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Court Locations

6500 Cherrywood Ln - Greenbelt, MD 20770 - Main Tel: 301-344-8018 map
101 W Lombard St Room 8530 - Baltimore, MD 21201 - Main Tel: 410-962-2688

The state court appointed Receiver of the Debtor (Receiver) and his Counsel filed separate motions seeking allowance of compensation and expenses incurred as administrative expense claims pursuant to 11 U.S.C. §§ 543(c)(2), 503(b)(3)(E) and 503(b)(4). The Receiver served in this capacity for the ten-day pre-petition period and was superseded by the commencement of the bankruptcy case pursuant to 11 U.S.C. § 543(a). The Receiver did not seek authority to continue in this capacity for the post-petition period yet continued to play an active role in the case primarily by seeking its dismissal. The Receiver and Counsel sought compensation and expenses for both the pre and post-petition periods. The Receiver and Counsel argued that it was not necessary that their actions contributed a substantial benefit to the estate for an award of fees but instead that the Court should rule in their favor because their activities could reasonably have been thought to be beneficial to the estate when they were performed. The Court, in concluding pursuant to well established law that a genuine benefit to the estate must be established, found that: (1) conclusory and bald averments that the Receiver and Counsel’s work tended toward the preservation and benefit of the estate was not sufficient; (2) reduced compensation for the Receiver would be awarded only for the ten-day pre-petition period; (3) Counsel was not entitled to any compensation, as his time records did not provide any evidence that his work tended toward the preservation or benefit of the estate.

Robert A. Gordon