered for the
Period July 1, 2016 Through September 30, 2018 and for Reimbursement of Expenses; (II) Second Interim Application
of Duff & Phelps, LLC as Accountant to the Chapter 11 Trustee for Allowance of Compensation for Services Rendered
for the Period July 1, 2016 Through September 30, 2018 and for Reimbursement of Expenses, and (III) Chapter 11
Trustee’s Report and First Interim Application for Allowance of Statutory Commission, In re TS Emp., Inc.,
No. 15-10243 (Bankr. S.D.N.Y. Dec. 20, 2018), ECF No. 307; First Interim Application of Corinne Ball, Chapter 11
Trustee, for Allowance of Compensation for Professional Services Rendered Through September 30, 2015, In re
SoundView Elite, No. 13-13098 (Bankr. S.D.N.Y. Dec. 14, 2015), ECF No. 922.
86 	In November 2020—four years after he was appointed—the Trustee sought reimbursement of his expenses
through February 29, 2020. See First Interim Application of the Chapter 11 Trustee, William A. Brandt, Jr., for
Reimbursement of Expenses for the Period From November 10, 2016 Through and Including February 29, 2020, ECF
No. 2231. The U.S. Trustee did not oppose the application. On December 20, 2020, the Court granted that application.
Order Granting Application for Reimbursement of Expenses, ECF No. 2272.
87 	The Trustee contends that Jenkins has been adopted by bankruptcy courts and, accordingly, the Court should
apply it here and approve calculating his lodestar using his current hourly rate. Fee Application at 67; Reply at 43. As
support, he cites to In re Com. Consortium of Cal., 135 B.R. 120 (Bankr. C.D. Cal. 1991) (“Commercial Consortium”);
In re Fall, 93 B.R. 1003 (Bankr. D. Ore. 1988) and In re D.C. Sullivan & Co., Inc., 69 B.R. 212 (Bankr. D. Mass.
1986). The court finds those cases to be distinguishable.
In Commercial Consortium, the Court applied Jenkins in awarding an interim payment of attorneys’ fees to
counsel to the chapter 7 trustee of an involuntary debtor whose principals did not cooperate with the chapter 7 trustee,
and whose only asset was a disputed claim under a fire insurance policy. 135 B.R. at 126-27. Four years after the
commencement of the case, the chapter 7 trustee settled the litigation in consideration for a payment of $273,000 by
the insurer to the estate. Id. at 121. At that point, counsel filed its interim fee application. In it, counsel requested it be
permitted to calculate the lodestar using its current billing rates. The U.S. Trustee objected to that aspect of the
application. The court overruled the objection. In awarding interim fees to counsel calculated at his current hourly
rate, the court reasoned:
Interim fee applications are supposed to help avoid undue delays in payment. When delay has
nevertheless occurred, counsel should not have to bear the full brunt of the resulting financial
impact. Therefore, this Court holds that use of current hourly rates should be permitted to
compensate counsel for unavoidable delay in allowance of fees.
Id. at 127. In so ruling, the court relied on In re Fall, and In re D.C. Sullivan & Co., Inc. In In re Fall, the court allowed
a fee enhancement in the form of retroactive adjustment to current rates for the long-unpaid chapter 7 trustee’s counsel
who eventually recovered substantial assets for the estate. 93 B.R. at 1010. In In re D.C. Sullivan & Co., Inc., the court
granted chapter 7 trustee’s counsel’s request for compensation at the current hourly rates rather than the rates charged
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For these reasons, the Court finds that a reasonable rate for the Trustee’s services in this
chapter 11 case is his hourly rate at the time he provided his services. This rate provides him with
reasonable compensation under section 330(a)(3) of the Bankruptcy Code when applied to the
hours billed as Trustee. Subtracting Mr. Brandt’s retroactive rate increase reduces the lodestar
applicable herein from $11,958,625.00 to $10,905,914.00 (the “Adjusted Lodestar”). See Obj.
¶ 41.
The Statutory Cap
A chapter 11 trustee’s compensation is calculated according to the monies the trustee
distributes to parties in interest. See 11 U.S.C. § 326(a). For Mr. Brandt, the application of
section 326(a) hinges primarily on whether the case involves an operating trustee or a liquidating
trustee, as the duties of a chapter 7 trustee differ materially from those of a chapter 11 trustee. Fee
Application at 72. In substance, he contends that in his capacity as an “operating trustee” he has
exercised control over multiple entities (i.e., CFG Peru and the Peruvian Opcos) and that he should
be compensated for the work required to operate those businesses. He maintains that he is entitled
to a commission for managing, preserving, and ultimately enhancing the value of the Peruvian
Business, for the benefit of the Debtors’ creditors, and that the disbursements to parties in interest
in the course of his operation of those business are properly considered within the Statutory Cap
in calculating the commission.
at the time the services were performed. The court reasoned that there had been a delay in payment “to a degree that
would not normally occur outside of the bankruptcy context, and seldom even in bankruptcy. The excess in current
hourly rates over rates charged in prior years is a justifiable compensating factor for this delay.” 69 B.R. at 218 (citing
Grendel’s Den, Inc. v. Larkin, 749 F.2d 945, 955 (1st Cir. 1984)).
Here, the Trustee did not file an interim fee request in deference to the U.S. Trustee’s request that he not do so.
His agreement not to seek interim compensation is not a basis to authorize him to bill his services at his 2021 hourly
rate.
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Mr. Brandt calculates the Statutory Cap with reference to two sources of disbursements
aggregating approximately $2.95 billion. The first source is the cash disbursements reflected on
the MOR Disbursements. Fee Application at 77. For the period of the Fee Application, the MOR
Disbursements total approximately $1.894 billion, consisting of approximately $48 million paid
by CFG Peru to its administrative creditors during the administration of its chapter 11 case (i.e.,
retained professionals and the U.S. Trustee), and $1.846 billion in disbursements by the Peruvian
Opcos to their creditors in the operation of the Peruvian Business. O’Malley Decl. ¶¶ 6, 9; see also
MOR June 2021. 88 The second source of disbursements is the equity and cash that the Trustee
turned over to the Plan Administrator and that was thereafter distributed to creditors under the
CFG Peru Plan. Fee Application at 82-83. The Trustee values the CFGI Equity Interests at $850
million,89 and he says that he turned over at least $211 million in cash to the Plan Administrator.
O’Malley Decl. ¶ 5. The Trustee asserts that, utilizing those figures, the Statutory Cap totals
approximately $88.6 million (i.e., 3% of $2.95 billion), which is well in excess of the $25 million
Proposed Commission. See id. ¶ 8.90
88 	Monthly Operating Report for June 2021, ECF No. 2614.
89 	In advocating that value, the Trustee cites to the declaration of Mr. Bradley submitted by the Creditor Plan
Proponents in support of the CFG Peru Plan. In it, Mr. Bradley states that for purposes of the plan only, the total
enterprise value of the CFGI Equity Interests would be approximately $850 million upon emergence. Declaration of
Bradley Jordan in Support of the Creditor Plan Proponents’ Chapter 11 Plan for CFG Peru Investments Pte. Ltd.
(Singapore), ECF No. 2542 (the “Jordan Confirmation Decl.”) ¶ 23.
90 	The Trustee explains that because the Statutory Cap essentially is calculated as 3% of the monies disbursed to
parties in interest, it will exceed $25 million if it is based on either the MOR Disbursements or the CFGI Equity
Interests (if valued at $850 million), and that adding the Trustee’s cash disbursements widens the gap such that the
Trustee’s requested commission is only 28.2% of the proposed Statutory Cap. See Fee Application at 66-68. Moreover,
according to the Trustee:
(i) The Statutory Cap calculated based upon the value of the CFGI Equity Interests, the Plan Cash
Payments (not including a reserve for the Trustee’s commission), and the $48 million that was
disbursed from CFG Peru’s accounts for obligations incurred during the Chapter 11 Cases, totals
approximately $33.3 million.
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The Creditor Plan Proponents assert that an “operating trustee” like Mr. Brandt is entitled
to no greater leeway in calculating the Statutory Cap than a liquidating trustee. Obj. ¶¶ 66-68. They
contend that. notwithstanding that the Trustee recorded the Peruvian Opcos’ disbursements to their
creditors among the MOR Disbursements, under the clear and unambiguous language of
section 326(a), he cannot credit them in calculating the Statutory Cap because they are not
disbursements “by the Trustee” and were not disbursed to “parties in interest,” as the Peruvian
Opcos’ trade creditors do not qualify as creditors in the Chapter 11 Cases. Id. ¶¶ 55-62. They argue
that the Trustee is not entitled to include any portion of the value of the CFGI Equity Interests in
the calculation of his commission because the Trustee did not sell the CFGI Equity Interests for
cash and distribute the cash proceeds to creditors, and that by definition, the equity that creditors
will receive under the CFG Peru Plan is not “moneys disbursed” as required by section 326(a). Id.
¶ 9. They also say that, in any event, the Trustee has failed to establish that the equity has any
value, let alone that it is worth $850 million. Id. ¶¶ 10-11.91 Finally, they assert that the Trustee
did not turn over $211 million in cash to the Plan Administrator. Id. ¶ 12. In sum, they argue that
at least approximately $2.87 billion of the Trustee’s approximately $2.95 billion in purported
creditor distributions are not creditable “moneys disbursed” under section 326(a). They say the
(ii) The Statutory Cap calculated based upon the value of all the MOR Disbursements and Plan Cash
Disbursements, but not upon the value of the CFGI Equity Interests, totals approximately $63.1
million.
O’Malley Decl. ¶¶ 9-11.
91 	They assert that the only “disbursements” made by Mr. Brandt of the CFGI Equity Interests came when he
abandoned the CFGI Equity Interests to CFG Peru’s estate in connection with the Plan’s confirmation hearing. They
argue that even assuming, arguendo, a debtor-to-debtor transfer is appropriately included in the Statutory Cap
calculation, Mr. Brandt has not independently valued the CFGI Equity Interests as of that date. Obj. ¶ 10 (citing Brandt
Dep. at 53:6-9). They say that at the time of his turnover, those interests were burdened by nearly $1.2 billion of
funded indebtedness and, therefore, were no doubt worthless. Id. ¶ 9.
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amount of “moneys disbursed” is limited to, at most, $98 million92 and, as such, the Statutory Cap
cannot exceed $2.96 million. Id. ¶ 13.
The Court considers those matters below.
Section 326(a) is derived from a similar provision in the Bankruptcy Act of 1898. which
included the identical concept of “moneys disbursed or turned over.” See H.R. Rep. No. 95-595,
at 327 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6283 (stating that section 326(a) “is derived
in part from section 48c of the [Bankruptcy Act of 1898]”). The few courts that have applied
section 326(a) (or the same language in its predecessor statute) to chapter 11 cases that involve
multiple entities under a trustee’s control have applied the term “moneys disbursed or turned over
in the case” in broad terms to include disbursements made by the business under its control. In In
re Toole, 294 F. 975, 976 (S.D.N.Y. 1920), the District Court broadly construed the phrase
“moneys disbursed or turned over” in Section 48c of the former Bankruptcy Act to allow
“compensation to trustees and receivers for all property properly administered by the bankruptcy
court, irrespective of whether it turns out to belong to the general estate or not,” as the phrase was
a “very broad provision.” 93 The Second Circuit followed Toole, in a pre-Bankruptcy Code case, to
hold that a trustee should not be barred from claiming a commission on a fund that was property
92 	They say that the $98 million consists of (i) approximately $48 million in disbursements from CFG Peru’s
accounts for obligations incurred during the Chapter 11 Cases (Obj. ¶ 8), and (ii) approximately $50 million distributed
to creditors under the CFG Peru Plan. Id. ¶ 12.
93 	In so construing the statute, the District Court explained that complex restructurings, such as the stockbroker firm
before it, require any receiver or trustee to provide:
great industry, capacity for detail, and unusual expenditure of time and energy. To deal with them
satisfactorily demands an experienced and able receiver and counsel. It is usually the case that the
amounts available for general creditors are far less than the moneys or securities which are
successfully reclaimed by third parties, and often they are negligible in amount as compared with
the so-called reclamation claims. If no compensation can be awarded, except commissions which
may be calculated upon the general estate, it is literally true that no competent person would wisely
accept the office of receiver or trustee of such an estate.
In re Toole, 294 F. at 976.
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of an insurance company, and not property of the estate, but which the trustee administered prior
to payment. See In re Dutcher Constr. Corp., 378 F.2d 866, 871-72 (2d Cir. 1967) (relying on
Toole in holding that, even though funds due to an insurance company never became property of
the estate, it “is not to say that the Trustee should not be allowed to recover the necessary expenses
of litigation or a commission for handling this fund”). Indeed, the case law is clear that property
of non-debtors and third parties will frequently be obtained, controlled, or impacted by a trustee’s
work in a manner that courts find appropriate for inclusion in such a calculation:
The statute [section 326(a)] plainly does not require that disbursed funds be
“property of the estate.” Some courts interpreting this language agree and
conclude that “[t]he base is not limited to distributions of property of the
estate, as a trustee may disburse monies to parties in interest, within the
meaning of Section 326(a) without in the process having actually distributed
property of the estate.”
In re Robert Plan Corp., 493 B.R. 674, 686 (Bankr. E.D.N.Y. 2012) (second alteration in original)
(quoting In re N. Am. Oil & Gas, Inc., 130 B.R. 473, 478 (Bankr. W.D. Tex. 1990)); see also In
re Orient River Inv., Ltd., 133 B.R. 729, 732 (Bankr. E.D. Pa. 1991) (noting that the Bankruptcy
Code’s uniform provisions for compensation of all trustees “requires bankruptcy courts to make
some allowances for operating trustees who perform their services diligently”).
The Peruvian Opcos constitute the most valuable assets of the Pacific Andes Group, but
neither entity is eligible to be a debtor herein. See Trustee Decision and Order at 8, 30. Nonetheless,
the Debtors’ desire to preserve the value of the assets and operations of those non-Debtors for the
benefit of all of the Debtors in the Chapter 11 Cases drove the Initial Debtors to commence the
Chapter 11 Cases. They sought to prevent a “fire sale” of the Peruvian Opcos to the prejudice of
the Debtors’ creditors. First Day Decl. ¶ 20 (“[T]he purpose of these chapter 11 cases is simple—
to provide the Debtors with a breathing spell in order to implement a restructuring of their
businesses and utilize the automatic stay to prevent creditors from forcing a fire sale [of the
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Peruvian Opcos], which would preclude structurally subordinated creditors and shareholders [i.e.,
the Initial Debtors’ creditors and shareholders] from realizing values.”). The Club Lender Parties
filed the Trustee Motion precisely because the Peruvian Opcos are outside of the scope of the
Chapter 11 Cases. They sought the appointment of a chapter 11 trustee in the Chapter 11 Cases
“to ensure independent fiduciary oversight” over the non-Debtor Opcos—which they could not
directly obtain over the Opcos—“to preserve the estates’ equity stakes in a lucrative fishery
business and processing plants in Peru operated by certain non-Debtor affiliates.” Club Lender
Parties’ Statement at 5. As previously noted, they got what they asked for.
Although CFG Peru had neither operations nor material funds of its own, the Court
appointed a trustee for CFG Peru because it is the 100% direct and indirect owner of the Peruvian
Opcos, and pursuant to applicable corporate law, and with the cooperation of the Ng Family, the
trustee could exert control over those non-Debtor entities. Trustee Decision and Order at 48-49.
The Court found that a trustee appointed for CFG Peru would be in a position “to evaluate the
optimal way to maximize the value of the Peruvian Business and to determine how to realize that
value for the benefit of the Debtors’ estates and creditors.” Id. at 48. The Court tasked the Trustee
with the job of protecting, preserving, and enhancing the value of the non-debtor Peruvian Opcos
for the benefit of all creditors, whether they were creditors of CFG Peru, or other entities within
the CFG Peru corporate enterprise. Id. at 48-49 (“It will be incumbent upon the appointed trustee,
in furtherance of his or her fiduciary duties, without limitation, to assess the highest and best use
of those assets in the context of the resolution of these Chapter 11 cases and the means for the
Debtors to realize maximum benefits from those assets.”). The Court’s mandate to the Trustee did
not permit him simply to retain the stock of the Peruvian Opcos as a passive shareholder. It required
the Trustee to adopt the “hands on” approach to the operation of the Peruvian Opcos that he
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brought to these cases. Throughout his tenure, the Trustee regularly appeared in Court to provide
detailed reports on the status of his work, including, particularly, updates on the operations of the
Peruvian Opcos. In those reports, the Trustee highlighted his oversight of the day-to-day operations
of the Peruvian Opcos. No one objected to the level of control that he asserted over the Peruvian
Business by his management of the operations of the Peruvian Opcos, or to the MOR
Disbursements reflected in the MORs.
The record is clear that, essentially from the day he was appointed, the Trustee asserted
hands-on control over the operations of the Peruvian Business, including the Opcos, and that
through his efforts, the Trustee protected, preserved, and enhanced the value of the Peruvian Opcos
for the benefit of the Opcos’ estates and creditors. The Court finds that to properly compensate the
Trustee for the work he was required to do in operating the Peruvian Opcos, it will calculate the
Statutory Cap based on the MOR Disbursements during the Fee Application Period by CFG Peru
and the Peruvian Opcos—which constitute the businesses under his control. See In re Orient River
Inv., Ltd., 133 B.R. at 729 (“We hold that, considering the extensive scope of duties which
operating trustees perform for debtors’ estates, beyond that of trustees who merely liquidate
debtors’ estates, operating costs are properly included in the computation.”); In re N. Am. Oil &
Gas, Inc., 130 B.R. at 478-79 (holding that trustee’s disbursements to “third party operators”
operating the debtor’s wells, and other “administrative expenses” all qualified as disbursements
under section 326); In re Ades, No. 00-11733, 2007 Bankr. LEXIS 5122, *26-27 (Bankr. D. Nev.
Sept. 4, 2007) (following Orient River to calculate cap “including operating expenses during the
Chapter 11 proceeding”).94 To that end, the case of In re MACCO Props., Inc., 540 B.R. 793
(Bankr. W.D. Okla. 2015) (“MACCO Props.”), is consistent with that precedent and is instructive.
94 	In reaching this determination, the Court notes that sections 704(a) and 1106(a) of the Bankruptcy Code
enumerate the duties of chapter 7 and chapter 11 trustees, respectively. As now relevant, section 704(a)(1) mandates
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In MACCO Props., Michael Deeba (“Mr. Deeba”) was appointed as chapter 11 trustee for
the estate of MACCO Properties, Inc. (“MACCO”). 540 B.R. at 800. MACCO was a property
acquisition and management company that was the sole or controlling member and/or manager of
approximately thirty limited liability companies that MACCO created as “single-purpose entities”
at the request of lenders (the “SPEs”). Id. at 801. Each such SPE owned a multifamily apartment
complex or commercial real estate (i.e., income-producing properties). Id. Historically, MACCO
and its subsidiary SPEs acquired properties that they managed for a period and then sold them for
a profit. MACCO owned 100% of the interests in most of the SPEs and a 99% interest in the
remaining SPEs. Id. at 801-02. MACCO’s guaranty of $60 million of the SPEs’ debts represented
the majority of MACCO’s unsecured debt, although it identified vendors, service providers, and
utilities as unsecured creditors. In addition, as of the petition date, several contract and/or tort
claims against MACCO were in various stages of litigation, thus constituting disputed and
unliquidated unsecured claims. Id. at 802.
Five years after his appointment, Mr. Deeba liquidated MACCO’s operations. In doing so,
he provided unsecured creditors a less-than-full recovery, and no recovery for the equity. The court
attributed this outcome largely to the equity holders’ “self-inflicted” conduct. Id. at 801. In his
that a chapter 7 trustee “collect and reduce to money the property of the estate for which such trustee serves, and close
such estate as expeditiously as is compatible with the best interests of parties in interest.” 11 U.S.C. § 704(a)(1). In
contrast, although section 1106(a) requires a Chapter 11 trustee to perform some duties listed in section 704(a), it
specifically excludes subsection (a)(1) from the list. See 11 U.S.C. § 1106(a). The Creditor Plan Proponents say that
the Trustee contends that the Statutory Cap calculation should include MOR Disbursements by the non-debtor
Peruvian Opcos based on his view that trustees that run operating businesses are entitled to greater compensation than
trustees that merely liquidate assets. Obj. ¶ 66. There is no support for that position in section 326(a) since it “makes
no special provisions for compensation for Chapter 11 trustees, even though the function of the trustee in Chapter 11
is undeniably, and intentionally, different from that of a Chapter 7 trustee.” In re Swenning, No. 15-11408, 2017 WL
1379349, at *5 (Bankr. N.D. Okla. Apr. 14, 2017) (quoting 5 N ORTON BANKR . L. & P RAC . 3d § 99:28). But the
Creditor Plan Proponents misconstrue the Trustee’s argument. He does not contend that he is entitled to “greater
compensation” merely because he is an “operating trustee.” Rather, he maintains that the Statutory Cap calculation
should include MOR Disbursements by the non-debtor Peruvian Opcos to compensate him for the work he was
required to perform to operate the Peruvian Business in the Chapter 11 Cases. Reply at 29. The Court credits that
position.
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final fee application, Mr. Deeba requested a commission in the full amount of the Statutory Cap,
calculated based on all distributions made by the MACCO parent and subsidiary SPEs. The
debtor’s equity holders argued that disbursements by the subsidiaries fell outside the scope of
section 326(a), because Mr. Deeba was not appointed as trustee for the non-debtor entities.
Id. at 848. The court disagreed and ruled in favor of the trustee, reasoning that:
. . . maintaining the businesses of all debtor and non-debtor SPEs, including
receiving and disbursing funds, was necessary to preserve the value of MACCO’s
estate. Trustee’s obligation to the MACCO enterprise required him to actively
oversee and direct the operations of dozens of large multi-family and business
properties, manage the demands of creditors, and determine how to realize from
each asset the best result for the estate. All funds flowing through the entire business
enterprise were managed and accounted for by Trustee. Again, Trustee rendered
significant services that can be compensated only by including SPE disbursements
in the Section 326 Base.
Id. (emphasis in original). The MACCO court also grounded its interpretation of the scope of the
section 326(a) on the fact that the operations of the subsidiary SPEs—most of which were not
debtors—benefited the parent and its creditors. Id. at 849 (“Disbursements that [Mr. Deeba] made
to creditors of MACCO’s subsidiaries with proceeds of the sales eliminated MACCO’s exposure
on its guarantees, and constituted valuable services to the MACCO estate”).95
95 	In Connolly v. Morreale (In re Morreale), 959 F.3d 1002 (10th Cir. 2020), Samuel Morreale owned the sole
membership interest in Morealle Hotels, LLC (“Hotels LLC”), which, in turn, owned two parcels of real property in
Denver, Colorado (the “Denver Property”). Mr. Morreale acted as Hotels LLC’s manager and personally guaranteed
certain loans that Hotels LLC obtained, which were secured by the Denver Property. See id. at 1004. In 2012, Hotels
LLC commenced a chapter 11 case. In 2013, Mr. Morreale commenced his own chapter 11 case that was later
converted to a case under chapter 7 of the Bankruptcy Code. Id. The U.S. Trustee appointed Mr. Connolly as the
chapter 7 trustee in that case. Id. As trustee, Mr. Connolly assumed Mr. Morreale’s membership interest in Hotels
LLC and appointed himself as its new manager. Id. Ultimately, the trustee caused Hotels LLC to liquidate the Denver
Properties. With the sale proceeds, the trustee caused Hotels LLC to satisfy all the claims of its creditors. With the
surplus funds, the trustee paid off 100% of the claims of the chapter 7 debtor. Id. at 1004-05. In support of his fee
application, the chapter 7 trustee asserted that the Statutory Cap included the funds paid to Hotel LLC’s creditors in
its chapter 11 case, as well as the funds distributed in the chapter 7 case. Id. The bankruptcy and district courts rejected
that contention and limited the trustee’s compensation to the services he performed in the chapter 7 case and calculated
the Statutory Cap solely upon the moneys he distributed in the chapter 7 case. See id. In affirming the lower courts,
the Tenth Circuit distinguished that case from MACCO. It noted that in MACCO, the bankruptcy court “allowed the
trustee to include in his section 326(a) base the moneys disbursed by special-purpose entities controlled by the debtor
and managed by the Chapter 11 trustee, some of which were also bankrupt,” but accorded the MACCO decision no
weight because “the court in Macco [sic] cited no statute or case law to support its decision to include those other
entities’ disbursements in the trustee’s § 326(a) base.” Id. at 1008-09.
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This case involves substantially identical considerations to MACCO Props. Like the
parent/manager in MACCO Props., the Trustee was appointed to administer a holding company,
where all value was found in operating subsidiaries not in bankruptcy. And like the cross-corporate
obligations in MACCO Props., CFG Peru was a guarantor on CFG Investment’s primary obligation
to the Noteholders, which exceeded $300 million on the Petition Date. Every disbursement made
by a Peruvian Opco inured to the benefit of their guarantor, CFG Peru, and properly constitutes a
disbursement of moneys under Section 326(a). Moreover, like Mr. Deeba, to fulfill his mandate as
CFG Peru’s chapter 11 trustee, Mr. Brandt was required to operate non-debtor entities—the
Peruvian Opcos. The Trustee did not leave operation of the Peruvian Opcos to the “discretion” of
others. As the Club Lenders requested in the Trustee Motion and the Court directed in granting the
motion, the Trustee asserted control over the Peruvian Business and replaced the Ng Family
members as the manager of that business. Through his efforts, the Trustee substantially enhanced
the value of the subsidiaries that reflect the value of the CFG Peru estate. To compensate him for
that work, the disbursements that were made to parties in interest in the course of a trustee’s
operation of the business are properly considered within the Statutory Cap calculation.96
The term “parties in interest” is not defined in the Bankruptcy Code, and the Second Circuit
has not provided direct guidance of the term’s meaning as it is used in section 326(a) of the
Bankruptcy Code. Under applicable law in this District, a person or entity is a party in interest if
96 	Moreover, it was abundantly clear in the Court’s decision granting the Trustee Motion that the Trustee would be
appointed as trustee for an entity that was entirely dependent upon Peruvian subsidiaries for cash. See Trustee Decision
and Order at 43 (“the CF Group debtors rely on the Peruvian Opcos for substantially all of their income, and any
income from the Peruvian Opcos is speculative and may not occur anytime soon due to the involuntary petitions
against the Peruvian Opcos in Peru. . . . This factor supports the appointment of a Chapter 11 trustee”). The term “CF
Group” is defined as “CFGL (the publicly traded holding company), Smart Group, Protein Trading, SPSA, CFG Peru
Singapore, CFIL, Growing Management, Chanery, Champion, Target Shipping, Fortress, CFGLPL, and Ocean
Expert.” Id. at 8 n.11. Several of these entities are also guarantors of the Peruvian Opcos’ debt and would benefit from
the Trustee’s restructuring and preservation of the Peruvian Opcos.
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“it has a sufficient interest in the outcome of the case that would require representation, or a
pecuniary interest that will be directly affected by the case.” In re Innkeepers Tr. USA, 448 B.R.
131, 141 (Bankr. S.D.N.Y. 2011) (“Innkeepers”) (citing In re Stone Barn Manhattan LLC, 405
B.R. 68, 74 (Bankr. S.D.N.Y. 2009)). The Creditor Plan Proponents assert that the disbursements
made to creditors of the Peruvian Opcos do not qualify as disbursements to “parties in interest”
under section 326(a) because the trade vendors in Peru and elsewhere have no pecuniary interest
in the case since they “did not file proofs of claim and/or have direct claims against CFG Peru.”
Obj. at 5.97
The Court disagrees because in making that argument, the Creditor Plan Proponents
overlook the fact that throughout these cases, the Court has treated the Club Lenders as “parties in
interest,” and appointed the Trustee for CFG Peru on the Club Lender Parties’ motion to protect
their interests in the Peruvian Opcos, even though they do not hold a claim against CFG Peru.98
97 	The Innkeepers court noted that “[c]ourts in this District . . . have limited ‘party in interest’ standing where a
party’s interest in the proceeding is not a direct one.” 448 B.R. at 141; see also In re Saint Vincent’s Cath. Med. Ctrs.
of N.Y., 429 B.R. 139, 149 (Bankr. S.D.N.Y. 2010) (stating that the “‘real party in interest’ is the one who[,] under the
applicable substantive law, has the legal right which is sought to be enforced or is the party entitled to bring suit”)
(quoting Roslyn Savings Bank v. Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571, 573 (2d Cir. 1983)). The
Creditor Plan Proponents liken the Trustee’s control of the Peruvian Opcos’ disbursements as payments to “creditors
of creditors” of CFG Peru. Obj. ¶ 60 (citing Innkeepers). However, Innkeepers is distinguishable. There, trust security
holders, which were effectively creditors of a creditor of the debtors, sought to be heard on various matters in the case.
The Innkeepers court held that a creditor of a creditor—while it has important issues at stake in a debtor’s bankruptcy
case—does not constitute a party in interest in chapter 11. See 448 B.R. at 144. However, the Peruvian Opcos are not
mere “creditors” of CFG Peru, they are its operating subsidiaries and its most valuable assets, and the Trustee properly
controlled disbursements made by the Peruvian Opcos and, in doing so, enhanced the value of the CFG Peru estate.
98 	Further, In October 2017, in enjoining the Club Lenders and others from filing any proceedings in Peru against
the Peruvian Opcos, the Court found that a claim against the Peruvian Opcos is a claim against CFG Peru by reason
of the entities’ identity of interest. See Motion of William A. Brandt, Jr., Chapter 11 Trustee for CFG Peru Investments
Pte. Ltd. (Singapore), Pursuant to 11 U.S.C. §§ 105(a), 362(a), and 541(a)(1), for Entry of an Order Confirming
Applicability of Automatic Stay to any Collection Actions Pursued in Peru by Holders of Club Facility and Senior
Notes Claims and by Debtor CFIL Against Peruvian Operating Companies, ECF No. 743 ¶ 31 (“Given the identity
of interest between CFG Peru and the Peruvian OpCos, attempts to assert claims against the Peruvian OpCos constitute
“[actions] to obtain possession of property of [CFG Peru’s] estate” for purposes of section 362(a)(3) and “the
commencement or continuation . . . of a proceeding against [CFG Peru]” for purposes of section 362(a)(1) of the
Bankruptcy Code.”); Order Granting Motion of William A. Brandt, Jr., Chapter 11 Trustee for CFG Peru Investments
Pte. Ltd. (Singapore), Pursuant to 11 U.S.C. §§ 105(a), 362(a), and 541(a)(1), for Entry of an Order Confirming
Applicability of Automatic Stay to any Collection Actions Pursued in Peru by Holders of Club Facility and Senior
Notes Claims and by Debtor CFIL Against Peruvian Operating Companies, ECF No. 809.
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Moreover, it has never been questioned that the Noteholders contingent guaranty rights against
CFG Peru were sufficient grounds for the Noteholders to appear in this case as “parties in interest.”
Every creditor of the Peruvian Opcos during the Trustee’s tenure had a contingent right under
Peruvian law to pursue any unpaid claim against any general manager of the Peruvian Opcos,
which included the Trustee acting in his official capacity, and which could have resulted in a claim
against CFG Peru.99 Thus, each vendor of the Peruvian Opcos had the same contingent guaranty
right of a Noteholder, except by operation of Peruvian law instead of by contract. Further, the CFG
Peru Plan demonstrates that certain of the creditors of the Peruvian Opcos had pecuniary interests
in the CFG Peru Chapter 11 Case. That is because they are treated as “Releasing Parties” under
the plan.100
The Creditor Plan Proponents cite In re Swenning, No. 15-11408, 2017 WL 1379349
(Bankr. N.D. Okla. Apr. 14, 2017), in support of their assertion that the requirement that
disbursements “by the trustee” pass through the trustee’s hands has also been applied to deny
compensation where the disbursements were made by subsidiaries of the estate rather than by the
trustee or the estate. Obj. ¶ 56. In that case, the bankruptcy court appointed a chapter 11 trustee for
99 	Article 190 of the Peruvian General Law of Companies provides that a general manager may be liable to third
parties, including creditors, “for the damages and losses procured by noncompliance with his obligations . . . .”
Peruvian General Law of Companies, Chapter III, Management, Article 190. In a closed stock company, the general
managers will also be responsible for irregularities arising from the functions that they exercise in replacement of the
board of directors. See id. art. 189 (translates as “the provisions on impediments and actions of responsibility of the
directors are applicable to the manager”); id. art. 247 (where a company does not have a board, all functions required
under Peruvian law are carried out by the general manager); id. art. 177 (the board, or managers, are responsible for
irregularities of their predecessors if they do not denounce them in writing).
100 	Under Article VII.K of the CFG Peru Plan, all persons or entities holding claims “that have been released” are
enjoined from taking any actions against the “Released Parties.” CFG Peru Plan art. VII.K. Article VII.H provides
that each “Releasing Party” releases against each “Released Party” all Claims against “CFG or any other Entity,”
including those arising from “the assertion or enforcement of rights and remedies against . . . the Peruvian Opcos.” Id.
art. VII.H. The definition of “Released Parties” includes “the Peruvian OpCos and their Related Parties.” See id. art. I,
¶ 126. In turn, the definitions of “Releasing Parties” and “Related Parties,” include the Peruvian Opcos and a large
body of their creditors, including their “employees, . . . managers, independent contractors, . . . professionals,
consultants, financial advisors, attorneys, [and] accountants . . . .” Id., art. I.A.125, 127.
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a debtor whose assets included his 100% interest in a professional corporation (the “PC”) that
provided medical services. In re Swenning, 2017 WL 1379349, at *5. After the Trustee was
appointed, the Debtor continued to operate the PC. The PC’s gross revenue “was disbursed to pay
the PC’s operating expenses, including Debtor’s salary.” Id. at *3. The Debtor and the PC’s payroll
agent—not the trustee—made those disbursements. Id. The trustee spent 122.4 hours working to
benefit the estate, with “most of the time devoted to general case administration and to negotiating
the terms of a consensual plan of reorganization.” Id. at *2. A reorganization plan was eventually
confirmed. Id. The trustee applied for compensation. Among other things, he asserted that in
calculating the Statutory Cap, the “moneys disbursed” in that case included the PC’s gross revenue
which the debtor disbursed to pay the PC’s operating expenses including the debtor’s salary.
Id. at *3. The court rejected that contention because the trustee did not take control of the debtor’s
PC and did not make decisions about how the business revenues would be paid out. See id. at *4.
The court noted that “it was the Debtor that directed payments to the PC’s trade creditors, contract
laborers, insurers, and others.” Id. In short, the court found that “the use of the funds appeared to
be left to Debtor’s discretion.” Id.
The Creditor Plan Proponents misplace their reliance on Swenning. It is distinguishable
because, in contrast to the trustee in Swenning, Mr. Brandt did not leave the operation of the Opcos
to the “discretion” of others. He replaced the Ng Family and took direct and ongoing control over
CFG Peru and the Opcos and, in doing so, preserved and enhanced the value of the subsidiaries
that reflect the value of the CFG Peru estate. Nor is it relevant that some of these disbursements
were ultimately made by an agent, such as a payroll company, as they were disbursements made
under the Trustee’s control and direction. See In re Tyczka, 287 B.R. 465, 469 (Bankr. E.D.
Mo. 2002) (“It is of no consequence that the disbursements of sale proceeds to the secured creditors
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and for expenses were actually made by the title company, rather than by Trustee. Trustee
authorized these disbursements through his participation in the closing process”); In re Reid,
251 B.R. 512, 518 (Bankr. W.D. Mo. 2000) (finding disbursement by third party pursuant to
instructions from trustee are included in cap).101 The Court includes the approximately $1.895
billion in MOR Disbursements for the period of the Fee Application in the calculation of the
Statutory Cap equal to approximately $57 million. On that basis, the cap dwarfs the Trustee’s
requested commission.
Under the terms of the CFG Peru Plan, the Trustee turned over the estate of CFG Peru to
the Plan Administrator, who effected a transaction that distributed the value of the CFG Peru estate
to Noteholders/Club Lenders as a mix of debt and the CFGI Equity Interests. The Bankruptcy
Code does not define the terms “money” or “disbursed” or the phrase “moneys disbursed,” used
in section 326(a). The Creditor Plan Proponents contend that in determining whether the equity
interests fall within the scope of section 326(a), the Court must apply the “plain and ordinary
meaning” of the terms used in the statute. See Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 69-70
(2011); Tamm v. U.S. Tr. (In re Hokulani Square, Inc.), 776 F.3d 1083, 1085 (9th Cir. 2015). They
maintain that the plain and ordinary meaning of “moneys” is money (i.e., cash, monetary currency,
a general medium of exchange used for trade) and does not encompass the much broader category
of “property” or a court’s determination of the value of property in money and, as such, the Court
should not consider the CFGI Equity Interests in calculating the Statutory Cap. Obj. ¶ 71. They
101 	In any event, it would be inequitable for the Trustee to have been appointed as trustee for the parent entity (as in
MACCO Props.), specifically tasked with protecting and preserving the value of the subsidiary and affiliate non-debtor
entities, and have been required to pay quarterly fees based on all “disbursements” by those subsidiary and non-debtor
entities yet be unable to claim compensation arising from those mandated tasks. A proper calculation of the statutory
cap must be based on the full scope of the Trustee’s mandate, including all MOR Disbursements made in fulfillment
of that mandate—whether they were disbursements made at the parent level (such as administrative expense claims
paid by CFG Peru), or at the subsidiary level (the Peruvian Opcos, and others, disclosed in the MORs). MACCO
Props., 540 B.R. at 848, 860. Were it any other way, “it is literally true that no competent person would wisely accept
the office of receiver or trustee of such an estate.” In re Toole, 294 F. at 976.
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assert that each of the circuit courts of appeals that have considered the issue has applied section
326(a) according to its ordinary meaning, distinguishing between cash and property that has not
been reduced to cash, and they rely on Hokulani Square and Staiano v. Cain (In re Lan Assocs. XI,
L.P.), 192 F.3d 109, 118 (3d Cir. 1999). In those cases, the Ninth and Third Circuits, respectively,
held that a credit bid under section 363(k) of the Bankruptcy Code did not constitute “moneys
disbursed” under section 326(a) of the Bankruptcy Code. See Hokulani Square, 776 F.3d at 1086
(“Taken together, this language seems to say that the trustee may collect fees only on those
transactions for which he pays interested parties (in this case, secured creditors) in some form of
generally accepted medium of exchange.”); Lan Assocs., 192 F.3d at 118 (court held that a credit
bid was not “moneys disbursed” under section 326(a) of the Bankruptcy Code, because the
statutory language is limited to “something generally accepted as a medium of exchange.”).
As set forth in the Restructuring Support Agreement, the equity interests paid out to
Noteholders and Club Lenders under the Plan “shall be freely transferable (subject at all times to
the tagalong rights and right of first offer described below).” 102 The $300 million in Plan Notes
granted to the Noteholders and Club Lenders are tradable in a transaction with “an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act . . . .”
Restructuring Support Agreement at 52. It is undisputed that, for the most part, the recipients of
these securities and notes are hedge funds and other investors who hold claims in this case because
they purchased them on the open market. Just as such investors know how to acquire notes and
securities of these types, they know how to sell them. Indeed, the investors who acquired bank
debt in this case and drove their own creditor-led plan would not have confirmed a plan that limits
their ability to sell those investments.
102 	CFG Peru Plan, Exhibit A (“Restructuring Support Agreement”) at 49.
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The Peruvian Opcos plainly are not encumbered assets that held no value for the CFG Peru
estate; rather, they are the sole meaningful value of the CFG Peru estate. The Noteholders/Club
Lenders are not secured creditors enforcing a lien against those assets. Every dollar of value that
exists in the Peruvian Opcos to be disbursed to Noteholders/Club Lenders is a product of the
Trustee’s efforts to “justifiably administer” those assets. And the value that he has restored in the
Peruvian Opcos is now being handed to Noteholders/Club Lenders in satisfaction of their
unsecured claims in the form of stock and notes, not abandoned as encumbered real property. As
such, the “credit bid” cases discussed above are not relevant to the calculation of the Statutory
Cap. See Lam Assocs., 192 F.3d at 119 (refusing to accept a credit bid for encumbered real property
as “moneys” disbursed under section 326(a)). Instead, the Court looks to those cases where the
value of an estate turned over by a trustee to prepetition debtors or to creditors is value that is
included in the calculation of the statutory cap. Fee Application at 83; see In re Toole, 294 F. at
977 (the court found that a receiver’s commission “ought to be calculated upon cash, as well as
upon the securities already turned over to claimants under orders of this court . . . [and]
commissions on the remaining securities when administered by the trustee.”); In re Lehrenkrauss,
16 F. Supp. 792, 793-94 (E.D.N.Y. 1936) (holding that the mortgages of a debtor turned over to
certificate holders are “moneys disbursed or turned over,” but requiring evidence of value); In re
Greenley Energy Holdings, Inc., 102 B.R. 400, 404 (E.D. Pa. 1989) (reversing bankruptcy court’s
denial of trustee fees, holding that the cap could include the value of contracts negotiated by the
trustee that provided the estate with certain future value, and including the value of guarantee
contracts turned over to creditors); In re N. Am. Oil & Gas, Inc., 130 B.R. at 479-80 n.15 (relying
on Greenley Energy for the proposition that property other than cash, such as “equity instruments,
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notes, or even assignments,” may be included in calculating the statutory cap where reducing such
assets to cash is not appropriate and cash value can be “easily and readily” quantified).103
In Lan Assocs., the Third Circuit held that the term “moneys” in section 326(a) is
“ambiguous,” overruling the lower court’s holding to the contrary. 192 F.3d at 116. The court did
not enforce a narrow definition of “moneys,” instead looking to legislative history to conclude
that:
despite . . . the ambiguity of the term “moneys,” we are persuaded by the
legislative history of § 326(a) and by the general policies underlying
bankruptcy administration that Congress did not intend to include credit
bids in the trustee’s compensation base.
Id. at 121. The Third Circuit did not hold that stocks or notes cannot qualify as “moneys.” Rather,
it cited In re Toole, for its holding on securities. Id. at 119. The court explained that it refused to
accept a credit bid for encumbered real property as “moneys” disbursed under section 326(a)
because “fully encumbered assets” such as real property “are unlikely to benefit the estate, and,
therefore, such assets are not likely to be justifiably administered.” Id. at 119.104 The Court finds
103 	Although the court in N. Am. Oil & Gas concluded that “unliquidated assets” turned over to the chapter 11 plan’s
liquidating agent could not be considered for calculation of the Statutory Cap, the court noted that it could be
appropriate to consider equity interests turned over to satisfy the claims of creditors:
In the rare case, distributions of property other than cash might be includable in the base, where the
distribution constitutes a liquidation of the estate and, for reasons having to do with the unique
factual posture of the case, actual conversion to cash is not appropriate. For example, a trustee might
in certain circumstances be called upon to distribute equity instruments, notes, or even assignments,
in satisfaction of outstanding claims against the estate. To the extent that these distributions can
easily and readily be quantified in money or money’s worth, the transactions could justifiably be
included in the base.
N. Am. Oil & Gas, 130 B.R. at 480 n.15 (citing In re Greenley Energy Holdings of Pennsylvania, Inc., 102 B.R. 400,
405 (E.D. Pa. 1989)).
104 	In an effort to distinguish the cases cited by the Trustee, the Creditor Plan Proponents assert that In re N. Am. Oil
& Gas, Inc. and In re Greenley Energy Holdings, Inc. have both been “overruled” or disapproved by Pritchard v. U.S.
Tr. (In re England), 153 F.3d 232, 237 (5th Cir. 1998). Obj. ¶ 73. There is no merit to that contention. In In re England,
the Fifth Circuit considered whether a chapter 7 trustee could receive a commission for abandoning real property to
creditors. In the course of listing cases that have accepted certain instruments such as securities as “moneys,” including
In re N. Am. Oil & Gas, In re Greenley, and In re Toole, the Fifth Circuit did not state that any of these cases were
wrongly decided, but rather that “[w]e disagree that the plain language of § 326(a) permits a different result from that
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that the value of the CFGI Equity Interests should be included in the calculation of the Statutory
Cap.
The Creditor Plan Proponents also assert that the value of the CFGI Equity Interests should
not be included in the calculation of the Statutory Cap because Mr. Brandt abandoned the CFGI
Equity Interests to CFG Peru’s estate in connection with the Plan’s confirmation hearing, and the
Plan Administrator, not Mr. Brandt, will distribute the CFGI Equity Interests and cash to creditors
on the Plan’s Effective Date. They contend that, pursuant to the plain language of the statute,
“debtor to debtor” distribution of the equity interests is excepted from the scope of section 326(a).
Obj. ¶¶ 9, 78, 81. The Court finds no merit to that contention. The case law is clear that the “debtor”
that is referenced in section 326(a) is neither a plan trustee or administrator, nor a liquidating agent,
nor any other recipient that is not the prepetition debtor. It is not even a reorganized debtor if that
debtor has administrative duties under a plan. See, e.g., In re N. Am. Oil & Gas, 130 B.R. at 479-80
(ruling that disbursements to a liquidating agent created under a confirmed plan of reorganization
are counted in calculating the trustee’s maximum compensation under section 326(a)); In re Acis
Cap. Mgmt., L.P., 603 B.R. 300, 306 (Bankr. N.D. Tex. 2019) (holding that disbursements made
to a reorganized debtor qualified for the section 326(a) statutory cap because the reorganized
debtor had “duties under the Plan similar to those performed by the liquidating agent” in N. Am.
Oil & Gas); In re Fin. Corp. of Am., 114 B.R. 221, 225-26 (B.A.P. 9th Cir. 1990) (noting that a
chapter 11 trustee’s “[t]urnovers made to a successor trustee should be included in the amount
used to calculate” a statutory cap, and that “failure to include turnovers under Section 326(a) would
reached by the bankruptcy court in this case” involving encumbered real property. In re England, 153 F.3d at 237.
That is not “overruled,” or even “disapproved.” It is a different fact scenario. Likewise, in In re Lan Assocs., the Third
Circuit discusses In re Greenley in a string cite with In re Sw. Media, Inc. v. Rau, F.2d 419, 423 (9th Cir. 1983),
concluding that “[w]e are not persuaded by these authorities’ adoption of the constructive disbursement theory . . .”
to include credit bid value from encumbered real property in the statutory cap. In re Lan Assocs., 192 F.3d at 118.
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result in an artificial and mechanical limitation on the trustee’s compensation”), aff’d, 946 F.2d
689 (9th Cir. 1991).
Finally, the Creditor Plan Proponents assert that, in any event, the value of the CFGI Equity
Interests should not be included in the calculation of the Statutory Cap because the Trustee relies
entirely on the Creditor Plan Proponents’ $850 million “total enterprise value” and provided no
evidence of the equity value of CFG Peru. Obj. ¶¶ 10, 79. In their Disclosure Statement, the
Creditor Plan Proponents described the $850 million as “the post-Effective Date total enterprise
value of the Peruvian OpCos.” In support of plan confirmation, Mr. Jordan stated that “the total
enterprise value of CFG Peru’s equity interests in CFGI would be approximately $850 million
upon emergence.” Jordan Plan Decl. ¶ 23. Under the CFG Peru Plan, on account of their more than
$1 billion of claims, the Club Lenders/Noteholders will receive the CFGI Equity Interests (through
NewCo), and $300 million in new notes along with participation rights in $150 million in a new
money facility.
The Trustee contends that under the Plan, the value of the CFGI Equity Interests is
$850 million, and that the Court should include that value in calculating the Statutory Cap. Fee
Application at 88. The Court finds no merit to that contention. It is clear that, as used in the
Disclosure Statement, the term “enterprise value” is not a proxy for the value of the CFGI Equity
Interests. Any such valuation of the CFGI Equity Interests in June 2021 would require
consideration of materially more factors than were used by the Creditor Plan Proponents in
connection with the terms and conditions of the Plan. That is because for these purposes, the
“enterprise value” is “the underlying value of the Peruvian operating companies.” Jordan Dep. at
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59:6-10.105 It is the value of a “pool of assets” without “taking a position on the capitalization of
the assets.” Id. at 22:2, 21-22. As the Creditor Plan Proponents explain:
to value the CFGI Equity Interests as of June 2021, one would need to factor in all
of the attendant risks and issues surrounding ownership of those shares as of June
2021, including the risk that the Effective Date and the transactions contemplated
by the Plan would not occur. The transactions contemplated by the Plan to occur
on or in connection with the Effective Date include: (a) the discharge of the Senior
Notes and the Club Facility; (b) the implementation of the Mediated Intercreditor
Settlement; (c) the implementation of the remaining transactions contemplated by
the Intercompany Netting Agreements; and (d) the implementation of the Global
Settlement Agreement with the Other Debtors and the Ng family. For instance, to
assess the value of the CFGI Equity Interests in June 2021, one would need to
consider how such a buyer of the CFGI Equity Interests would evaluate their ability
to extinguish or pay off the significant liabilities associated with the CFGI Equity
Interests before value would accrue to the holders of those shares. The TEV set
forth in the Disclosure Statement does not include an analysis of those types of
issues, among others, and therefore should not be used as a proxy for the value of
the CFGI Equity Interests in June 2021.
Obj. ¶ 78. 106 The Trustee did not conduct any independent valuation of the CFGI Equity Interests
as of the Effective Date. See Brandt Dep. at 52:24-53:8. He has failed to meet his burden of
demonstrating the value of the CFGI Equity Interests as of the Plan’s Effective Date. For that
105 	Deposition of Brad Jordan, ECF No. 2834 (the “Jordan Dep.”).
106 	During his deposition, Mr. Jordan discussed the difference between “equity” and “enterprise” value, as follows:
It sounds like you're asking me what the recovery value is for the creditors, and the recovery value
is not the same thing as the enterprise value under the disclosure statement. The enterprise value is
the starting point. That’s the amount of value you have to start with.
And then the plan has expenses and other provisions that determine what each party gets, and
so when we do the calculations of recovery values, whether it be for a noteholder or a loan holder,
that analysis of recovery values, yes, would have been reduced for all kinds of payments like these
and other things that had to happen because it comes out of the value they would otherwise have.
Jordan Dep. at 50:2-15; see also id. at 51:17-52:1 (explaining that the enterprise value reflected in the Disclosure
Statement is “a top gross number before deducts of expenses. And here it assumes . . . that all the planned transactions
happened, and the plan goes effective. That’s what the assets would be worth. It’s not saying what is the recovery
value of the stakeholders at the end of the day after the plan goes effective because it doesn’t reflect all the deducts
along the way. This is just referring to the gross value of the underlying business.”).
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reason, the Court rejects the Trustee’s assertion that the Statutory Cap should account for
$850 million in CFGI Equity Interests.
The Creditor Plan Proponents also assert that the Statutory Cap should exclude the cash
that the Trustee says he turned over to the Plan Administrator and was distributed to creditors
under the CFG Peru Plan. Obj. ¶¶ 12, 81. They contend that collectively, CFG Peru and the
Peruvian OpCos had approximately $119.8 million, not $211 million, as of his departure.
Id. ¶¶ 12, 81. They also say that, in calculating the Statutory Cap, the Court should exclude at least
$161.4 million of the $211 million of the CFG Peru Plan’s required cash distributions, upon which
Mr. Brandt bases his statutory cap calculation in the Fee Application.107 Id. ¶¶ 12, 81. They assert
that Mr. Brandt’s reliance on $161.4 million of the CFG Peru Plan’s cash payments is not
“reasonable” because they, not Mr. Brandt, spent months finalizing, negotiating, and documenting
the Ng Family settlement, and that there is no legitimate reason why he should get credit for it. Id.
¶¶ 12, 81. They also assert that Mr. Brandt should not profit from distributions in respect of the
creditor professional fees and expenses paid, or consent and work fees payable, under the plan he
long opposed. They maintain that it is not reasonable to give Mr. Brandt credit for the $75-million
Interim Distribution, which he failed to effectuate for years and opposed in open court.108 Id. ¶¶
12, 81. Finally, separate and apart from the issues relating to the $161.4 million in disbursements,
they say that the substantial majority of funds that CFG Peru will disburse on the Effective Date
will come from the proceeds of the $150 million New Money Facility that the Creditor Plan
107 	Those cash payments relate to the Ng family settlement ($25 million), creditor work fees ($13.4 million), creditor
consent fees ($33 million), consenting creditor professional fees ($15 million), and the $75 million interim
distribution.
108 	See Transcript Regarding Hearing Held on June 9, 2021, ECF No. 2577 at 43:14-17 (“I put on the record that
the Peruvian OpCos and, in turn, the plan debtors, are unable to make the seventy-five-million-dollar distribution after
confirmation.”); id. at 48:12-14 (“I believe the distribution should be clearly delayed until after the effective date.”).
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Proponents and other creditors will fund at emergence, and that Mr. Brandt fails to explain why
his cap should be calculated in reference to loan proceeds arranged without his support. Id. ¶¶ 12,
81.
The Court finds no merit to those contentions. Exhibit A to the Jordan Confirmation
Declaration is a Sources and Uses Analysis, which shows that in addition to the $150 million New
Money Facility, the Peruvian Opcos/SFR will contribute $234 million in cash balances and
operational income to jointly fund $384 million of cash disbursements necessary for the CFG Peru
Plan to become effective. 109 Which “cash” is used for which disbursements is irrelevant, as it does
not change the fact that the Peruvian Opcos’ cash is available for such uses from a business turned
over by the Trustee. The date of the turnover is not relevant, as the cash was in the financed fishing
season and would shortly return as operating capital sufficient to fund $234 million of plan
disbursements. 	Further, 	the 	Creditor 	Plan 	Proponents’ 	argument 	to 	extract 	certain 	plan
disbursements from consideration on the ground that the Trustee had raised concerns about their
payment—such as the Interim Distributions—is baseless. The fact that the Plan Proponents had
the means to make the payments is a testament to the Trustee’s work in restoring value to the
Peruvian Opcos. It is cash that was available solely because of the Trustee’s accomplishments.
How the Plan Proponents chose to spend that cash is irrelevant to whether or not the Trustee should
be compensated for creating that value. The Court finds that, in addition to the MOR
Disbursements, the Court will credit the $211 million in cash turned over to the Plan Administrator
towards the Statutory Cap. In that light, the Statutory Cap totals approximately $63.15 million
(i.e., 3% of $2.105 billion).
109 Jordan Confirmation Decl., Exhibit A.
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The Request for A Fee Enhancement
The Court now considers the Trustee’s request for a fee enhancement in the form of a 2.09
multiplier of his lodestar. In Perdue, the Supreme Court expressed favor for the “objective”
lodestar method to determine reasonable fees over the more “subjective” factors enumerated in the
seminal Johnson opinion (the “Johnson Factors”). Perdue, 559 U.S. at 551-52; see Johnson v.
Georgia Highway Exp., Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). The Supreme Court further
“reject[ed] any contention that a fee determined by the lodestar method may not be enhanced in
any situation,” holding that the lodestar’s strong presumption of reasonableness “may be overcome
in those rare circumstances in which the lodestar does not adequately take into account a factor
that may properly be considered in determining a reasonable fee.” Id. at 553-54. Bankruptcy courts
in the Second Circuit, both before and after Perdue, have held that the Johnson Factors apply at
the fee enhancement stage. See Nicholas v. Oren (In re Nicholas), 496 B.R. 69, 74 (Bankr.
E.D.N.Y. 2011) (relying on Perdue and its progeny for the view that the lodestar is the “starting
point” for determining a reasonable fee, which “can then be adjusted on the basis of case specific
considerations”); see also In re The 1031 Tax Grp., LLC, 2009 WL 4806199, at *2 (applying the
Johnson Factors to the fee enhancement stage); In re Northwest Airlines Corp., 382 B.R. at 645
(same). The Creditor Plan Proponents do not contend otherwise. However, they assert that the
Trustee has failed to demonstrate any basis on which to enhance the fee. See Obj. ¶ 47. They also
assert that the total hours spent by Mr. Brandt on this matter were excessive and, in certain
circumstances, appear implausible. Id. ¶ 48. They contend that the gross number of hours spent by
Mr. Brandt on this matter weighs against a fee enhancement because, even in the absence of any
fee enhancement, he would be compensated extraordinarily well for his efforts.
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The Johnson Factors are as follows:
(1) the time and labor required for the matter; (2) the novelty and difficulty of the
questions presented; (3) the skill needed to perform the services appropriately;
(4) the preclusion of the professional from taking other cases by working on the
matter; (5) the customary fee involved in similar instances; (6) whether the fee is
fixed or contingent; (7) any time limitations imposed by the client; (8) the sums
involved and the results obtained; (9) the experience and ability of the employed
professional; (10) whether the case is “desirable” or not; (11) the length of the
relationship between the professional and the client; and (12) what awards were
granted in similar cases.
Johnson, 488 F.2d at 717-19. The Trustee “bears the burden of establishing that an adjustment is
necessary to the calculation of a reasonable fee.” Grant v. Bethlehem Steel Corp., 973 F.2d 96, 101
(2d Cir. 1992); see also In re Kohl, 421 B.R. 115, 131 (Bankr. S.D.N.Y. 2009) (“Lodestar analyses
consist of two steps. First, a court calculates the lodestar amount by multiplying the number of
hours expended on the case by a reasonable billing rate . . . then [it] examine[s] whether any
adjustment is necessary, looking to section 330 of the Bankruptcy Code . . . .”). Some courts
perform an analysis of each of the factors, while others consider the factors together in a more
holistic way. Compare In re MACCO Props., Inc., 540 B.R. at 855-60 (conducting a factor-by-
factor analysis of the Johnson Factors), with In re The 1031 Tax Grp., LLC, 2009 WL 4806199,
at *2-4 (conducting a generalized inquiry).
It is settled that a court should enhance a lodestar “only in the rare case where the fee
applicant offers specific evidence to show that the quality of service rendered was superior to that
one reasonably should expect in light of the hourly rates charged and that the success was
‘exceptional.’” Blum v. Stenson, 465 U.S. 886, 899 (1984). Put differently, “[e]nhancement of the
lodestar calculation is only appropriate in exceptional and rare circumstances and must be
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supported by detailed evidence and specific findings.” In re Kohl, 421 B.R. at 131 (emphasis in
original). As one bankruptcy court explained:
Simple rhetoric describing a trustee’s or professional’s efforts with catch phrases
such 	as 	“exceptional,” 	“unprecedented,” 	“extraordinary,” 	and 	the 	like 	are
insufficient, standing alone, to justify a fee enhancement. But when those
laudations are accompanied by a “specific showing of exceptional activity,”
bankruptcy courts have been persuaded that the objectively-calculated lodestar
amount is unreasonable inasmuch as it fails to adequately compensate the trustee
or the professional for work in a particular case.
In re New England Compounding Pharm., Inc., 544 B.R. 724, 736 (Bankr. D. Mass. 2016)
(citations omitted).
Not all of the Johnson Factors are relevant to the analysis of the Trustee’s request for a fee
enhancement. The eleventh Johnson factor focuses on the “the nature and length of the
professional relationship with the client.” Johnson, 488 F.2d at 719. The Johnson court explained
that in applying this factor, “[a] lawyer in private practice may vary his fee for similar work in the
light of the professional relationship of the client with his office. The Court may appropriately
consider this factor in determining the amount that would be reasonable.” Id. By its terms, that
factor is not germane to this matter because the Trustee, in his capacity as the Court-appointed
fiduciary in these cases, did not have (and could not have had) a relationship with CFG Peru prior
to his appointment herein.
More fundamentally, the lodestar may be adjusted according to a Johnson factor only if
that factor is not already accounted for by the lodestar. See Shipes v. Trinity Industries, 987 F.2d
311, 320 (5th Cir. 1993). In that light, the first Johnson factor—time and labor involved—is not
applicable because it is “subsumed within the Court’s lodestar analysis.” Connolly v. Harris Tr.
Co. of Cal. (In re Miniscribe Corp.), 241 B.R.729, 749 (Bankr. D. Colo. 1999). Other courts have
held that the Johnson Factors pertaining to the professional’s skill and the complexity of the case
(Johnson Factors 2, 3, 8, and 9) remain relevant only in exceptional cases. See ASARCO, L.L.C. v.
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Jordan Hyden Womble Culbreth & Holzer, P.C. (In re ASARCO, L.L.C.), 751 F.3d 291, 295 (5th
Cir. 2014) (“Because the four Johnson Factors related to attorney skill and legal complexity are
presumably fully reflected in the lodestar, those four factors can only form the basis for a fee
enhancement in ‘rare and exceptional circumstances.’” (quoting In re Pilgrim’s Pride Corp., 690
F.3d 650, 656 (5th Cir. 2012))), aff’d sub nom. Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121,
(2015). The Trustee contends, and the Court agrees, that this case is a “rare and exceptional” case
as it pertains to the duties required of this Trustee, and that each of those four factors pertaining to
the professional’s skill and the complexity of the case remains relevant to a calculation of the
requested fee enhancement. Accordingly, the Court considers application of Johnson Factors 2-10
and 12 to the Trustee’s actions in these cases.
The second Johnson factor is the “novelty and difficulty of the questions.” Johnson,
488 F.2d at 718. In formulating this factor, the Fifth Circuit noted that “[c]ases of first impression
generally require more time and effort on the attorney’s part,” and that the attorney “should be
appropriately compensated for accepting the challenge.” Id. This is plainly a unique case that has
given rise to novel and complex legal and non-legal issues—very much akin to matters of “first
impression.” As detailed above, as of the date of the Trustee’s appointment, the Peruvian Business
was in “free fall” as it had no financing and was struggling to recover from the devastating effects
of the El Niño weather pattern, and the Peruvian Opcos were mired in the Peruvian Insolvency
Proceedings and certain criminal investigations. The Trustee assumed the role without any
assurance that foreign courts or agencies would recognize his authority,110 that he could resolve
the Peruvian Insolvency Proceedings, or that he could obtain financing for the Peruvian Business.
110 	In granting the Trustee Motion, the Court noted, among other things, that “it is not clear whether an appointed
Chapter 11 trustee will be recognized under applicable foreign law as the authorized representative of the Debtors.”
Trustee Decision and Order at 48.
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To preserve the value of the Opcos for the benefit of the creditors of the CFG Peru enterprise and
other Debtors, the Trustee had to quickly find a source of financing for the business, gain the trust
and confidence of the Peruvian Opcos’ management and employees, learn the intricacies of the
anchovy/fish meal industry in Peru, shore up the operations of the Peruvian Opcos, and then
fashion a plan for maximizing the value of the Peruvian Opcos. As set forth above, he did just that,
as he successfully operated the Opcos during his five-year tenure and, in doing so, preserved and
enhanced the value of CFG Peru and the Peruvian Opcos. The application of this factor supports
the Trustee’s request for an enhancement to the lodestar. See In re MACCO Props., Inc., 540 B.R.
at 855 (noting that application of the second Johnson factor “weigh[ed] strongly in favor of
enhancing Trustee’s compensation” where the trustee’s duties included “not only operating and
administering MACCO’s own assets, but also . . . operating, protecting, and preserving the
[subsidiary single-purpose entities’] property as well.”).
The third Johnson Factor focuses on the level of “skill necessary [for the trustee] to
properly perform the . . . services.” See Johnson, 488 F.2d at 718. This factor overlaps with the
ninth Johnson Factor (“the experience, reputation, and ability of the [trustee]”). Id. at 718-19. As
to the latter, the Johnson court noted that “[m]ost fee scales reflect an experience differential with
the more experienced attorneys receiving larger compensation.” Id. Mr. Brandt is a well-known
practitioner in the insolvency/restructuring market and rightfully enjoys a stellar reputation for his
work in chapter 11 cases. The Johnson court explained that in applying the third Johnson Factor,
“[t]he trial judge’s expertise gained from past experience as a lawyer and his observation from the
bench of lawyers at work become highly important in this consideration.” Id. Throughout his
tenure, Mr. Brandt demonstrated to the Court that he was uniquely qualified to address the political,
financial, and legal challenges that arose in the cases, negotiate with creditors, political bodies,
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and other authorities, maintain existing management at the Peruvian Opcos, and restructure the
non-debtor entities’ operations and asset base. Moreover, the wealth of his experience and the
breadth of his abilities clearly benefited CFG Peru, as reflected in the high-quality work that he
did in and out of court during his tenure as Trustee. In short, the Trustee “demonstrated the highest
caliber of stewardship under the most challenging circumstances.” MACCO Props., 540 B.R. at
857. Application of the third and ninth Johnson Factors supports the Trustee’s request for an
enhancement to the lodestar.
The fourth Johnson Factor focuses on the “preclusion of other employment due to
accepting the case.” Johnson, 488 F.2d at 718. This factor “involves the dual consideration of
otherwise available business which is foreclosed because of conflicts of interest which occur from
the representation, and the fact that once the employment is undertaken the attorney is not free to
use the time spent on the client’s behalf for other purposes.” Id. The “conflicts of interest” aspect
of this factor is not relevant. However, the Trustee asserts that the effort required for him to fulfill
his duties in this case had a preclusive effect that largely prevented him from accepting other
engagements, including engagements that would have provided the Trustee with timely and certain
fees, rather than the risks and delays inherent in the CFG Peru assignment. Fee Application at
93.111 The seventh Johnson Factor is the “time limitations imposed by the court or the client.”
Johnson, 488 F.2d at 718. The court explained that “[p]riority work that delays the lawyer’s other
legal work is entitled to some premium.” Id. This is related to the fourth Johnson factor but “is
particularly important when a new counsel is called in to prosecute the appeal or handle other
111 	The Creditor Plan Proponents note that Mr. Brandt’s retention as Trustee did not preclude him from continuing
to serve as the Executive Chairman of DSI. Obj. ¶ 48. However, that has no bearing on the Court’s assessment of
this Johnson factor because it is an emeritus position—“pretty much just oversight.” See Brandt Dep. at 7:24-25. Mr.
Brandt transitioned to the emeritus position at the beginning of his tenure herein, specifically to permit work on
cases such as this one. See id.
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matters at a late stage in the proceedings.” Id. The seventh Johnson Factor is not applicable because
the Trustee’s workload was not impacted by new matters arriving late in his tenure. In applying
the fourth Johnson Factor, the Court finds that the evidence shows that during his tenure, Mr.
Brandt served as the plan administrator for Equipment Acquisition Resources, Inc. and
Aéropostale, and as chapter 11 trustee in the San Luis cases. Moreover, there is no evidence in the
record demonstrating that the Trustee turned down or was precluded from pursuing other
opportunities due to the press of matters in this case. He suggests that if such opportunities existed,
he would likely have been on the “short list” for those opportunities. See Fee Application at 93 (“It
is fair to say that William A. Brandt, Jr. is a professional who would have easily replaced the CFG
Peru engagement with other work if this appointment had not been made”). However, the Trustee
has not met his burden of demonstrating that application of the fourth Johnson Factor supports his
request for an enhancement to the lodestar.
The fifth Johnson Factor focuses on the “customary fee for similar work in the
community.” Johnson, 488 F.2d at 718. It is related to the sixth factor—whether the fee is fixed or
contingent. Id. Mr. Brandt says that application of these factors supports his request for a fee
enhancement because, as demonstrated above, fee applications that have been filed by chapter 11
trustees appointed in other chapter 11 cases that are pending or recently were pending in the
Southern District of New York demonstrate that his hourly rate—before application of any fee
enhancement—(i) is far below the hourly rates charged by comparable trustees, and (ii) is about
one-half of what his rate would be if he were to charge an hourly rate comparable to senior
restructuring attorneys working on these same chapter 11 cases, even though he has many more
years of experience in the restructuring field. He says that, if approved, the 2.09 multiplier
effectively would double his hourly rate, and bring it in line with rates charged by professionals in
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cases in this district. He also contends that there is precedent in this case to support such a
multiplier because Houlihan’s fees, as the Creditor Plan Proponent’s investment banker, will be
nearly doubled by a $4 million success fee that Houlihan is entitled to receive under its engagement
agreement. 112 Application of this factor does not support the Trustee’s request for an enhancement.
First, Mr. Brandt selected his billing rate as part of his business plan for obtaining this assignment.
See Brandt Decl. ¶¶ 8, 92. Thus, the putatively higher rates of other practitioners in the community
do not represent a basis for enhancing Mr. Brandt’s hourly rate long after he was engaged for this
case, notwithstanding the high-quality work that he performed. Moreover, the Court finds the
success fee that the Creditor Plan Proponents agreed to pay to Houlihan irrelevant to whether Mr.
Brandt is entitled to a fee enhancement. Mr. Brandt did not act as an investment banker in this
case, and the Creditor Plan Proponents do not consent to the multiplier. That pre-negotiated
success fee does not provide a ground for the Court to award a fee enhancement to Mr. Brandt in
this case.
The eighth Johnson Factor is the “amount involved, and the results obtained.” Johnson,
488 F.2d at 718. There is no formula for measuring a trustee’s success in a chapter 11 case. Rather,
courts rely on a “multitude of factors . . . in concluding that a trustee or professional is (or is not)
deserving of a fee enhancement over the lodestar amount.” In re New England Compounding
Pharm., Inc., 544 B.R at 736. That court found that the single overarching theme that can be
gleaned from the case law is that “[i]n the majority of cases, courts rely heavily on the outcome of
112 	See Creditor Plan Proponents’ Motion for Entry of an Order Pursuant to the Creditor Plan Proponents’
Chapter 11 Plan for CFG Peru Investments Pte. Ltd. (Singapore) and Section 1129(a)(4) of the Bankruptcy Code
(I) Approving All Pre-Confirmation Fees, Expenses, Costs and Disbursements Incurred by Houlihan Lokey, Inc. and
(II) Authorizing and Directing the Plan Administrator to Promptly Pay All Such Preconfirmation Fees, Expenses,
Costs and Disbursements, ECF No. 2582 at 7 n.6.
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a case (generally measured by the funds available for creditors) in deciding whether an
enhancement is warranted.” Id. at 737 (footnote omitted). The court noted, as follows:
Whether discussed in the context of the “results obtained,” “value of services
rendered,” or “benefits received by the bankruptcy estate,” the fundamental inquiry
is the same—have the trustee’s or professional’s actions in this case benefited the
bankruptcy estate to such an admirable degree that a mere multiplication of the
hours expended by the hourly rate fails to adequately compensate the individual for
the work they have done?
Id.
The Creditor Plan Proponents concede that Mr. Brandt provided stability to the case during
the early months of his trusteeship but assert that since at least late 2018, his pursuit of a
“third-party cash sale at any cost effectively trapped CFG Peru in chapter 11 and prevented a
creditor-driven course correction.” Obj. ¶ 48. However, they assert that the result of this case is an
outcome far different than what Mr. Brandt long predicted, and that outcome is possible only due
to the efforts of the creditors to file and confirm the CFG Peru Plan. Id. They assert that in five
years, Mr. Brandt:
(1) never accomplished the sale that he viewed as the exclusive path out of
bankruptcy;
(2) never proposed a plan;
(3) opposed the plan that was filed with overwhelming creditor support and
ultimately confirmed by the Court;
(4) allowed hundreds of millions of dollars in additional debt to accrue;
(5) doled out unnecessary fees to the U.S. Trustee; and
(6) required the estate to incur extremely large professional fees while he pursued
his sales agenda.
Obj. ¶ 48. It is plain that the Trustee determined that the means for CFG Peru to exit bankruptcy
was through the sale of the CFGI Equity Interests, that he worked toward that goal right up to the
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plan confirmation hearing, and that he failed to realize the goal. However, it was not for lack of
effort, and, contrary to the Creditor Plan Proponents’ assertion, the Trustee’s failure to find a buyer
for the equity does not render his administration of the CFG Peru estate a failure. To the contrary,
when he took possession of the CFG Peru estate, its assets were subject to a liquidation proceeding
that gave equal footing to massive insider claims. Through his efforts described above, the Trustee
restructured the Peruvian Business, including its debt structure, to become a profitable business
that, through the CFG Peru Plan, was turned over to the Club Lenders and Noteholders—who had
sought the appointment of the Trustee. Without the Trustee’s considerable efforts, the Peruvian
Opcos would have held little to no value to the Club Lenders and Senior Noteholders. His work
provided the basis for them to restructure their debt through the CFG Peru Plan. Moreover, at the
outset of these cases, the Club Lenders stated to this Court that they “remain[ed] very concerned
that the valuable Peruvian Business is outside the Chapter 11 estates and that local management
may take precipitous action to destroy the value under the direction of the Debtors’ sponsors.” See
Club Lenders’ First Day Statement ¶ 11. The Trustee’s mandate was not merely to take control of
the CFG Peru estate, but also to protect and enhance the value of its subsidiaries—primarily the
Peruvian Opcos, entities with a value in excess of one billion dollars, yet facing a material risk in
their then-pending insolvency proceedings. As summarized above, the Trustee plainly met that
challenge. Application of this factor supports the Trustee’s request for a fee enhancement.
The tenth Johnson Factor is the “undesirability of the case.” Johnson, 488 F.2d at 719. That
prong was developed in Johnson in the context of difficult civil rights cases, which could present
attorneys with “hardships in their communities because of their desire to help the civil rights
litigant.” Id. (citing NAACP v. Button, 371 U.S. 415, 443 (1963); Sanders v. Russell, 401 F.2d 241
(5th Cir. 1968)). For their part, in arguing that application of this factor does not support the
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Trustee’s request for a fee enhancement, the Creditor Plan Proponents advise that they “understand
that there was no shortage of qualified candidates that sought to serve as trustee in this case due
to, among other reasons, (1) the complicated issues presented by the filing, (2) the international
aspects of the case, and (3) the fact that serving as trustee in a chapter 11 case in this District is an
important professional accomplishment.” Obj. ¶ 48. That may be, but there is no probative value
to their “understanding” of the undesirability of the case. On the other hand, the Trustee says that
the “undesirability” of the CFG Peru trusteeship has been “substantial and unique.” Fee
Application at 98. The Court finds merit to that contention. As the trustee for CFG Peru—the
parent company of an international enterprise (i.e., the Peruvian Business)—and the de facto CEO
of the Peruvian Opcos, Mr. Brandt encountered inordinately complex and time-consuming legal,
financial, and political challenges that called for him to be “on call” and able to be available for
frequent international travel. Furthermore, the international nature of the assets and subsidiaries
exposed the Trustee to risks of personal liability. The Trustee correctly notes that the Hong Kong
Court in which the Trustee sued HSBC-HK refused to recognize the Trustee’s appointment by this
Court. It is undisputed that the effect of that ruling, under Hong Kong law, was that the Trustee
was litigating the case as an individual and risking personal exposure to claims arising from the
litigation, as well as risking liability for the fees and costs that a losing party must pay under Hong
Kong’s judicial procedures. It was plainly a risk that was unique to the particular circumstances of
this case. On balance, the Trustee has demonstrated that, in applying the tenth Johnson factor,
there are risks associated with his appointment in this case that are properly compensated by
adjustment of the Lodestar.
The twelfth Johnson Factor is “fee awards in similar cases.” Johnson, 488 F.2d at 719. In
applying that factor, the court noted that “[t]he reasonableness of a fee may also be considered in
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the light of awards made in similar litigation within and without the court's circuit.” Id. The Trustee
is correct that there are cases in which courts have awarded 2.0+ multipliers of the lodestar in
awarding commissions to chapter 7 and chapter 11 trustees. For example, in In re Miniscribe
Corp., 309 F.3d at 1239, 1245-46, the Tenth Circuit approved a bankruptcy court’s upward
revision of a chapter 7 trustee’s base lodestar calculation from $711,600 to $1,828,812, or a
$1.1 million upward revision (constituting a 2.57 multiplier, equal to 60% of the Statutory Cap).
In Miniscribe, the trustee took over an administratively insolvent estate with $3 million in
chapter 11 fees and only $150,000 in hand, facing a superpriority claim of $17 million and total
claims of over $900 million. Id. at 1237. The trustee lowered the superpriority claim from
$17 million to $1 million and persuaded the entity holding the superpriority claim to loan the estate
$1 million to finance litigation which eventually yielded the estate $80 million. The trustee
conducted 45 different adversary proceedings, recovering $17 million for the estate, and reduced
outstanding claims against the estate from $900 million to $168 million. Id. In In re The 1031 Tax
Grp., LLC, 2009 WL 4806199 at *3, the court approved an upward revision of the chapter 11
trustee’s lodestar calculation of $998,559 to $1,997,118 (constituting a 2.0 multiplier, equal to
70% of the Statutory Cap). The trustee was appointed to an administratively insolvent estate in
which no substantial investigation or analysis had been conducted regarding the estate’s potential
claims against the debtor’s former principal. The trustee led an investigation of the estate and
attempted to reconstruct the transactions that the debtor’s principal and others used to carry out
their fraud. Id. Because of the absence of reliable books and records, this investigation involved
“Herculean efforts” by the trustee and his professionals. Id. The results of the investigation led to
months of litigation and settlement negotiations with third parties against whom the Trustee filed
or threatened to file adversary complaints. Id. The Trustee spent a great deal of time negotiating
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numerous settlements, including the settlement agreements that eventually became the basis for
funding the reorganization plan. The Trustee also obtained approval for settlements resulting in
substantial recoveries to the estate from the Debtors’ insurers, from the former owners, and from
the principal’s former lawyers. Id. The trustee also drafted and shepherded to approval a disclosure
statement and plan of reorganization. Due in no small part to the trustee’s efforts, the estate made
a 34-cent initial distribution to its unsecured creditors. Id.
There are some similarities between those cases and this one. Like the trustees in
Miniscribe and 1031 Tax Grp., Mr. Brandt was appointed to an administratively insolvent estate,
and like the trustee in 1031 Tax Grp., Mr. Brarndt’s efforts furthered the confirmation of a chapter
11 plan. The CFG Peru Plan was proposed by the Creditor Plan Proponents, but it plainly could
not have been proposed and confirmed had the Trustee not fulfilled his mandate to protect,
preserve, and enhance the value of the Peruvian Opcos. While the trustees in Miniscribe and 1031
Tax Grp. created value for their respective estates through their investigations and affirmative
litigation, the Trustee enhanced the value of the Peruvian Opcos through his careful and sound
management of the Peruvian Business—under challenging conditions. Indeed, the business that
remains today is one that has preserved value—it has retained management, retained primary
assets, 	and 	retained 	fishing 	quotas, 	while 	simultaneously 	being 	reorganized 	in 	terms 	of
intercompany debts, liquidation of non-material assets, and resolution of material proceedings that
were pending against many of the companies, both civil and criminal. All of the that is a testament
to Mr. Brandt’s contributions to the successful operation of the business in fulfillment of the
Court’s mandate.
It is particularly appropriate for a court to consider approving an enhancement to the
lodestar where the applicant is operating a business. See In re Residences at Bear Creek, Inc.,
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No. 00-33139, 2002 Bankr. LEXIS 1986, at *11 (Bankr. N.D. Tex. June 13, 2002) (explaining
that, where a chapter 7 trustee was authorized to operate the debtor’s business, “[t]he lodestar does
not reflect the compensation of the operator of a business. The lodestar also does not contemplate
the risks of the operation of a business while in a fiduciary capacity.”). Still, Mr. Brandt bears the
burden of establishing that an adjustment to the lodestar is necessary to the calculation of a
reasonable fee. In fixing the multiplier, Mr. Brandt likens the 2.09 multiplier to a “success fee”
payable to an investment banker or other financial advisor for successfully completing a
transaction. See Fee Application at 99 (“The Court need look no further than the instant case for a
comparison of a fee enhancement, in the form of the $4 million “success fee” that Houlihan is
entitled to receive on the Effective Date of the CFG Peru Plan, which is an approx. 2.0 multiplier
of its $4,625,000 fee request.” (footnote omitted)). The Court attaches no weight to that contention.
The Trustee is not an investment banker, and the Creditor Plan Proponents have not agreed to the
commission.
There is no uniform standard assisting bankruptcy courts to determine what level of upward
adjustment of a lodestar amount is reasonable, but any modification cannot represent a windfall to
the applicant. In re The 1031 Tax Grp., 2009 WL 4806199, at * 2. In fixing the multiplier, Mr.
Brandt did not apply a standard. The Trustee explains that to arrive at the 2.09 multiplier, first,
during his negotiations with the U.S. Trustee, he determined that a “reasonable” commission for
the work that he did in this case equals $25 million. He then calculated the multiplier by dividing
the $25 million Proposed Commission by the Trustee’s Lodestar ($11,958,625.00). See Fee
Application at 10; Brandt Dep. at 32:15-33:3. Mr. Brandt sets his own hourly rate and
acknowledges his choice to set his rate at a level that will allow him to stay competitive for
middle-market assignments. He asserts that if he set his rate in the range comparable to his
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competitors based in this District, it would likely be about $1,600/hour for 2021. He says at that
rate the Trustee’s Lodestar would be $21,867,200, and that to obtain a $25 million Proposed
Commission for his work, he would be seeking a fee enhancement of only 1.143. Fee Application
at 8-9. Thus, the Trustee contends that “the number of the multiplier itself is less relevant than the
overall commission that he has requested for the work performed in this case, and the success of
his efforts.” Id.
The Court has carefully reviewed the Fee Application and all documents submitted by and
on behalf of Mr. Brandt in support of the application. As noted, during his tenure, Mr. Brandt
frequently appeared in court and addressed the Court on matters relating to the administration of
the CFG Peru estate, and particularly with respect to the Peruvian Business and the status of the
operations of the Peruvian Opcos. As such, the Court has a very good understanding of the services
Mr. Brandt provided during his tenure as Trustee and the benefits derived by the CFG Peru debtor,
the Peruvian Opcos and third parties like the Club Lenders and Noteholders from those services.
Moreover, the Court has carefully considered the Creditor Plan Proponents’ Objection. The Court
finds that based on the foregoing analysis of the Johnson Factors, the Trustee is entitled to a 1.5
multiplier to the Adjusted Lodestar ($10,905,914.00). Accordingly, the Court awards Mr. Brandt
fees totaling $16,358,871.00.
EXPENSE REIMBURSEMENT
The Trustee seeks to recover the expenses totaling $409,382.02 that he incurred during the
current (second) expense period.113 Among those expenses are the Trustee’s attorney’s fees
incurred in connection with the Fee Application, as follows:
(i) The Trustee’s engagement of Baker Hostetler to prepare his Fee Application (the
113 	The Court previously approved reimbursement of the Trustee’s expenses totaling $355,051.93 on an interim basis.
See Fee Application at 9.
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“Baker Fees”—$286,127.50); and
(ii) The involvement of DSI’s inhouse counsel in preparation of the Fee Application
(the “In-House Fees”—$84,296.00).
As the Court-appointed Trustee, Mr. Brandt is entitled to “reimbursement for actual
necessary expenses” that he incurred in discharging his duties under the Bankruptcy Code. See 11
U.S.C. § 330(a)(1)(A). It is settled that he may properly recover attorneys’ fees in connection with
the preparation of his fee application. In Mesa Air Grp., Inc., 449 B.R. 441, 445 (Bankr. S.D.N.Y.
2011) (“Since fee applications are required under the Bankruptcy Code, courts may award fees for
time spent in actually preparing a fee application ‘based on the level and skill reasonably required
to prepare the application.’” (quoting 11 U.S.C § 303(a)(6))). “It is proper . . . for the bankruptcy
court to examine the amount and value of the time spent preparing the [fee] application, and
reasonable limits may be placed on compensation for such work.” In re Bennett Funding Grp.,
Inc., 213 B.R. 234, 249 (Bankr. N.D.N.Y. 1997).
The Creditor Plan Proponents object to the payment of the Baker Fees and In-House Fees.
In so objecting, they do not challenge the reasonableness of the fees. Rather, they object on the
ground that the Trustee incurred the fees defending the Fee Application and, as such, under the
rule established by Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015), reimbursement of
those expenses is not authorized under section 330 of the Bankruptcy Code. They also contend
that the Court should disallow the In-House Fees because they constitute non-reimbursable
overhead expenses. The Court considers those matters below.
Baker Hostetler
In or about March 2021, Mr. Brandt, in his individual capacity, engaged Baker Hostetler
to prepare his Fee Application and to address issues pertaining to the Fee Application that arose
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during CFG Peru Plan confirmation negotiations. Fee Application at 103.114 In Baker Botts, the
Supreme Court held that section 330(a)(1) of the Bankruptcy Code does not permit a bankruptcy
court to award attorneys’ fees for work performed in defending a fee application in court. 576 U.S.
at 131-35. In part, the Court noted that section 330(a)(1)(A) authorizes reasonable compensation
only for “actual, necessary services rendered,” which implies “‘loyal and disinterested service in
the interest of’ a client.” Id. at 121-22 (quoting Woods v. City Nat. Bank & Tr. Co., 312 U.S. 262,
268 (1941)). The Court found that a “professional’s preparation of a fee application is best
understood as a ‘servic[e] rendered’ to the estate administrator under § 330(a)(1), whereas a
professional’s defense of that application is not.” Id. at 132 (alteration in original). Notably, the
Court opined that “[t]ime spent litigating a fee application against the administrator of a
bankruptcy estate cannot be fairly described as ‘labor performed for’ . . . that administrator.” Id.
at 122.115 To highlight the difference between preparing a fee application and defending one, the
Court offered the following analogy:
it would be natural to describe a car mechanic’s preparation of an itemized bill as
part of his “services” to the customer because it allows a customer to understand—
114 	Mr. Brandt did not and was not required to retain Baker Hostetler under section 327 of the Bankruptcy Code.
[N]othing in the language of section 327 suggests that counsel retained to represent a retained
professional in connection with its retention or fee applications should or even could be retained
under section 327—that is work being done for the professional, not for the estate. And nothing in
section 327 excludes such expenses as “necessary” where the work was required to comply with the
Bankruptcy Code, Rules, or General Orders. . . . [W]here the fees are incurred in representing the
professionals, and not in performing work for the debtor, section 327 does not apply.
In re Borders Group, Inc., 456 B.R. 195, 208-10 (Bankr. S.D.N.Y. 2011) (allowing trustee to recover reasonable
attorney’s fees and expenses of counsel retained in an individual capacity, for work done solely on his behalf rather
than on behalf of debtor); see also In re Am. Preferred Prescription, Inc., 218 B.R. 680, 686 (Bankr. E.D.N.Y. 1998)
(awarding debtor’s accounting firm its attorney’s fees for retention dispute, despite no court-approved application
under Section 327, as engagement to protect its own interests which did not require Section 327 approval). The
Creditor Plan Proponents do not contend otherwise.
115 	In Baker Botts, the Supreme Court also reaffirmed the American Rule that “[e]ach litigant pays his own attorney’s
fees, win or lose, unless a statute or contract provides otherwise. 576 U.S. at 126 (quoting Hardt v. Reliance Standard
Life Ins. Co., 560 U.S. 242, 252-53 (2010)). The Court ruled that it would “not deviate from the American Rule ‘absent
explicit statutory authority,’” id. (quoting Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health &
Human Resources, 532 U.S. 598, 602 (2001)), and recognized departures from the American Rule “only in ‘specific
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and, if necessary, dispute—his expenses. But it would be less natural to describe a
subsequent court battle over the bill as part of the “services rendered” to the
customer.
526 U.S. at 132. Thus, “[t]he touchstone . . . for determining whether fees are recoverable under
Baker Botts is not when the fees were incurred (i.e., before or after an objection) but rather whether
they were incurred in service to the estate.” In re Stanton, 559 B.R. 781, 785 (Bankr. M.D. Fla.
2016).116
The Creditor Plan Proponents assert that the Court should disallow all of the Baker Fees
because legal fees associated with researching and drafting the 200-page Fee Application are not
comparable to “a car mechanic’s preparation of an itemized bill.” Obj. ¶ 89 (quoting Baker Botts,
576 U.S. at 132-33). They maintain that the extensive legal arguments in support of Mr. Brandt’s
right to the requested fees were in no way necessary to allow parties in interest to understand or
dispute such fees. Id. Courts have found that fees charged in connection with advocating for a
trustee’s right to certain fees are not compensable under Baker Botts even when such actions
and explicit provisions for the allowance of attorney’s fees under selected statutes,’” id. (quoting Alyeska Pipeline
Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 260 (1975)). The Court concluded that section 330(a) did not authorize
compensation for fee-defense litigation. That section authorized “reasonable compensation for actual, necessary
services rendered” but did not explicitly or specifically authorize courts “to shift the costs of adversarial litigation
from one side to the other—in this case, from the attorneys seeking fees to the administrator of the estate—as most
statutes that displace the American Rule do.” Id. at 128.
116 	In Stanton, a chapter 7 trustee submitted his first interim fee application. Although it contained all the information
called for under the applicable local rules, the U.S. Trustee objected to the application. Stanton, 559 B.R. at 783. The
U.S. Trustee sought additional information not ordinarily required in fee applications filed in a chapter 7 case;
effectively insisting “on the level of detail required for a fee application in a chapter 11 case.” Id. The trustee submitted
an 18-page supplement that addressed the U.S. Trustee’s objections, and the court approved the first interim fee
application in its entirety. Id. In his second interim fee application, the chapter 7 trustee, in part, sought payment of
$33,840.00 for fees incurred in drafting the first interim fee application. Id. at 783-84. The U.S. Trustee objected to
$27,520 of that amount, proposing “a bright-line rule for determining whether fees are recoverable under Baker Botts:
if time is spent on a fee application after an objection has been lodged, then that time is necessarily for work defending
the fee application and therefore unrecoverable under § 330(a).” Id. at 784. The court rejected that proposed test, since
it did not account for work performed after an objection that served the estate, and on the facts in Stanton, the trustee’s
provision of supplemental information in response to the U.S. Trustee’s request was such a service. The court opined
that “it is the nature of the work—not when it is performed—that determines whether it is compensable,” and
accordingly, “work done in service of the estate administrator is compensable.” Id. at 787 (emphasis in original).
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occurred before the fee application was filed, because such actions do not benefit the estate but the
trustee himself. See In re Nilhan Devs., LLC, No. 15-58443, 2021 WL 408977, at *18. (Bankr.
N.D. Ga. Feb. 4, 2021) (disallowing certain fees in connection with preparation of a trustee’s fee
application because “the time spent researching and advocating for a commission on the credit bid
or for a fee enhancement was not for the benefit of the estate, but rather for the benefit of the
Trustee, and was not necessary to the administration of the estate”); In re Robert Plan Corp.,
No. 08-74573, 2018 WL 1267870, at *14 (Bankr. E.D.N.Y. Mar. 1, 2018) (disallowing fees related
to litigation over the compensation that a chapter 7 trustee was entitled to as ERISA plan
administrator under Baker Botts because “the Supreme Court ruled that § 330(a)(1) does not
authorize courts to award compensation for fee-defense litigation. While the Trustee took
prospective action in this case, this is no different from defending the fee after the fact”). The
Creditor Plan Proponents say that Baker Hostetler clearly rendered services for Mr. Brandt’s
benefit and that those services did not benefit the estate. They also contend that when Mr. Brandt
retained Baker Hostetler to draft the Fee Application, he knew that the Creditor Plan Proponents
had significant concerns regarding the quantum of his potential commission and that Baker
Hostetler drafted that application with an eye toward defusing those concerns.117 Id.
Mr. Brandt contests that argument. He says that the Creditor Plan Proponents incorrectly
argue that the Trustee may not recover attorney’s fees for preparing his Fee Application simply
117 	They contend that the time entries provided by Baker Hostetler included in the Fee Application crystalize the
point. For example, Mr. Brandt seeks reimbursement for time entries for researching and drafting arguments in support
of the trustee’s right to compensation for fee enhancements and reimbursement of fees under Baker Botts. See Brandt
Decl., Exhibit L (“Research case law on trustee fee enhancement issues and work on memo re: same”); id. at Exhibit O
(“Research ASARCO case law re limits of recovery of fees for application (0.70), research case law re ability of
trustee to recover fees of counsel retained as individual for preparation of fee application, and draft argument for fee
app re same (2.20), research case law on standards for fees permitted for fee application, and draft argument re same
(1.70).”). Mr. Brandt also seeks reimbursement for time spent developing strategy for arguments in the Fee
Application. See id. at Exhibit M (“Draft, revise and final outline of fee application strategy, and email to B. Brandt”);
id. at Exhibit N (“Communications with R. Julian re: strategy issues for fee app”).
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because an objection from the Plan Proponents could be anticipated. Reply at 46. He asserts that
Stanton stands for the proposition that the mere fact of an objection to a fee application is not a
“bright line rule” for compensability of the trustee’s fees. Id. at 786-87; see also In re Migell,
No. 15-bk-10569, 2020 WL 5745652, at *2 (Bankr. M.D. Fla. Sept. 18, 2020) (noting that “a law
firm may recover time spent on explaining its requested fees but not necessarily for defending its
fees upon an objection”). Mr. Brandt contends that Stanton supports his view, since it permitted
reimbursement for work performed after an objection was filed. Reply at 46. He asserts that the
Creditor Plan Proponents’ suggestion that threatening a future objection can erase a trustee’s right
to compensation for preparing a fee application is baseless and would create a remarkably simple
means for creditors to deny fees to future trustees for preparation of fee applications, regardless of
the validity of asserted grounds for objection. Id.
When determining whether work was performed in defending a fee application, “it is the
nature of the work—not when it is performed—that determines whether it is compensable.”
Stanton, 559 B.R. at 787. As an initial matter, Mr. Brandt appears to have anticipated that his fee
application would be contested, and he represents that he does not request fees that will be incurred
in the defense of his application. Fee Application at 103 (“Consistent with applicable authority,
the Trustee has not requested fees that he may incur defending his Fee Application”). In accordance
with this representation, Brandt has not sought attorneys’ fees or other expenses in connection with
filing his reply to the objection to the Fee Application. The filing of the Fee Application was
necessary to the administration of the CFG Peru estate and was a service to the Trustee. Section
330(a)(6) permits recovery of reasonable fees for the preparation of fee applications. 11 U.S.C.
§ 330(a)(6). Baker Hostetler expended significant time and effort in drafting the Fee Application.
In resolving this objection, the Court must consider whether the Baker Fees represent fees for legal
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work done “in service of the estate,” as opposed to fees incurred for the Trustee’s benefit. See
Stanton, 559 B.R. at 787; see also In re Nilhan Devs., LLC, 2021 WL 408977, at *18 (reducing a
request for $1,763.50 in attorneys’ fees expenses incurred in preparing a fee application by $1,388
to $375, where the bankruptcy court determined that the $1,388 correlated with “time spent
researching and advocating for a commission . . . or for a fee enhancement”); see also In re
Morreale, No. 13-27310, 2019 WL 3385163, at *1114 (Bankr. D. Colo. July 3, 2019) (declining
to approve an expense of $63,091 in attorneys’ fees explicitly incurred in defense of the trustee’s
fee application).
Accordingly, the Court has conducted a detailed review of the Baker Hostetler timesheets
for this interim period. See Brandt Decl., Exhibits L-P. Of the 295.7 total hours for which
attorneys’ fees are expensed, the Court finds that 104.1 of those hours are supported by time entries
that the Court finds denote work performed in anticipation of the Trustee’s defense of the Fee
Application. For example, the Trustee incurred legal fees for legal research on “case law on fee
enhancements” (Brandt Decl., Exhibit L at 3), various aspects of the lodestar issue (e.g., id.
Exhibit M at 3), and section 326 issues in general. See, e.g., id. Exhibit P at 3. Baker Hostetler
billed all of those hours at the rate of $795.00 per hour.118 Accordingly, the Court disallows
$82,759.50 of the Baker Fees, as fees incurred in the defense of the Fee Application, and allows
reimbursement of the Baker Fees totaling $203,368.00.
118 	The Court notes that the bulk of the work performed on the Fee Application was performed by the same legal
professional, who appears to have performed essentially all of the Fee Application defense work, in addition to
numerous other tasks. Reduction of fees from only that professional simply reflects that that professional performed
the lion’s share of the work on the Fee Application—it is by no means a criticism of the work’s quality, which was
undoubtedly of a high caliber.
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Legal Fees for In-House Counsel
Mr. Brandt seeks reimbursement of $84,296.00 in expenses for the work related to the Fee
Application performed by Cathy Vance, DSI’s in-house counsel. These fees are on account of
205.6 hours of work at a rate of $410 per hour. Fee Application at 9, 105. The Creditor Plan
Proponents object to the reimbursement of those fees on three grounds. First, they assert that
Ms. Vance’s time records reflect that she “was actively assisting Baker & Hostetler in its efforts
to defend Mr. Brandt’s application.” Id. ¶ 90 . Second, they maintain that Ms. Vance provided no
benefit to the estate—because Mr. Brandt “was not engaged to provide legal counsel to the estate,
the services of his attorney were not furnished for the benefit of the estate, but rather for the benefit
of the Trustee.” Id. Finally, they characterize Ms. Vance’s expense as non-reimbursable “overhead
expenses.” In response, Mr. Brandt says that DSI’s use of in-house counsel “at a reduced billable
hour is not non-compensable ‘overhead,’” and compares this to the general practice of law firms
that draft their own fee applications. Reply at 46. The Court considers those matters below.
The Creditor Plan Proponents contend that Ms. Vance’s time records show that she actively
assisted Baker Hostetler in its efforts to defend Mr. Brandt’s application. Obj. ¶ 90. The Court
disagrees. The Objection does not identify a single time entry by Ms. Vance that denotes work of
that nature. Moreover, the Court’s review of Ms. Vance’s time entries confirms that she did not
bill time for work of that nature. See Brandt Decl., Exhibit R. Rather, the time records reflect that
Ms. Vance provided Baker Hostetler with basic information necessary to the filing of the Fee
Application. For example, she billed time for “research for citations of confirmation of factual
information,” gathering information on non-core asset sales, and preparing privilege and
confidentiality protocols for review of the Trustee’s fee records. Id. at 2-13. She also spent
significant time conferring with colleagues in connection with various privilege and confidentiality
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issues, as well as overseeing a document review team. Id. These activities all relate to the
substantive work she performed in connection with preparation of the underlying Fee Application.
She provided no services in defense of the Fee Application. Her work is related to, but is
independent from Baker Hostetler’s work on the Fee Application. It did not run afoul of Baker
Botts.
The second element of the Creditor Plan Proponent’s objection is essentially the same
argument they raised with respect to Baker Hostetler. As discussed above, only a portion of Baker
Hostetler’s work was preparation for the defense of the Fee Application—the majority of the work
Baker Hostetler did was simply to complete the Fee Application, a necessary task. Likewise, Ms.
Vance’s time entries demonstrate that she performed significant work in preparation of the Fee
Application. Brandt Decl., Exhibit R. Ms. Vance’s preparation of the Fee Application was
necessary work in service of the estate. See Stanton, 559 B.R. at 78; In re Nilhan Devs., LLC, 2021
WL 408977, at *18. The fact that she worked in house for DSI is irrelevant. It is “well-settled that
attorneys’ fees and costs should be awarded for litigation performed by in-house counsel if such
fees would be awarded for the same work provided by outside counsel.” Video-Cinema Films, Inc.
v. Cable News Network, Inc., 2004 WL 213032, at *6 (S.D.N.Y. Feb. 3, 2004). Courts in this
Circuit have routinely allowed attorneys’ fees for in-house counsel at a reasonable rate. See id.
(rejecting a plaintiff’s argument that it should pay attorneys’ fees for work performed by the
defendant’s in-house counsel after the court awarded such fees under 17 U.S.C. § 505); Baiul v.
NBCUniversal Media, LLC, No. 13-cv-2205, 2014 U.S. Dist. LEXIS 97527, at *9 n.5 (S.D.N.Y.
July 14, 2014) (“That the . . . Defendants request attorneys’ fees for work performed by their in-
house counsel is of no moment . . . .”), aff’d, 607 F. App’x 99 (2d Cir. 2015) (summary order);
United States ex rel. ATC Distrib. Grp., Inc. v. Ready-Built Transmissions, Inc., No. 03 Civ. 2150,
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2007 WL 2522638, at *2 (S.D.N.Y. Sept. 7, 2007) (rejecting, in a magistrate judge’s order in a
False Claims Act case, the argument that attorneys’ fees should not be awarded for work performed
by in-house counsel). Mr. Brandt’s decision to employ in-house counsel to assist retained counsel
represents a cost-saving measure that ultimately seems to have benefited the estate. Because Ms.
Vance’s work could have been performed by outside counsel, it is properly requested in the Fee
Application.
Finally, the Objection asserts that these costs are non-reimbursable overhead expenses and,
in any event, were provided only for the benefit of Mr. Brandt, not the Debtors or their estates.
Obj. ¶ 90. The U.S. Trustee Guidelines sheds light on the subject of non-reimbursable overhead
costs and they do not include the expense of in-house counsel:
Whether the expenses are or should be non-reimbursable overhead costs incident
to the operation of the applicant’s office and not particularly attributable to an
individual client or case. Without limitation, the United States Trustee will
ordinarily consider the following expenses to be overhead: Word processing,
proofreading, secretarial and other clerical services, rent, utilities, office equipment
and furnishings, insurance, taxes, telephone charges (other than actual charges for
multi-party conference calls incurred by counsel in connection with the case), and
library and publication charges.
U.S. Trustee Guidelines ¶ B(3)(e).119 Moreover, the Creditor Plan Proponents have failed to cite
any case in which a court disallowed the legal fees of an in-house attorney as overhead. Instead,
they cite to In re Fibermark for the proposition that “[o]verhead expenses are those incurred day
119 	The Guidelines also describe in less specific terms the consideration of overhead in connection with the fee
portion of fee applications.
Whether the application includes activities that should be considered part of the applicant’s overhead
and not billed to the estate. Tasks that the United States Trustee may object to as overhead include
clerical tasks and word processing. The United States Trustee may also object to fees for summer
clerks or summer associates, which are more properly the firm’s overhead for recruiting and
training.
Id. ¶ B(2)(j).
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to day by a law office regardless of whom it represents.” In re Fibermark, No. 04-10463, 2007
WL 2522638, at *3 (citing In re S.T.N. Enterprises, Inc., 70 B.R. 823 (Bankr. D. Vt. 1987)).
However, the Fibermark court also provides a non-exhaustive list of overhead expenses, including
“rent, insurance, taxes, utilities, secretarial and clerical pay, library, computer costs, office
supplies, local postage and telephone charges, meals, and local travel.” Id. This mirrors the
language in the U.S. Trustee’s Guidelines, which describes similar non-substantive tasks
appurtenant to the administrative operation of an office. See UST Guidelines ¶ B(3)(e).120
Overhead includes simple administrative costs, not the fees of in-house counsel.
Except to the extent set forth above, the Court overrules the Creditor Plan Proponents’
objection to the Trustee’s request for expense reimbursement. 	Accordingly, with respect to
expenses for the Final Expense Period, the Court awards $203,368.00 in connection with the Baker
Fees, $84,296.00 in connection with the In-House Fees, and an additional $38,958.52 for
traditional expenses (such as document review services, airfare, and lodging), which have not been
challenged. 	See Fee Application at 8-9. 	This totals $326,622.52 in approved expenses for the
Final Expense Period.
CONCLUSION
Based upon the foregoing, and for the reasons stated herein, the Court awards the Trustee
a commission in the form of (i) an adjusted lodestar of $10,905,914.00 arising from the Trustee’s
13,667 hours of time spent on this case at the hourly rates charged when he recorded the hours,
(ii) a fee enhancement in the form of a 1.5 multiplier applied to the Lodestar for a total commission
120 	The Creditor Plan Proponents also include a quote ultimately attributable to the 1996 version of the U.S. Trustee
Guidelines, which states that “[o]verhead consists of all continuous administrative or general costs incident to the
operation of the applicant’s office and not particularly attributable to an individual client or case.” Obj. ¶ 90 (quoting
In re GSC Grp., Inc., No. 10-14653, 2012 WL 676409, at *18 (Bankr. S.D.N.Y. Feb. 29, 2012)). Similarly, they omit
the portion of the quotation that describes the perfunctory nature of expenses defined as “overhead.” See UST
Guidelines ¶ B(3)(e).
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of $16,358,871.00, and (iii) expenses in the amount of $326,622.52 incurred in the Final Expense
Period, and directs the parties identified in the CFG Peru Plan as being responsible for payment of
the Trustee’s commission and expenses to pay the commission and expenses. The Court approves,
on a final basis, the $355,051.93 in interim expenses previously allowed and paid.
IT IS SO ORDERED.
Dated: New York, New York
January 27, 2023
/s/ James L. Garrity, Jr.
Hon. James L. Garrity, Jr.
U.S. Bankruptcy Judge
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