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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)


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