Furniture World, Inc.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
Furniture World, Inc.
Debtor. No. 11-10-13292-SA
MEMORANDUM OPINION AND ORDER
APPROVING IN PART AND DENYING IN PART
FIRST AND FINAL COMPENSATION APPLICATION
FOR COUNSEL FOR DEBTOR IN POSSESSION
AND ORDERING FILING OF ADDITIONAL APPLICATION(S)
Debtor in Possession counsel (“Firm”, or “Counsel” referring
to the Firm’s senior attorney as context may dictate) filed its
First and Final [sic] Application for Allowance and Payment of
Fees and Reimbursement of Expenses by Attorneys for Debtor [in
Possession], Furniture World, Inc., for the Period of June 30,
2010 through June 28, 2011 (“Application”) on July 27, 2011 (doc
139) and refiled the Application on July 28, 2011 pursuant to
instructions from the Clerk’s office (doc 141). The Firm noticed
the Application out on July 27, 2011 (docs 140 and 142). No	1
objections were received, including no objection from Debtor’s
management or the United States Trustee. In consequence, the	2
Firm has submitted a proposed form of order to allow it total
The notices filed with the Court did not have attached to	1
either of them a copy of the Court mailing matrix that the Firm
used to send out the notices. In the future, the Firm should
ensure that a copy of the matrix is attached.
The Court notes that the notice of objection deadline	2
provides instructions on how to access a copy of the Application.
Doc 142. The instructions refer to ACE, the case management and
electronic filing system that was replaced a number of years ago
by CM/ECF. The Firm needs to update its form.
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fees of $79,386.00, New Mexico gross receipts tax of $5,557.02 on
that figure, and costs of $4,201.07.3
The Application did not have attached to it the monthly
invoices or billing statements for the period at issue. Counsel
explained that the invoices (12 in all) were so bulky that the
Firm was unable to upload them to CM. When the Court requested
copies of the invoices, the Firm promptly provided them in hard
copy.
The Court reviewed the invoices, together with the
Application and attachments to the Application. Based on that
review and a review of the Order Confirming Debtor’s Second
Amended Plan of Reorganization (“Confirmation Order”) and the
attached Second Amended Plan (“Plan”) (doc 131), entered June 29,
2011, the Court has the following observations and rulings:
The Firm charged a combination of $250 per hour and $300 per
hour for the time of senior counsel at the Firm. Since there was
no objection to the rates charged, the Court allows the billings
at the rates charged, without making any ruling on the
reasonableness of those rates (with the minor exceptions detailed
below).
The Court has calculated these figures based on Exhibit B	3
attached to the Application modified by reducing the charge for
in-house photocopying from $.40/page to $.10/page. See also
Application. Doc 141, page 23 of 36. The proposed order from
the Firm took into account the Court’s earlier request, conveyed
by e-mail, to reduce the photocopying charges.
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At the outset, the Court immediately denied without
prejudice the first cash collateral motion (doc 6) and request
for emergency hearing on same (doc 7) filed on the petition date
(June 30, 2011) for deficiencies on the face of the motion – no
budget attached and failure to serve Bank of America, the primary
secured creditor. Doc 10. The Court would have considered
reducing the billing in connection with that filing except that
the invoices show virtually no time at all on these first two
motions. Although this lack of billing is puzzling, the old	4
basketball adage of “no harm, no foul” would seem to be
applicable.5
There was also some considerable confusion about a set of
three motions filed by the Debtor with a request to shorten quite
sharply the time for objections. These orders dealt with an
extension of the request for use of cash collateral, and two
The billings do show considerably more time was spent	4
starting July 1 on the follow-up motion for use of cash
collateral, but this subsequent billing was quite appropriate in
the circumstances.
The same applies to what appear to be other anomalies in	5
the invoices. For example, entries for August 3, 2010 show time
spent revising the third cash collateral motion and revising the
fourth cash collateral order [sic]. August 31, 2010 invoice,
page 2. This does not make sense of course, and in fact the CM
docket shows the filing of the third motion for use of cash
collateral (doc 44) and the entry of the order granting the
second motion for use of cash collateral (doc 45) on August 3.
The Court assumes these entries were merely mistakes made in the
course of recording the time and not caught when the bills were
proofread before sending them to the client.
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motions, one to leave the then-current business premises of the
Debtor and another to move into the new premises. See generally
docs 40, 41, 43, 44, 46, 47, 49, 50-52, 54-57, and 59-61. After
several e-mail exchanges, all included in the filing at docket 53
(which pretty much explains and illustrates the problem), it
finally became clear to the Court what it was that the Debtor
wanted and what it needed. For example, the initial moving
papers did not make clear that Debtor needed the month of August
to help implement the move to the new location, so that not
having a decision on the ability to move out of the one location
and move into another until the end of August would not work for
the Debtor. Counsel then clearly explained what the problem was,
so that ultimately orders were entered granting the relief
requested. Suffice it to say that the e-mail correspondence and
the filings demonstrate that the filings were not of the quality
that an attorney charging $300 per hour should be compensated
for, to say nothing of the Court’s time used to figure out what
was going on and to issue the needed instructions to clear things
up. For that reason, the Court will instruct the Firm to deduct
$500.00 from the requested fees, together with the applicable
gross receipts tax.6
The Court is still puzzled by the fact that the e-mail it	6
sent the Firm addressing this issue on Tuesday, August 3, 2010 at
5.06 pm either did not arrive at or was not seen by the Firm
until the morning of Friday, August 6. Doc 53, page 3 of 10.
(continued...)
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Finally, the application is titled “First and Final”,
suggesting that the Firm will not be submitting any additional
compensation applications. Of course the Firm continues to
provide services to Debtor; a cursory glance at the docket shows
entries for obtaining a bar date for claims, claims objections
and resolutions (including the unsuccessful challenge of the Tara
Kappenman claim which involved a half-day trial over a post
petition transaction for $2,637), and a request for a final
decree. The Court assumes the Firm has received or expects
compensation for its work.
The Confirmation Order provides that “[t]he Effective Date
of the Plan shall be the date this Confirmation Order is
entered.” Plan, decretal paragraph B, doc 131, at page 4 of 8
pages. The Confirmation Order was entered June 29, 2011. The
Application runs through June 28, 2011. The Court is not aware
of any provision in the Code or the rules (national or local)
that provides that the Firm may cease to file compensation
applications. Nor is there any such provision in the Plan that
the Court can find. In fact, paragraph 10.5, Retention of
Jurisdiction, provides in relevant part that the Court retains
(...continued)	6
The Court only notes that phenomenon as a further anomaly, and is
not separately deducting anything for it. Similarly, the Cort
has not deducted anything for the cash collateral motion
submitted without a budget and without notice to the primary
secured creditor.
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jurisdiction to “[h]ear and determine all requests for allowance
of compensation and/or reimbursement of expenses made by
Professional Persons after the Confirmation Date.” Id. at ¶10.5
(c). While this provision could certainly be construed to say
that the Court retains jurisdiction to decide only those
applications actually submitted to the Court for decision, the
language could also imply that the professionals will continue to
file compensation applications. In any event, however, nothing
in the Plan dispenses with the obligation to file the
applications required by §330. While it does not appear that
payment to the class 4 and 5 unsecured claims is dependent on
what remains from the reorganized Debtor’s monthly or quarterly
budget – Plan, ¶¶ 3.6, 3.7 and 4.01 – the disclosure and
accountability of the compensation process is nonetheless still
important.
IT IS THEREFORE ORDERED as follows:
1. The Firm shall file in CM the invoices that were submitted
to the Court in support of the Application, and shall do so
no later than Wednesday, November 30, 2011.7
2. The Firm shall submit to the Court a form of order
consistent with this memorandum opinion, including in the
Should the Firm have difficulty uploading the exhibits, it	7
should consult with the Clerk’s office about breaking down the
collection of billing statements into smaller increments for
uploading. This is another example of a problem that a firm that
charges $300 per hour should not be presenting to the Court.
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order an accounting showing for each professional person the
fees charged and at what rate in the Firm, a subtotal of all
the fees charged (and showing the subtraction of the $500
referred to in this memorandum decision), the applicable New
Mexico gross receipts tax on the fees, and the costs charged
together with any applicable New Mexico gross receipts tax
on the costs.
3. The Firm shall file one or more additional compensation
applications as a condition to obtaining a final decree for
Debtor. As part of any further compensation applications,	8
the Firm shall upload as exhibits the relevant billing
invoices. Any further notice concerning any applications
shall have attached a mailing matrix and shall refer readers
to CM/ECF rather than ACE.
4. Should the Firm have any objection to filing a further
compensation application, including wanting to argue that
the Court has missed an important piece of information, the
Firm may request a hearing with notice to the United States
If the Firm moves promptly, it can file such an	8
application, and another request for a final decree (if the
status of the case justifies it), soon enough to obtain a final
decree before the end of the quarter, without the need for a
significant reduction in any notice periods. Of course, this
assumes that there will continue to be no objections from the
Debtor, the creditors or the United States Trustee office.
Should there be objections, the Court will conduct a hearing on
short notice as needed.
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Trustee and the Court will conduct such a hearing on short
notice.
James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: November 21, 2011
COPY TO:
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Louis Puccini, Jr
Puccini Law, P.A.
PO Box 50700
Albuquerque, NM 87181-0700
Robert J Muehlenweg
Rammelkamp, Muehlenweg & Cordova, P.A.
316 Osuna Rd NE Unit 201
Albuquerque, NM 8710
James C Jacobsen
111 Lomas NW Ste 300
Albuquerque, NM 87102-2368
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