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In Re Marciano

February 27, 2012

IN RE MARCIANO


Bk. Case No. 1:11-BK-10426-VK

The opinion of the court was delivered by: Honorable A. Howard Matz, U.S. District Judge

JS-6; O

CIVIL MINUTES - GENERAL

Present: The Honorable A. HOWARD MATZ, U.S. DISTRICT JUDGE

Stephen Montes Not Reported

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys NOT Present for Plaintiffs: Attorneys NOT Present for Defendants:

Proceedings: IN CHAMBERS (No Proceedings Held)

The Official Committee of Unsecured Creditors ("Committee") appeals from an order of the bankruptcy court denying in part a motion filed by the Chapter 11 bankruptcy trustee ("the Trustee"). In relevant part, that motion sought to require counsel for the Chapter 11 debtor Georges Marciano to file retroactive employment and fee applications for the period in which the involuntary Chapter 11 petition was pending, known as the "Gap Period." The bankruptcy court ruled that Marciano's counsel would not be required to file applications for this period. Although the Trustee declined to appeal that ruling, the Committee seeks to overturn it. This Court holds that the Committee lacks standing because it did not join in the Trustee's motion or otherwise voice its support for the motion before the bankruptcy court issued its ruling. Accordingly, the Court dismisses the Committee's appeal.

FACTS

On October 27, 2009, several of Marciano's creditors filed an involuntary bankruptcy petition against Marciano under Chapter 11 of the Bankruptcy Code. On December 28, 2010, the bankruptcy court entered an order of relief, bringing Marciano's estate under the bankruptcy court's jurisdiction. The bankruptcy court and the parties refer to this period--from the filing of the involuntary petition to the entry of the order of relief--as the "Gap Period." On March 7, 2011, the bankruptcy court appointed David K. Gottlieb as the trustee of Marciano's bankruptcy estate. During the period starting with the entry of the order of relief and ending with the Trustee's appointment, Marciano was a "debtor-in-possession" under bankruptcy law. For that reason, that period is referred to as the "DIP Period."

After his appointment, the Trustee moved for an order requiring Marciano's attorneys to file employment and fee applications for their representation of Marciano "from the petition date to the date of the Trustee's appointment"--that is, for both the Gap Period and the DIP Period. Marciano objected to the motion and the Trustee filed a reply. The Committee did not join in the Trustee's motion or file any other papers indicating a position as to the Trustee's motion. On November 23, 2011, the bankruptcy court issued a written order requiring Marciano's counsel to file employment applications only for work performed during the DIP Period.*fn1 The bankruptcy court declined to decide whether to require Marciano's counsel to submit applications for the Gap Period and instead continued the hearing on the matter. Pursuant to the court's ruling, Hill Farrer & Burrill ("HFB"), a law firm representing Marciano, filed an employment application for the DIP Period. Shortly thereafter, both the Trustee and the Committee filed objections to HFB's application for the DIP Period.*fn2

At a hearing on February 12, 2012, the bankruptcy court took up the matter of whether Marciano's counsel would be required to submit employment applications for the Gap Period. Peter Davidson, counsel for the Committee, appeared at the hearing. Davidson did not, however, voice the Committee's views on the matter, despite the fact that the bankruptcy court invited the assembled attorneys to speak before it issued its ruling. E.R. 697 ("THE COURT: And the Court's reviewed the case law on that issue. I don't know if people want to talk about it. If not the Court is ready to make a ruling. Okay."). The bankruptcy court then ruled that it would not require ...


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