FAIRCHILD, Chief Judge.
Avrum Dannen, serving both as Trustee and, pursuant to order, as Attorney for the Trustee in this bankruptcy matter, appeals from an order of the district court reducing the allowance for legal services provided him by the bankruptcy judge.
Out of an estate of $6,220.00, the bankruptcy judge awarded Dannen a total of $3,150.00 — $3,000.00 for legal services and $150.00 for services as trustee. A major factor in the bankruptcy judge's decision appears to have been his finding that the estate on its face had appeared to be "no asset," before Dannen succeeded in establishing, apparently after considerable contest, that a prior conveyance of real estate by the bankrupt to a trust was void, thus enabling the real estate to be sold as an asset of the estate.
Pursuant to a local Bankruptcy Rule, see e.g., In re Hamilton Distributors, Inc., 440 F.2d 1178, fn. 2 (7th Cir. 1971), the district court automatically reviewed the allowance because it exceeded a specified percentage of the net estate. Without affording appellant a hearing and without making findings other than saying that "in light of the work required to be performed and benefit to the estate, the fee is indefensible," the district court reduced the attorney fee to $650.00.
Bankruptcy Rule 25F of the Northern District of Illinois stated in pertinent part:
(f) Following any hearing on applications for allowance, the referee shall prepare an order on the applications.
(1) If (a) the total assets realized in the case do not exceed $500 in the case of a nonbusiness petition, or $1,000 in the case of a commercial or business petition or (b) the total costs of administration do not exceed 25% of the total proceeds realized or $25,000, whichever is less, the order of the referee shall be effective upon entry subject only to review pursuant to a petition for review as provided in Section 39(c) of the Bankruptcy Act and Rule 26 hereof.
(2) All other orders allowing compensation shall be subject to review by and become effective only upon the express approval of a judge of this court. The referee shall file a copy of such orders with the clerk who shall treat the order in the same manner as a Petition for Review and assign it to a judge.
The district court's language implies that the bankruptcy judge abused his discretion. Assuming that was the court's view, there is some question whether the record sustains it. More fundamentally, appellant Dannen was provided no opportunity to be heard in the district court to defend the award. While the local rule does not on its face provide for such a hearing, we hold that procedural fairness demands that allowances should not be reduced on automatic review without giving at least the persons adversely affected an opportunity to be heard.
While the main thrust of appellant's brief is his request for relief on the merits, he does raise the issue of lack of opportunity to be heard below. Although he conceded on oral argument that he did not request such a hearing, we feel that on these facts his omission cannot be deemed a waiver because the local rules of the Northern District neither entitled him to a hearing nor provided adequate opportunity for such a request to be made.
We have cast this decision as a published opinion for future guidance in the Northern District of Illinois, and because some past opinions of this court have been silent as to the procedural issues associated with automatic review of attorneys' fees in bankruptcy cases. See, e. g., In re Hamilton Distributors, Inc., supra; In re Midwest Engineering and Equipment Co., 440 F.2d 326 (7th Cir. 1971). We intimate no view whether or not a reduction is appropriate in this case, nor, if appropriate, as to the amount.
Reversed and remanded for proceedings not inconsistent with this opinion.
Reversed.