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SCO's Ch. 11 Trustee Cahn files to block approval of professional fees until he can review them
Friday, September 25 2009 @ 11:57 PM EDT

Another bill from Pachulski Stang filed in the SCO bankruptcy, this one for July, but the Chapter 11 trustee, Edward Cahn, has filed an Omnibus Response to and Reservation of Rights With Respect to Allowance of Debtors' Professionals' Fee Applications [PDF]:
WHEREFORE, the Trustee respectfully requests that (a) this Court refrain from approving interim and final allowance of the Professionals' fees as requested in the Fee Applications until such time as the Trustee has reviewed and evaluated the Fee Applications, (b) any fee applications listed on Exhibit A not be considered allowed under the Interim Compensation Order until further review and evaluation of the fees and case status has been determined and (c) granting such other and further relief as is just, proper and necessary.
What does it mean? He'd like to see if the fees are reasonable. And there is a hint of possible disgorgement of fees already paid.

The reference to the Exhibit A's refers not to an exhibit attached to his filing but to the exhibits each professional's bill includes, Exhibit A being the details of each bill. For example, here's Pachulski Stang's Exhibit A attached to this bill. You'll notice a change in style. This bill includes not just names but indications of where the person works. We used to have to guess.

Here's what the Chapter 11 Trustee has been doing:

9. The Trustee has been diligently reviewing the Debtors' pending litigation and business operations and prospects. Indeed, the Trustee's recent appointment has not allowed for sufficient opportunity to review and evaluate fees incurred and sought in these cases. Moreover, the Trustee is evaluating the retainers received by professionals and any unused retainers available to certain professionals. The Trustee interposes this Reservation of Rights to request additional time to review and evaluate the reasonableness of the Fee Applications that have been filed. Absent a more fulsome review of the Fee Applications, the Trustee is unable to take a position on the reasonableness of the fees requested by the Fee Applications.

10. Accordingly, the Trustee files this Reservation of Rights to reserve all rights to object to interim and final allowance of the Fee Applications, if any, until the Trustee has completed the review process. Any failure by the Trustee to have filed or to file an Objection with respect to a Monthly or Interim Fee Application shall not serve as a waiver to the Trustee's right to object to the reasonableness of any Professional's fees on a final basis.

Might "certain professionals" who got retainers include Boies Schiller? Yes, but I also recall an affidavit from Laurie Jones [PDF] of Pachulski Stang, back when SCO first filed for bankruptcy, about a retainer, the math for which we couldn't get to line up at the time. Perhaps the trustee can. Remember her telling about $72,928 paid by SCO to the firm in the year prior to SCO filing for bankruptcy? But for what? Starting when? Then there is the $887,523.55 that Stuart Singer of Boies Schiller told the court [PDF] his firm got from SCO in the year prior to the filing. God knows that's the smallest part of what they got. Any of that retainer left? Then there was the whopping bill by Mesirow for almost a cool half million for two and a half months' work. $48,000 and change of that total was for expenses for 11 people. Nice work if you can get it. But is it reasonable? They had a retainer of $35,000, too, as I recall. Lots of reading ahead for Mr. Cahn. Hopefully the question he'll be asking will be, What were you thinking?

The filings:

09/25/2009 - 918 - Certificate of No Objection (No Order Required) Regarding Twenty-Third Interim Application of Berger Singerman, P.A. for Compensation for Services and Reimbursement of Expenses, as Co-Counsel to the Debtors in Possession for the Period From July 1, 2009 through July 31, 2009 (related document(s) 905 ) Filed by The SCO Group, Inc.. (Attachments: # 1 Certificate of Service & Service List) (O'Neill, James) (Entered: 09/25/2009)

09/25/2009 - 919 - Application for Compensation (Twenty-Third) of Pachulski Stang Ziehl & Jones LLP for Compensation and for Reimbursement of Expenses for July 1, 2009 through July 31, 2009 Filed by Pachulski Stang Ziehl & Jones LLP. Objections due by 10/15/2009. (Attachments: # 1 Notice # 2 Exhibit A # 3 Certificate of Service & Service List) (O'Neill, James) (Entered: 09/25/2009)

09/25/2009 - 920 - Omnibus Response to and Reservation of Rights With Respect to Allowance of Debtors' Professionals' Fee Applications Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al. (Attachments: # 1 Certificate of Service) (Fatell, Bonnie) (Entered: 09/25/2009)


  


SCO's Ch. 11 Trustee Cahn files to block approval of professional fees until he can review them | 168 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
SCO's Ch. 11 Trustee Cahn files to block approval of professional fees until he can review them
Authored by: entre on Saturday, September 26 2009 @ 12:04 AM EDT
Good luck and enjoy the readings.

[ Reply to This | # ]

Corrections here
Authored by: PolR on Saturday, September 26 2009 @ 12:05 AM EDT
If any is needed.

[ Reply to This | # ]

OT here
Authored by: PolR on Saturday, September 26 2009 @ 12:07 AM EDT
Make them clickies if you can. Instructions are below the comment box.

[ Reply to This | # ]

Newspick here
Authored by: PolR on Saturday, September 26 2009 @ 12:09 AM EDT
Please refer to the headline in the comment title. This will let us know which
news pick you refer to.

[ Reply to This | # ]

Humor inquiry. Can this pig fly?
Authored by: PolR on Saturday, September 26 2009 @ 12:17 AM EDT
I don't see wings on this pig. I don't think it can fly. Is this the point of
the picture? Or is there some other kind of humor that I missed?

:)

[ Reply to This | # ]

6 in a row
Authored by: PolR on Saturday, September 26 2009 @ 12:19 AM EDT
Wow. With this post I made six posts in a row with no intervening posts by other
posters. This must be some kind of record.

[ Reply to This | # ]

And now for the boring part
Authored by: Anonymous on Saturday, September 26 2009 @ 01:38 AM EDT
No Objections and sur sur replies and requests for overlong memorandums.

[ Reply to This | # ]

Possible disgorgement - Now you are cooking with gas!
Authored by: argee on Saturday, September 26 2009 @ 02:14 AM EDT
I just love that word. But I am not optimistic.


---
--
argee

[ Reply to This | # ]

Is this unusual?
Authored by: rsteinmetz70112 on Saturday, September 26 2009 @ 03:15 AM EDT
I wonder if this is unusual or a normal thing a Trustee would do to establish
control.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

$425, $595, $825 per hour?
Authored by: AMackenzie on Saturday, September 26 2009 @ 03:59 AM EDT
How on earth can they justify hourly rates like that? Surely they're taking the
Mickey ever so slightly?

I've no objection to people who achieve highly being paid for those achievments,
but in the present case there was no achievement - just lots of "reviewing
orders scheduling telephonic hearings" at $425/hour, and "drafting
email correspondence" also at $425/hour, and "filing letters to Judge
Gross" at $210/hour. You charge $210/hour for a filing clerk? Nice work
if you can get it! And after all this activity, there still wasn't a viable
rescue plan for SCO, or anything resembling one.

Is it open to the trustee to challenge these hourly rates at all?

[ Reply to This | # ]

SCO's Ch. 11 Trustee Cahn files to block approval of professional fees until he can review them
Authored by: Anonymous on Saturday, September 26 2009 @ 08:08 AM EDT
Funny. Where the '(joke)'? Heh.

[ Reply to This | # ]

When does Novell get paid?
Authored by: Anonymous on Saturday, September 26 2009 @ 11:10 AM EDT
I thought when the last ruling came down from the judge (the one that kicked the
APA summary judgement back to a trial) that Novell's claims were not overturned.
Shouldn't Novell have been paid by now? Has there been any mention of the $3
million or so of Novell's money getting sent to them?

[ Reply to This | # ]

"unused retainers" - there is no such thing
Authored by: vb on Saturday, September 26 2009 @ 12:17 PM EDT
"the Trustee is evaluating the retainers received by professionals and any
unused retainers..."

Good luck with that. Lawyers *never* return anything left over from a retainer.
Once the job is done, the retainer is gone, even if the retainer was an
overestimate. If you're lucky you might get a some additional services without
additional charge, but you'll never get any money back.

I'm guessing that accountants act the same way.

I challenge anyone to speak up if, from personal experience, you have been
treated differently.

[ Reply to This | # ]

Trustee uses phantonym: fulsome != thorough
Authored by: UncleJosh on Saturday, September 26 2009 @ 12:36 PM EDT
From The NY Times Magazine's On Language column: "Phantonyms pop up in the usage of even so careful a speaker as President Obama. As William Safire noted in March, when the president said that he wanted the American people to have “a fulsome accounting” for his stimulus program, he meant full, whereas to punctilious authorities the word means disgusting, excessive, insincere."

[ Reply to This | # ]

Hopefully the question he'll be asking will be, What were you thinking?
Authored by: The Mad Hatter r on Saturday, September 26 2009 @ 02:49 PM EDT

What would be really nice is if he would tell the general public what he finds.
Now I understand that his duty is to try and pay out as much as possible to the
people or organizations that The SCO Group is in debt to. However The SCO Group
was attacking many others, such as the Linux Kernel project, and the groups that
were attacked deserve to know why and what was going on.


---
Wayne

http://crankyoldnutcase.blogspot.com/

[ Reply to This | # ]

"Unused retainers available to certain professionals"
Authored by: Anonymous on Saturday, September 26 2009 @ 05:57 PM EDT

I don't think this cryptic reference has anything to do with BSF, because BSF doesn't represent SCO in the bankruptcy and it doesn't file interim fee applications.

Since October 2008, Berger Singerman and Pachulski (but not Tanner) haven't been receiving the 20% holdbacks on fees that SCO was authorized to pay under the interim compensation order [95] when the quarterly fee applications were approved. At the same time, those firms also stopped showing the unpaid holdbacks as having been approved on their quarterly applications, even though they were approved. They seem to have tacitly agreed that SCO wouldn't pay them, at least not then.

The latest Pachulski application [919] shows a balance forward of about $68,000, and Berger [905] shows $214,000. Those are interim-allowed, post-petition debts that SCO ought to have paid, and was paying until October 2008, when the quarterly applications were approved. SCO's failure to pay these fees, and the professionals' failure to demand payment, haven't been explained. It wouldn't be surprising if Cahn thought something funny was going on here.

[ Reply to This | # ]

So why hasn't the trust money been turned over by now?
Authored by: Anonymous on Sunday, September 27 2009 @ 10:20 PM EDT
If any money is held in trust for Novell, why has it not been turned over? I
thought the bankruptcy judge ruled on that.

[ Reply to This | # ]

SCO's Ch. 11 Trustee Cahn files to block approval of professional fees until he can review them
Authored by: Anonymous on Tuesday, September 29 2009 @ 08:53 AM EDT
SCO's reply is still not in that I can see. The first is fast coming up on us
and I am wondering if SCO files after the first, does it still count as being
filed or does it get assumed that SCO does not contest this and the Court can
then rule? Could the trustee have instructed the law firms not to reply and if
so could this be telling of what he is thinking in regards to the litigations?

[ Reply to This | # ]

  • Wait ... - Authored by: Anonymous on Tuesday, September 29 2009 @ 05:13 PM EDT
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