Michael Morris, Klenda Austerman, LLC, Wichita, Kansas, for Appellees. Lazzo served as legal counsel for Schupbach Investments, L. The BAP reversed those portions of the bankruptcy court's order that (1) confirmed post facto approval of Mr.
Davis, the trustee of the Schupbach Investments Liquidation Trust (Trust), appealed the final fee order to the Bankruptcy Appellate Panel (BAP).
The plaintiff alleged that BMW did not deliver engines or other products to Fisker under the agreements.
On November 22, 2013, Fisker filed its Chapter 11 bankruptcy petition. Under the plan, a liquidating trust was formed, which, among other things, initiated an adversary proceeding against BMW attempting to recover the Payments as alleged fraudulent transfers under § 544 and § 548 of the Bankruptcy Code and the allegedly applicable California or Delaware law.
BACKGROUNDThe Debtor's business involved the purchase, renovation, rental, and sale of residential real estate in Wichita, Kansas. At the time it filed the petition, it failed to submit an application to employ Mr. In the final fee order, the bankruptcy court determined that Mr. In rulings pertinent to this appeal, the BAP determined that (1) Mr.
BMW opposed the trustee’s motion and argued that the Payments were not subject to § 548 because (i) the Payments were extraterritorial, occurring in Germany, not in the US, (ii) most of the Payments occurred more than two years prior to the debtor’s petition date, and (iii) the complaint failed to adequately allege Fisker’s insolvency.
The Employment Applications One month after Debtor filed its Chapter 11 petition, the United States Trustee notified Mr. The Debtor and the Schupbachs initially objected to the Creditors' Plan, but they later withdrew their objections to the plan as amended, and the bankruptcy court confirmed it. The Fee Applications The Debtor filed a total of seven fee applications, plus two supplemental seventh applications, which together covered Mr.
On June 17, 2011, shortly after he received the notice from the United States Trustee, Mr. This initial application, however, did not explicitly request post facto approval of his employment from the filing date of the petition. Lazzo did not clarify that he sought approval of his employment post facto to the petition date until several months later, on September 1, 2011, when he filed a supplemental employment application. Lazzo had “substantially complied” with the requirement to seek approval because (1) he filed his disclosure form at the time of the Debtor's petition, (2) “[a]ll the facts and circumstances surrounding the filing of this case and everything that was going on are sufficient justification for not [timely] filing the application,” and (3) the United States Trustee had not objected to the application. The Creditors' Plan of Liquidation (Creditors' Plan) called for the transfer of the Debtor's secured property to the secured creditors; the cancellation of the Schupbachs' ownership interest; the dissolution of the Debtor; and the creation of a liquidation trust vested with the Debtor's other property and rights. Post Facto Approval of Employment With court approval, a bankruptcy trustee or debtor-in-possession may employ professional persons, including attorneys, to assist them in their duties.
After a hearing, the bankruptcy court granted the application, reasoning that Mr. A number of secured creditors filed a competing plan calling for liquidation of the Debtor.
The Creditors' Liquidation Plan On October 3, 2011, the Debtor filed a proposed Chapter 11 plan, which would have permitted the Schupbachs to retain their ownership and control of the Debtor. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.