IN RE WIRELESS TELECOMMUNICATIONS, INC. (Bankr.M.D.Pa. 10-14-2010)

JOHN THOMAS, Bankruptcy Judge

The Debtors were authorized to employ Hogan Hartson LLP as Special FCC Counsel by Order of this Court dated December 29, 2003 (Doc. #228). On August 13, 2007, Hogan Hartson LLP filed a First and Final Application requesting compensation and reimbursement of expenses (Doc. #819). Thereafter, the Debtors filed a Motion pursuant to Federal Rule of Bankruptcy Procedure 9019 for an Order approving a Stipulation and Agreement addressing the Final Application of Hogan Hartson LLP for its request for compensation and reimbursement of expenses (Doc. #1320). In response to the limited notice on the underlying Motion, Vermont Telephone Company, Inc., (hereinafter "VTel"), filed a Limited Objection (Doc. #1333). The Court held a hearing on the Motion and Limited Objection on March 16, 2010 and at the conclusion of the hearing, took the matter under advisement.

The Final Fee Application requests compensation in the amount of $54,742.50 together with reimbursement of expenses in the amount of $592.57 for a total of $55,335.07. The allegations of the Motion indicate that the Debtors believe the total request in the Fee Application is excessive. Not surprisingly, Hogan Hartson contend that the amounts requested are reasonable. The Motion further alleges, at paragraph 16, that the parties intended to settle the dispute in order not have the expense, delay, and uncertainly associated with any litigation concerning the Fee Application. In short, the parties stipulated that Hogan Hartson should be allowed an administrative expense in the amount of $27,667.53. The Motion provides that by applying the factors the Court must consider when requested to approve a compromise or settlement under Fed.R.Bankr.P. 9019, as set forth in the case of Myers v. Martin (In re Martin), 91 F.3d 389 (3d Cir. 1996), the Court should find that the Stipulation is reasonable and in the best interest of the estate. Furthermore, the Debtors allege that the request for compensation and reimbursement of expenses satisfies, in all respects, the standards of the Code under Section 330 and the applicable standards for allowance of compensation and reimbursement of expenses as set forth in the case of In Re Busy Beaver Building Centers, Inc., 19 F.3d 833 (3d Cir. 1994).

VTel's objection argues that the Debtors have provided no information as to why they believe the Final Fee Application was excessive and why the settlement amount is a fair settlement in the best interests of the estate and its creditors. Further, VTel questions why any compensation should be allowed to Hogan Hartson when the Debtors may have viable claims against Hogan Hartson arising from the work they were hired to perform on behalf of the estate. In short, VTel questions the rationality of the settlement. VTel also indicates that, while deference should be given to the Debtors' business judgment decisions, the factors which the Debtors used to make a decision to settle the potential dispute on the Fee Application were not made public, and therefore, neither the creditors nor this Court can weigh the reasonableness of the settlement.

At the hearing, the Court heard argument from both the Debtors and VTel. The only witness was Neil Gilmour, President and Chief Restructuring Officer and Plan Administrator of the Debtor. No one from the applicant, Hogan Hartson, participated in the hearing. Mr. Gilmour's testimony parroted the position advanced by the Debtors in the Motion to approve the Stipulation concerning both the reasons why the Court should approve the Stipulation using the Martin factors and why a fifty percent (50%) reduction in the request for fees and expenses under 11 U.S.C. § 330 and the Busy Beaver standards were appropriate. After the closing of the record, I observed that every application presented to this Court had to be reviewed under the guidelines of Busy Beaver and that I really did not view this matter as a settlement to be analyzed under the Martin factors. Rather, I would review the Application in its reduced, negotiated state as presented by the Debtors.

As I begin my review of the Fee Application, I keep in mind that the only testimony provided to the Court on the Section 330 standards was by Mr. Gilmour and that no one testified on behalf of the applicant. Mr. Gilmour recognized that Hogan Hartson provided value to the estate by their services, but he was not able to quantify the value of those services. He further testified that he felt a reduction was in order because many of the time entries concerned the circumstances surrounding the resignation of Hogan Hartson as Special FCC Counsel and the ramifications of that resignation. He indicated that he could not determine the reasonableness of many of the time entries because they involved the "lumping" of several services under one time entry. Also, many entries did not identify the subject matter of correspondence or phone calls. These last two items are both specific requirements of fee applications of professionals filed in the United States Bankruptcy Court for the Middle District of Pennsylvania and are found, among other requirements, at Local Bankruptcy Rule 2016-1(b).

Admittedly, this matter came before the Court on a Motion to approve a Stipulation and not on a hearing to review the underlying Fee Application under Section 330 of the Bankruptcy Code. As with any Fee Application, there is the possibility that the Court may disallow certain items of compensation and Busy Beaver instructs that the applicant has a right to a hearing should disallowance be a consideration. This possibility, coupled with the fact that the Fee Application, as originally filed or as renegotiated, was not noticed to creditors under either Fed.R.Bank.P. 2002(a)(6) or L.B.R. 2002-1(a), (b), compels a determination that a ruling as to the reasonableness of the instant application is premature. The applicant and/or Debtor is directed to notice its Final Fee Application, as modified, on or within twenty (20) days of the date of the Order to follow. At the end of this notice period, the Application will be taken under advisement by the Court.

An Order will follow.

Date: October 14, 2010

District/Off: 0314-5 User: CSisk Date Created: 10/14/2010 Case: 5:02-bk-03994-JJT Form ID: pdf006 Total: 15 Recipients submitted to the BNC (Bankruptcy Noticing Center) without an address: aty Robert J. Keller TOTAL: 1 Recipients of Notice of Electronic Filing: ust United States Trustee ustpregion03.ha.ecf@usdoj.gov aty Anne K. Fiorenza Anne.Fiorenza@usdoj.gov aty J. Gregg Miller millerj@pepperlaw.com aty Jill M. Spott jspottesq@sheilslaw.com aty Michael H Reed reedm@pepperlaw.com aty Robert P Sheils, III RSheilsIII@SheilsLaw.com aty Robert P. Sheils, Jr RSheils@SheilsLaw.com TOTAL: 7 Recipients submitted to the BNC (Bankruptcy Noticing Center): db Wireless Telecommunications Inc c/o Neil Gilmour, III, President 1000 N. West Street Suite 1200 Wilmington, DE 19801 dbpos Wireless Ventures III, Inc. C/O LEON HALLER TRUSTEE 1719 N FRONT ST HARRISBURG, PA 17102 aty Pepper Hamilton LLP 3000 Two Logan Square Eighteen and Arch Streets Philadelphia, PA 19103-2799 aty Anne K. Fiorenza, Esq Assistant Us Attorney FEDERAL BUILDING 228 WALNUT STREET SUITE 217 PO BOX 11754 HARRISBURG, PA 17108 aty Michele C Farquhar Hogan and Hartson LLP Columbia Square 555 Thirteenth Street SW Washington, DC 20004-1109 aty Robert E. Levine 1750 K Street, N.W. Suite 350 Washington, DC 20006 smg Internal Revenue Service PO BOX 21126 PHILADELPHIA, PA 19114 TOTAL: 7