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Hearing on Interim Compensation/Bonuses set for March 7 at 2 PM in Bankruptcy Ct.
Tuesday, February 19 2008 @ 02:42 AM EST

There is a hearing scheduled [PDF] to consider approving the various quarterly fee applications folks working for SCO have filed in bankruptcy court. The hearing will be March 7th at 2 PM. That is the same hearing that will consider whether executive incentive bonuses SCO says were paid in the ordinary course of business really were. The US Trustee's Office apparently doesn't see them that way. SCO would like testimony at the hearing closed to the public and sealed, so if you are thinking of going to the hearing, you probably want to check with the court first. So much has been going on regarding the reorganization plan, this detail about the trustee's concerns hasn't been highlighted, but it's docket numbers 344 and the request to seal is 345 [PDFs]. If anyone can do OCR's on those two, I'd appreciate it.

The applications for interim compensation being considered that day will be Pachulski Stang's, Tanner's, Dorsey & Whitney's [PDF], Berger Singerman's, and of course Mesirow [PDF] -- you remember the "astonishing" first monthly bill from Mesirow -- Novell being the one that called the level of spending reflected in the first bill "astonishing". If you recall, the bill was for $449,888.30 plus expenses of $48,702.11, and Novell told the court that while it would let the interim bill pass, it reserved its right to object to the amount on final application to the court. That won't be at this hearing, I don't think, as we're still in interim compensation territory. This is the filing [PDF] that gives you the grand totals in interim compensation requested by one and all.

There is also a hearing scheduled [PDF] for April 2nd at 2 PM on SCO's Amended Notice of Debtor's Motion to Approve Settlement Compensation or Sale Compensation and Expense Reimbursement to Plan Sponsor, 'plan' meaning their recent reorganization plan, with the deadline for objections being March 26. The original Notice [PDF] mistakenly had April 26 as the deadline.

These bills that will be considered at the March hearing are all being submitted under Bankruptcy Code Section 331, Interim Compensation:

A trustee, an examiner, a debtor’s attorney, or any professional person employed under section 327 or 1103 of this title may apply to the court not more than once every 120 days after an order for relief in a case under this title, or more often if the court permits, for such compensation for services rendered before the date of such an application or reimbursement for expenses incurred before such date as is provided under section 330 of this title. After notice and a hearing, the court may allow and disburse to such applicant such compensation or reimbursement.

So we're talking interim payments. Later, there will be a final determination, and if you read Section 330, referenced in 331, you see that the court can then authorize less than was requested, as the standard is reasonable fees and expenses for actual, necessary services:

(A) reasonable compensation for actual, necessary services rendered by the trustee, examiner, ombudsman, professional person, or attorney and by any paraprofessional person employed by any such person; and

(B) reimbursement for actual, necessary expenses.

And here are the factors the court will consider:

(3) In determining the amount of reasonable compensation to be awarded to an examiner, trustee under chapter 11, or professional person, 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;

(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;

(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.

Here's what won't fly by, or at least what isn't supposed to:

(4)

(A) Except as provided in subparagraph (B), the court shall not allow compensation for—

(ii) services that were not—
(I) reasonably likely to benefit the debtor’s estate; or
(II) necessary to the administration of the case.

How the first monthly Mesirow bill can get over this bar is unknown. I can't understand how the bill, almost all for the clearly unacceptable York deal, can be cloaked as necessary to the case or likely to benefit the estate, given that they were proposing a plan that ignored the rights of creditors, most particularly Novell, including the scheme of selling off assets that the Utah District Court had already ruled were not theirs to sell. Novell, as you'll remember, saw it similarly, saying its concern regarding the Mesirow bill was that it spent over 600 hours and in excess of $250,000 on analysis of a deal "for which no definitive value has been realized." Let's not even mention the expenses for dinners out. But, bankrupcy court has surprised me more than once with its largesse, so who knows? My point is that what happens at the hearing isn't necessarily what will ultimately happen.

Here are the filings:

349 - Filed & Entered: 02/14/2008
Notice of Hearing (B)
Docket Text: Notice of Hearing of Amended Notice of Debtors' Motion to Approve Settlement Compensation or Sale Compensation and Expense Reimbursement to Plan Sponsor (related document(s)[346] ) Filed by The SCO Group, Inc.. Hearing scheduled for 4/2/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 3/26/2008. (Attachments: # (1) Certificate of Service and Service List) (O'Neill, James)

350 - Filed & Entered: 02/14/2008
Application for Compensation
Docket Text: Quarterly Application for Compensation and Reimbursement of Expenses of Mesirow Financial Consulting, LLC as Financial Advisors to the Debtors for the Period from September 14, 2007 through December 31, 2007 Filed by Mesirow Financial Consulting, LLC. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 2/29/2008. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service andService List# (4) Certificate of Service andService List (Notice Only)) (Werkheiser, Rachel)

351 - Filed & Entered: 02/15/2008
Certificate of No Objection
Docket Text: Certificate of No Objection re Fourth 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 December 1, 2007 through December 31, 2007 (related document(s)[314] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service) (O'Neill, James)

352 - Filed & Entered: 02/15/2008
Application for Compensation
Docket Text: Monthly Application for Compensation Third Interim Application of Dorsey & Whitney LLP, Special Counsel to the Debtors and Debtors-in-Possession for Compensation and Reimbursement of Expenses for the Period December 1, 2007 through December 31, 2007 and Notice of Intent to Setoff Certain Pre-Petition Fees and Expenses against Pre-Petition Retainer Filed by Dorsey & Whitney LLP. Objections due by 3/6/2008. (Attachments: # (1) Exhibit Exhibit A # (2) Exhibit Exhibit B # (3) Exhibit Exhibit C # (4) Exhibit Exhibit D # (5) Exhibit Exhibit E # (6) Notice Notice) (Schnabel, Eric)

353 - Filed & Entered: 02/15/2008
Application for Compensation
Docket Text: Quarterly Application for Compensation and for Reimbursement of Expenses for the Period from September 14, 2007 through December 31, 2007 (First) Filed by Dorsey & Whitney LLP. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 3/3/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Exhibit B # (4) Exhibit C # (5) Certificate of Service # (6) Certificate of Service (2002 Parties)) (Werkheiser, Rachel)

354 - Filed & Entered: 02/15/2008
Notice of Hearing (B)
Docket Text: Notice of Hearing to Consider Approval and Allowance of Quarterly Fee Applications (related document(s)[327], [350], [342], [353], [336] ) Filed by The SCO Group, Inc.. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. (Attachments: # (1) Exhibit A # (2) Certificate of Service) (O'Neill, James)


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