It is Permissible for Trustee to Hire Herself as a Lawyer in a Chapter 7 Case

It is Permissible for Trustee to Hire Herself as a Lawyer in a Chapter 7 Case

On November 11, 2014, the Trustee in the above-captioned Chapter 7 case filed an Application to appoint himself as counsel for the Chapter 7 Trustee. This application was approved by the Court by Order dated November 19, 2014. No party in interest appealed the November 19, 2014 Order. On March 13, 2017, counsel for the Trustee filed a First and Final Fee Application which was met by objections filed by the Debtor, who is also an attorney. The matter proceeded to hearing at which time the Court took the objections under advisement.

The several objections raised by the Debtor  can be generally summarized as follows. Permitting compensation for many of the tasks performed by counsel for the Trustee would amount to “double dipping” because counsel requested compensation for services normally performed by the Trustee without the assistance of an attorney. In regard to a general argument that many of the tasks performed by counsel were unreasonable under 11 U.S.C. § 330(a)(3)(A), were allegations that the fees charged were not based on the level of skill reasonably required to perform some of the services; the services were not necessary to the administration of the case nor were they beneficial to the estate; and the amount of time expended on each task was unreasonable when viewed in relation to the complexity, importance, and nature of the problem, issue, or task addressed. Additionally, the retention of counsel for the Trustee was “merely a scheme to avoid the proscriptions of 11 U.S.C. 326(a), and to charge two fees and avoid the courts [sic] review of the distribution to parties in interest.”

While not raised in the written objections to the fee application found in Doc. #157, the Debtor did argue, at the time of hearing and more particularly in its post-hearing brief, whether the appointment of the Trustee, as his own counsel, was the appointment of a person who was disinterested as required by 11 U.S.C. § 327(a). The Debtor indicates that while the application to appoint counsel referenced that counsel did not hold an interest adverse to the estate, no where did it represent that counsel was disinterested.

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