BOULDEN, Judge
David T. Berry and Berry Bertch Birch (Applicants) seek allowance of attorney fees incurred during their representation of Donnie Lee Amos (Debtor). At issue is under what section of the Code and in what amount should be fees be allowed, and, if allowed, from what funds and in what priority should the fees be paid.
FACTS
When the Debtor filed a petition seeking relief under Chapter 13 of the Bankruptcy Code, the 11 U.S.C. § 541 property of the estate consisted of two assets: the Debtor's home, and a counterclaim asserted by the Debtor in litigation pending in State Court (Adversary Proceeding). The Debtor's home was sold pursuant to § 363 preconfirmation. The net sale proceeds were paid to the Chapter 13 Trustee to be held as property of the estate pending further order of the Court. The Adversary Proceeding (99PB-2060) was removed to this Court and the Debtor's counterclaim, which was prosecuted by counsel other than the Applicants, eventually resulted in a Judgment in favor of the Debtor for amounts in excess of $100,000. The Judgment was appealed and collection is pending.
The Debtor proposed a plan that provided for satisfaction of creditors' claims from payments to be paid from the Debtor's post filing income, contribution of the net proceeds of the sale of the Debtor's home, and up to $147,000, less costs, of the recovery from the Judgment. The prosecution of the adversary proceeding, and other matters, resulted in continuances of the confirmation hearing on the Debtor's chapter 13 plan. On September 7, 1999, prior to the final date for the Debtor to either obtain confirmation of his Chapter 13 plan or face conversion, the Debtor filed a notice to convert his case to Chapter 7. As of the date of conversion, the Chapter 13 Trustee was holding § 1306(a) property of approximately $10,100 from the funds generated from the sale of the Debtor's home that the Debtor stipulated would be used to pay his creditors, and § 1306(a)(2) property of approximately $2,500 from monthly plan payments made from the Debtor's post petition income.
Prior to filing the notice of conversion, the Applicants filed a Fee Application (First Application) seeking $7,077.00 in fees and $618.95 in expenses for a total of $7,695.95, covering services from November 17, 1998 through August 5, 1999. Allowance of the First Application was to be heard at the hearing on confirmation of the Debtor's Chapter 13 plan, but was not heard because of the conversion to chapter 7.
Subsequent to conversion, the Applicants noticed the allowance of the fees contained in the First Application for hearing. At that hearing the Court expressed concern regarding the failure of the Applicants to obtain approval of their fees prior to conversion of the case to Chapter 7, and allowed a continuance to properly notice the hearing and to enable the Applicants to specify which section of the Code supported allowance of their fees.
The Applicants then filed an Amended Fee Application (Second Application) covering services from November 17, 1998 but extending to November 11, 1999, and reformatted into project billing. The Second Application seeks $4,022.00 in fees pursuant to § 330(a), and $4,102.00 in fees pursuant to § 503(b)(2), and that the Court enter an order requiring payment of the fees and costs pursuant to § 1326(a)(2). The Second Application contains 4.9 hours of additional time entries at $150 per hour, or $735, yet the Second Application increases the total amount sought by an additional $1,047.00. Unable to ascertain where the additional fees come from and without further explanation in the Second Application, the Court determines the total amount of fees sought are $7,812.
The itemization attached to both the First and Second Application reveals entries totaling $2,045.46 that are not compensable as reasonable compensation for actual, necessary services to the Debtor under the criteria set forth in § 330(a)(3)(A). Entries totaling $372 describe clerical activities that constitute overhead and are not separately billable, and those fees are therefore disallowed. Many of the entries are "lumped," that is, contain more than one task with only one time entry. Lumped entries prohibit the Court from making an informed judgment regarding whether the amount of time spent to accomplish a particular task was commensurate with the complexity, importance, and nature of the problem, issue, or task addressed. Five percent of the total fees, or $390.60, are therefore disallowed as lumped entries. Some of the listed activities were not performed in a timely manner. Five percent of the total fees, or $390.60, are therefore disallowed for untimely prosecution of the case. The Applicants have segregated $2,022 in fees relating to the Adversary Proceeding. A careful review of these fees reflects a duplication of services in reviewing the events in the Adversary Proceeding, and in consulting with the attorney who actually tried the case. While it is reasonable that the Applicants remained informed of the events in the Adversary Proceeding and incorporated the results into the Debtor's plan, the time spent is excessive, duplicative, and therefore unnecessary. Therefore, one third, or $667.26 of the fees in this category are disallowed. Fees of $225 listed in the Second Application were incurred after conversion to a Chapter 7, and are disallowed. In total, fees of $5,766.54 represent reasonable compensation for the Applicant's representation of the Debtor's interests in connection with the case. Expenses sought in the amount of $618.75 represent the Debtor's actual and necessary costs.
DISCUSSION
The Applicants argue that the issue related to allowance of the fees has three possible components. First, are "gap period" attorney's fees and costs incurred after the filing of the Chapter 13 petition but before conversion to Chapter 7 construed as § 348(d) prepetition claims. Second, should "gap period" attorney's fees be allowed pursuant to § 330(a)(4)(B) and paid from the funds held by the Chapter 13 Trustee pursuant to § 1326(a)(2). Third, should a portion of the fees be allowed as § 503(b)(1)(A) claims. This statement of the issues is incomplete because implicit in resolution of the fee issue is a determination of which property should satisfy the fees, and in what priority the fees should be paid. A determination of these issues will likely effect the amount actually received by the Applicants for any allowed fees.
Allowance
The Applicants correctly point out that the mere conversion of the Debtor's case from Chapter 13 to Chapter 7 does not render their fees prepetition debts. Section 348, which sets forth the effect of conversion, provides that only those debts arising post filing but preconversion that are not § 503(b) claims, e.g. claims that arise from either the actual, necessary costs and expenses of preserving the estate, or from compensation and reimbursement awarded pursuant to § 330(a), are treated as having arisen prior to the date of filing. Section 330(a)(4)(B), in turn, allows for reasonable compensation to a Chapter 13 debtor's attorney for representing the interests of a debtor in connection with a case. As set forth above, the Court disallows $2,045.46 in fees, but concludes that fees of $5,766.54 and costs of $618.95 are allowable under § 330(a)(4)(B) as reasonable compensation to the Applicants for representing the Debtor's interest in connection with the Chapter 13 case.
The Applicants alternatively seek allowance of a portion of their fees (which may include those fees disallowed above) pursuant to § 503(b)(1)(A). The relief is denied. "Statutory priorities [including § 503(b)(1)(A)] are to be narrowly construed '[b]ecause the presumption in bankruptcy cases is that the debtor's limited resources will be equally distributed among his creditors.'" In re Amarex, Inc., 853 F.2d 1526, 1530 (10th Cir. 1988) (quoting Trustees of Amalgamated Ins. Fund v. McFarlin's, 789 F.2d 98, 100 (2d Cir. 1986)), quoted in In re Bayly Corp., 163 F.3d 1205, 1208 (10th Cir. 1998); see In re Mid Region Petroleum, Inc., 1 F.3d 1130,1134 (10th Cir. 1993) (§ 503(a)(1)(A) was not intended to saddle debtors with special post-petition obligations lightly or give preferential treatment to certain select creditors by creating a broad category of administrative expenses). As highlighted by the case before the Court, the Code provides an intricate structure that regulates the allowance and payment of fees for officers of the estate. The Code is also generous in the criteria for allowing fees to attorneys for Chapter 13 debtors (as opposed to attorneys for Chapter 7 debtors) for representation of the debtor. For example, services related to plan construction, abatements, financial counseling, decisions regarding what property the Chapter 13 debtor should retain, prosecution of the Debtor's rights to exempt property, or conversion, are allowable because they are legitimate services to protect the interests of the debtor. Why then, would the Code allow fees under § 503(b)(1)(A) that are disallowed under the broad structures of § 330(a)(4)(B)? Broadening the attorney fee allowance provisions to include § 503(b)(1)(A) only because fees are disallowed under § 330(a)(4)(B) not only upsets the statutory scheme, it invades one of the few Code sections that allows administrative claim status for non-attorney fee claims. When the Code already provides a category for allowance of the Applicant's Chapter 13 fees incurred in representing the Debtor, it would be inappropriate to ignore the provisions of § 330(a)(4)(B), and instead allow the Applicant's fees as necessary costs of preserving the estate, in order to allow a greater return to the Applicants than the Code would ordinarily allow. United States v. Noland, 517 U.S. 535 (1996) (decisions about treatment of categories of claims in bankruptcy proceedings are not dictated or illuminated by principles of equity and do not fall within judicial power of equitable subordination.) Such an extension of § 503(b)(1)(A) would also be contrary to the fundamental tenet of statutory construction that a court should not construe a general statue to conflict with a specific statute. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384, 112 S.Ct. 2031, 2037, 119 L.Ed.2d 157 (1992) ("[I]t is a commonplace of statutory construction that the specific governs the general."); State Bank of Southern Utah v. Gledhill (In re Gledhill), 76 F.3d 1070 (10th Cir. 1996); Franklin v. United States, 992 F.2d 1492, 1502 (10th Cir.1993) ("[A] specific statute . . . should not be deemed controlled or nullified by a general statute . . . absent a definite contrary intention.")
Payment
Once allowed under § 330(a)(4)(B), the issue becomes from what funds may the Applicants' fees and costs be paid? The Debtor's case was converted on the date of filing the notice for the purposes of applying § 348(c) and Fed.R.Bankr.P. 1019. Fed.R.Bankr.P. 1017(d). Although § 1362(a)(2) requires the Standing Chapter 13 Trustee to return payments, less unpaid claims allowed under § 503(b) to the Debtor if a plan is not confirmed, if a case is converted to Chapter 7, the Chapter 13 Trustee is required to forthwith turn over property of the estate to the Chapter 7 Trustee. Fed.R.Bankr.P. 1019(4). Therefore, in this case the proceeds from the sale of the Debtor's house are forwarded to the Chapter 7 Trustee for eventual distribution to creditors pursuant to prior order of the Court, but the $2,500 in monthly plan payments paid by the Debtor from his post-filing income are returned to the Debtor, but "less unpaid claims allowed under § 503(b)." § 1362(a). This rather ambiguous language could mean that, to be paid from the $2,500, the Applicant's fees must have already been allowed as of the date of conversion. Or it could be read consistent with § 503(a) that the only criteria for payment from the $2,500 is that a timely request for payment had been made. Although the Applicants did not have an allowed § 503(b) claim as of the date of conversion, they had timely filed their First Application. New Fed.R.Bankr.P. 1019(6) now clarifies that the focus of § 503(a) and § 1362(a)(2) is on timely filing, not allowance, of a request for payment under § 503(a). Since the Applicants timely filed their First Application under § 503(a) and the fees are now allowed administrative claims under § 503(b)(2), they should be paid by the Standing Chapter 13 Trustee prior to returning any remaining § 1306(a)(2) funds to the Debtor. If there are more in allowed chapter 13 administrative claims than there are available § 1306(a)(2) funds, the allowed § 503(b)(2) administrative claims should be prorated.
The remainder of the allowed chapter 13 administrative expenses not paid from § 1306(a)(2) funds may be paid from § 541 property. However, the remaining allowed chapter 13 administrative expenses are subordinated to allowed chapter 7 administrative expenses by virtue of § 726. In re Rodriguez, 240 B.R. 912, 916 (Bankr. D. Colo 1999) (Congress made the policy decision that chapter 7 expenses are paid first, thus preconversion expenses of administration are paid in chapter 7 as a second tier expense). The allowed fees will not share pro rata with chapter 7 allowed administrative fees, because they are allowed under § 330(a)(4)(B), and do not receive a stepped up priority that would occur if they were allowed as § 503(b)(1)(A) administrative claims.
Procedure in Future Cases
It has not escaped the Court that the ruling in this case impacts the procedure generally followed in this jurisdiction for obtaining the allowance of administrative expense claims when converting a Chapter 13 case to a Chapter 7 case. To date, if attorney fees were sought the procedure has been to file a motion to convert a case to Chapter 7, rather than a notice of conversion pursuant to Fed.R.Bankr.P. 1017(f)(3). The order converting the case then also allowed, as appropriate, the attorney fees. Since under new Fed.R.Bankr.P. 1019(6) the focus is on timeliness of filing the application, not allowance of the fees, a change in procedure is warranted. Henceforth, those parties who seek allowance of Chapter 13 administrative expenses, whether attorney fees or other expenses, must timely file a request for payment of the administrative expense prior to conversion of the case to Chapter 7. However, in order to lessen the delay that may be involved in closing Chapter 13 cases that have been converted to Chapter 7, any request for payment of an administrative expense filed prior to conversion that has not been resolved by a final order, or other order extending the period, within sixty days of the conversion will be deemed waived by the applicant. Upon such allowance or waiver, the Standing Chapter 13 Trustee will make final disbursement of all funds.
Therefore, it is hereby
ORDERED, that Applicants are allowed $5,766.54 in fees and $618.95 in costs for a total of $6,385.24, payable by the Standing Chapter 13 Trustee prorata with similar allowed administrative claims from § 1306(a)(2) property. If the allowed fees and costs are not satisfied therefrom, they may be paid by the Chapter 7 Trustee as a second tier distribution from § 541 property of the estate as may ultimately be distributed according to § 726(b).
DATED this ____ day of February, 2000.