609 B.R. 889 (Bkrtcy.D.N.M. 2019), 18-11579-t11, In re MBF Inspection Services, Inc.

Docket Nº:18-11579-t11
Citation:609 B.R. 889, 68 Bankr.Ct.Dec. 46
Opinion Judge:Hon. David T. Thuma, United States Bankruptcy Judge
Party Name:IN RE: MBF INSPECTION SERVICES, INC., Debtor.
Attorney:Eric S. Bravo, Lane Alton & Horst LLC, Columbus, OH, Christopher M. Gatton, George D. Giddens, Jr., Giddens, Gatton & Jacobus, P.C., Albuquerque, NM, Richard E. Olson, Hinkle Shanor LLP, Roswell, NM, for Debtor. Daniel Harris Reiss, Levene, Neale, Bender, Yoo & Brill L.L.P, John-Patrick McGinnis ...
Case Date:December 24, 2019
Court:United States Bankruptcy Courts, Tenth Circuit

Page 889

609 B.R. 889 (Bkrtcy.D.N.M. 2019)

68 Bankr.Ct.Dec. 46

IN RE: MBF INSPECTION SERVICES, INC., Debtor.

No. 18-11579-t11

United States Bankruptcy Court, D. New Mexico

December 24, 2019

Page 890

Eric S. Bravo, Lane Alton & Horst LLC, Columbus, OH, Christopher M. Gatton, George D. Giddens, Jr., Giddens, Gatton & Jacobus, P.C., Albuquerque, NM, Richard E. Olson, Hinkle Shanor LLP, Roswell, NM, for Debtor.

Daniel Harris Reiss, Levene, Neale, Bender, Yoo & Brill L.L.P, John-Patrick McGinnis Fritz, Los Angeles, CA, for Creditor Committee.

OPINION

Hon. David T. Thuma, United States Bankruptcy Judge

The Court entered an order confirming Debtor’s plan of reorganization on December 18, 2019. At the confirmation hearing two days earlier, Debtor asked the Court to enter a final decree closing the case so it could stop paying U.S. Trustee fees. The U.S. Trustee’s office objected, arguing that pending fee applications prevent closure. Having reviewed the applicable statutory and case law and considered the facts of this case, the Court determines that entry of a final decree is appropriate.

I. FACTS .

The Court finds:1

Debtor filed this chapter 11 case on June 22, 2018. The same day Debtor applied to retain B.L.F., LLC as its bankruptcy counsel. The employment was approved by an order entered September 13, 2018.

Debtor was forced to retain new counsel in March 2019 because B.L.F.’s sole attorney, Jennie D. Behles, was disbarred. B.L.F. apparently assigned its account receivable to Ms. Behles. On July 16, 2019, Ms. Behles filed a final fee application for $279,318.52 for work done on the case. Debtor and the U.S. Trustee’s office both objected to the fee application. A final hearing on the application and objections thereto is scheduled for January 14, 2020.

Page 891

The main issue in this case was how to deal with the liability associated with a class action lawsuit against Debtor for underpaid wages. On the petition date, the lawsuit was pending in federal court in the Southern District of Ohio, styled Ganci v. MBF Inspection Services, Inc., Cause no 2:15-cv-02959-GCS-CMV. Class members are certain of Debtor’s current or former pipeline weld inspectors.

On May 16, 2019, the Court entered an order appointing a mediator to mediate the dispute between Debtor and the class action claimants. The mediation took place on May 30, 2019. The parties settled their dispute, subject to bankruptcy court and district court approval.

Based on the settlement, Debtor filed an amended plan of reorganization on August 16, 2019. The amended plan contains the following provisions germane to the issue before the Court: • The plan’s effective date is the "first day of the first month following the date upon which an Order confirming this Plan become final." Article 1, Section 1.1.13;

• Administrative expenses will be paid by the reorganized debtor within 30 days of the effective date. Article 6, section 6.1;

• Payments to the class claimants start on or before the effective date. Article 7, section 6.5.1;

• The reorganized debtor assumes management after confirmation. Article 7, section 7.4;

• All property of the estate vests in the reorganized debtor on the effective date. Article 11, section 2.2; and

• There are no deposits required by the plan.

The Court’s confirmation order is a final order, although the appeal period will not run until January 2, 2020. No appeal is anticipated because confirmation of the plan was not contested.2

In addition to Ms. Behles’ fee application, the Court must rule on final fee applications of counsel for Debtor and the Unsecured Creditors’ Committee ("UCC"). The fee applications have not yet been filed. At a December 23, 2019, hearing on Debtor’s request for a final decree, the reorganized debtor’s management represented to the Court and the parties that they did not anticipate objecting to either final fee application. Counsel for Debtor and the UCC confirmed that the proposed fee application amounts had been discussed and approved.

At the same hearing, the U.S. Trustee’s office informed the Court that if Debtor settled its fee dispute with Ms. Behles, the U.S. Trustee’s office objection would be resolved as well. Later that day, after the hearing, the Court was notified by counsel that Debtor and Ms. Behles settled the fee dispute. Thus, subject to entry of an order, it appears the Behles fee dispute has been resolved.

From the petition date through October 31, 2019, Debtor has disbursed about $66,619,000, or about $4,200,000 per month. If the Court enters a final decree now, Debtor proposes to pay the class action claimants $2,225,000...

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