In Re Whiteeagle Properties 22 Corp.

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prepetition work, fees for work on a motion to extend the deadline for the filing of a Subchapter V Chapter 11 plan (Debtor has since redesignated and is no longer proceeding under Subchapter V), and fees for multiple office conferences between two attorneys in the firm, where both attorneys billed their time.. The interim fee application is granted in part and denied in part. Denied are $7140 in fees requested for work billed prepetition. The U.S. Trustee's objection to the award of fees for the motion to extend and for office conferences is overruled. Those fees were reasonable for the actual, necessary services rendered and are therefore compensable from the estate.

I. Procedural History

Debtor Whiteeagle Properties 22 Corp. is 80% owned by David Rendon and 20% owned by Trevor Fischer.³Debtor's assets include commercial real and personal property in Lindsborg, Kansas, and an interest in one parcel of residential real property in Arizona.⁴

Debtor filed its Chapter 11 petition on July 28, 2025, indicating it was a small business debtor under § 101(51D) and electing to proceed under Subchapter V of Chapter 11.⁵No Schedules or supporting documents were filed with the petition and the Court issued an Order to Correct the deficient filing.⁶

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The same day, July 28, 2025, Mr. Lazzo docketed Debtor's Application to Employ Attorneys.⁷In that Application, Debtor sought to employ Mark J. Lazzo, P.A. as counsel for its bankruptcy estate and proposed compensation of $350 per hour for both Mr. Lazzo and Mr. Balbierz of that firm.⁸Attached to the Application was an "Attorney Affidavit under D. Kan. LBR 2014.1" for each of Mr. Lazzo and Mr. Balbierz. The Affidavits were identical and contained few details. They included bare statements the attorney was disinterested and "does not hold or represent an interest adverse to the estate," does not represent "a creditor of the Debtor,"

understands the continuing duty to disclose any disinterestedness or adverse interest, and that counsel understands approval of employment is not approval of compensation.⁹Neither the Application nor the Affidavits disclosed the existence of a retainer.

The next day, on July 29, 2025, Debtor filed a Motion to Allow Monthly Payment of Fees and Expenses to Debtor's Counsel.¹⁰In that motion, counsel requested "monthly payment of fees and expenses in accordance with the regular billing cycles of its law firm," with payment of 100% of the fees and expenses and 10% being held in trust "pending the court's approval of an interim or final fee application."¹¹

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Also on July 29, 2025, Debtor filed a "Fee Disclosure." In the Fee Disclosure, filed "pursuant to bankruptcy Rule 2016(b),"¹²Mr. Lazzo disclosed that his law firm

"received a retainer payment of $21,738 from Curtis A. Graumann paid on behalf of the Debtor for fees and expenses to be incurred" in the case.¹³The Fee Disclosure further reported the "payment by Graumann to counsel was not a loan to debtor, and there is no obligation by Debtor for repayment."¹⁴

The U.S. Trustee filed objections to both the Application to Employ and the Motion to Allow Monthly Payment. The U.S. Trustee argued the Application to Employ was inadequate under Fed. R. Bankr. P. 2014 because it did not provide necessary details about the $21,738 retainer payment to the law firm, including what happened to it and when, did not address whether the law firm was a creditor of Debtor, did not explain who Mr. Graumann is or why he paid the retainer or whether he was involved in the case, and did not address whether there were any connections between Mr. Graumann and Debtor.

Regarding its objection to the Motion to Allow Monthly Compensation, the U.S. Trustee objected essentially on the same basis: a lack of detail. Debtor had not yet filed its Schedules or the information required in small business cases and had not responded to U.S. Trustee inquiries for financial information about insurance and banking. As a result, Debtor's financial situation was opaque, and the U.S.

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Trustee was concerned with administrative insolvency, arguing that permitting monthly compensation would favor Debtor's attorneys over other administrative claimants.

When Debtor's Schedules and supporting documents had not been filed about six weeks postpetition, the U.S. Trustee filed a motion to dismiss or convert, arguing cause existed based on (1) the lack of Schedules and failure to comply with the Court's Order to Correct, and (2) the lack of good faith because there was no going concern to preserve and no effort to maximize the value of Debtor's estate. The Court set a hearing on the U.S. Trustee's motion for September 25, 2025. Just before the hearing, on September 24 and 25, 2025, which was almost two months postpetition, Debtor filed multiple documents: (1) an amended petition and Schedules and supporting documents, (2) its list of Equity Security Holders and Corporate Ownership Statement, (3) a response to the U.S. Trustee's motion to dismiss or convert, (4) an amended creditor matrix and amended Schedules, and (5) an Amended Application to Employ. In the Disclosure of Compensation of Attorney for Debtor filed on September 24, 2025, with the amended Schedules, Mr. Lazzo reported he had received a retainer of $21,738 that would be billed against at $350 an hour, and that the source of the compensation paid and to be paid was Debtor.¹⁵ The Court continued the hearing on the U.S. Trustee's motion to dismiss or convert, the Application to Employ, and the Motion to Allow Monthly Compensation, and

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required Debtor to file all missing documents and provide all previously requested information to the U.S. Trustee by October 10, 2025.

In the Amended Application to Employ, Debtor again sought employment of Mark J. Lazzo, P.A. as counsel for its bankruptcy estate and proposed compensation of $350 per hour for both Mr. Lazzo and Mr. Balbierz.¹⁶The Amended Application adds the following paragraph:

Mark J. Lazzo, P.A. received a retainer payment of $21,738 from Curtis Graumann on behalf of Debtor. The payment was a gift and no repayment is expected. From these funds, $1,738.00 was applied to the Chapter 11 filing fee, which reduced the retainer balance to $20,000.00 at the time of filing, with no monies owed to Mark J. Lazzo P.A.¹⁷ Attached to the Amended Application are Amended Affidavits. Again, the Amended Affidavits for Mr. Lazzo and Mr. Balbierz are identical. As pertinent here, they include bare statements that counsel are disinterested and do "not hold or represent an interest adverse to the estate" and understand the continuing duty to disclose any disinterestedness or adverse interest.¹⁸

At the end of September and in early October 2025, Debtor filed additional missing documents and the hearing on the pending motions was continued again. No objection was filed to the Amended Application to Employ, and on October 20,

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2025, the Court entered an order granting that Amended Application to Employ, approving employment "as of the date of filing of the original Application."¹⁹ On October 24, 2025, Debtor filed a motion to extend the deadline to file his

"Chapter 11 Subchapter V Plan and Disclosure Statement."²⁰The motion acknowledged the upcoming October 27, 2025, plan filing deadline set by the Bankruptcy Code, sought a forty-five-day extension, and recognized the standard for requesting an extension under § 1189(b). The motion then stated: "Debtor is unable to timely file its Plan as: (a) its accountant has failed to timely complete Debtor's 2024 tax return; and (b) Debtor has a pending Motion to determine the amount of the claim of its primary secured creditor . . . ."²¹The U.S. Trustee responded in two ways. She first objected to the motion to extend the deadline, arguing Debtor had not satisfied the statutory standards for an extension. The U.S. Trustee then supplemented its motion to dismiss or convert to "amend and clarify"

its current bases for its motion, arguing Debtor's failure to file or confirm a plan within the statutory time requirements was unreasonable and an undue delay and a basis for cause to dismiss or convert. Debtor's motion to extend the plan filing deadline was set for hearing on December 12, 2025.

On December 8, 2025, Debtor filed a Chapter 11 Subchapter V plan. At that point, the U.S. Trustee confirmed the sole basis remaining for its motion to dismiss

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or convert was Debtor's failure to file a plan by the statutory deadline. The still pending motions (Debtor's motion to allow monthly compensation, the U.S. Trustee's motion to dismiss or convert, and Debtor's motion to extend the plan filing deadline) were then set for an evidentiary hearing in February 2026. On December 11, 2025, Debtor filed a Supplemental Fee Disclosure, pursuant to Bankruptcy Rule 2016(b). Mr. Lazzo reported the law firm "received a post- petition payment of $17,500 from David A. Rendon on behalf of the Debtor for fees and expenses incurred in this case," which had been deposited in the firm's trust account.²²The Supplemental Fee Disclosure concluded with a statement that "[t]he payment by Rendon to counsel was not a loan to Debtor, and there is no obligation by Debtor for repayment."²³Similarly, on December 31, 2025, Mr. Lazzo filed another Supplemental Fee Disclosure with the same statement, this time for $7500 from Mr. Rendon.

On January 21, 2026, Debtor filed an amended petition, removing the indication it was a small business debtor and removing its election to proceed under Subchapter V.²⁴The same date, Debtor and the U.S. Trustee filed an agreed order on the U.S. Trustee's motion to dismiss or convert and Debtor's motion to extend time to file its plan, resolving those disputes.

Shortly thereafter, on January 28, 2026, Debtor and the U.S. Trustee submitted an agreed order granting in part Debtor's motion to allow monthly

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compensation. Per this agreed order, no payment of monthly fees or expenses could be "made by Debtor or with funds from Debtor's estate, unless and until Debtor has received proceeds from sales approved by the Court."²⁵Debtor also acknowledged the continuing obligation to supplement its fee disclosures. The evidentiary hearing on the pending motions was then terminated. Debtor then again amended its petition, this time indicating it was a Chapter 11 small business debtor. On February 10, 2026, Debtor filed its first interim application for allowance and payment of attorney fees and expenses. The body of the application seeks approval of fees of $73,425 and expenses of $1795.96 (for a total of $75,220.96)

"incurred from August 4, 2025 through December 31, 2025."²⁶It then reports that

"counsel has received payments from non-Debtor's totaling $46,738 which have been applied to the fees and expenses set forth in this Application" and asks the Court to

"authorize payment by Debtor of that portion of said allowed fees and expenses not previously paid by non-Debtors."²⁷But the itemization attached to the application does not match the details in the application itself: while it does show total fees and expenses of $75,220.96 (with $11,393 in July 2025, $7910 in August 2025, $15,178.58 in September 2025, $11,685.26 in October 2025, $16,734.12 in November

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2025, and $12,320 in December 2025), the time entries begin on July 25 (before the petition was filed) and not August 4, 2025.²⁸

The U.S. Trustee objected to the interim application, arguing it should be denied in part because it seeks prepetition fees, seeks fees for the motion to extend the deadline to file the plan, seeks fees for two billers for the same office conferences, and may conflict with the agreed order on Debtor's motion to allow monthly compensation. The Court set the dispute for evidentiary hearing, and the parties filed trial briefs, which the Court has considered. Counsel for Debtor confirmed the law firm is not seeking payment of fees prior to the sale of property as required by the agreed order entered on the motion for monthly compensation,²⁹ and the Court therefore does not address that issue further.

II. Findings of Fact

At the evidentiary hearing, Mr. Lazzo testified about the law firm's work on Debtor's case and its billing records. Mr. Lazzo has practiced bankruptcy law in this area since 1986 and has had his own firm since 2002. He has done debtor work, creditor work, and trustee work. In his career, he has been involved in at least twenty Chapter 11 cases as debtor's counsel. Mr. Lazzo testified that both he and Mr. Balbierz, the other lawyer in the law firm, currently have a $350 hourly rate,

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which he believes is consistent with the area market rate. The Court finds no fault with the hourly rate.

Debtor's first contact with the law firm was a phone call from Mr. Rendon on July 25, 2025. Mr. Rendon called the firm to discuss a state court foreclosure: he reported one of Debtor's creditors obtained a default judgment for over $400,000 and a sheriff's sale had been set for July 29, 2025, four days (but only two business days) later. Mr. Lazzo discussed a potential bankruptcy case with Mr. Balbierz and the legal steps they could undertake regarding the state court default judgment (and what they believed to be an unenforceable penalty provision therein) and decided to file an urgent bankruptcy petition to stop the scheduled sheriff sale. Mr. Lazzo had multiple conferences with the client and with Mr. Balbierz. Mr. Lazzo testified all the work the law firm did prepetition was in contemplation of a bankruptcy filing. Mr. Lazzo confirmed all time entries on July 25, July 26, and July 27, 2025, were prior to the bankruptcy filing. Regarding the time entries on July 28, 2025 (the date of filing), Mr. Lazzo testified these time entries were also all prepetition. As a result, a total of $7140 of the $75,220.96 requested was for work completed prepetition.³⁰

At some point on either July 25, 26, 27, or 28, Mr. Graumann paid a $21,738 retainer to the law firm, which was deposited in the law firm's trust account. The exact date the retainer was received relative to the prepetition work done is

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unknown, although the testimony was clear it was received at some point prior to filing the bankruptcy petition. Mr. Graumann has no ownership interest in Debtor and is a friend of Mr. Rendon. Mr. Lazzo testified the retainer was not a loan, but a gift of money to pay the fees incurred. The law firm was retained to prepare and file a Chapter 11 bankruptcy petition with the goal of determining the claims against Debtor, liquating Debtor's assets, and paying creditors, but again, the exact date of the firm's retention is unknown. Mr. Lazzo testified his fee agreement is with Debtor, not Mr. Graumann.

At the time the bankruptcy petition was filed on July 28, 2025, the law firm held the $21,728 retainer in its trust account, and $1738 was paid for the filing fee, so $20,000 remained in the law firm's trust account. Mr. Lazzo testified he did not apply the retainer to the prepetition fees owed prior to filing the petition because of his urgency to get the case filed before the scheduled sheriff's sale. He testified that he normally bills up to the petition and then draws down on a retainer before filing a petition, but he simply failed to follow his normal process this time due to the urgency of the case. Mr. Lazzo also testified he understood he could not apply the retainer to the fees postpetition without court approval. At some point prior to the end of the next month (August 2025), Mr. Lazzo's staff prepared the July 2025 billing statement and he reviewed it, presumably becoming aware at that point Debtor had unpaid, prepetition fees.

Mr. Lazzo's explanation for why his subsequent September 2025 Court filings failed to disclose the prepetition fees owed was not persuasive. He testified the

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reason the amended application for employment of the law firm stated no money was owed to the law firm at the time of the filing of the petition was because he considered the fees owed to be covered by the retainer from funds gifted by Mr. Graumann. He testified that the amended application should have had a clarification that no money was owed "by Debtor" (because of the retainer's funding by Mr. Graumann). Mr. Lazzo testified he included those fees in his application for compensation, however, despite not considering them owed by Debtor, because he wanted to be transparent. He contrasted the fees owed in this case, where the prepetition retainer was sufficient to cover them, with fees he has agreed to waive in other cases, because in those other cases, the prepetition retainer had been exhausted with a small amount still owed, so there was not a sufficient retainer to cover the fees.

Regarding the postpetition deposits to his trust account, the law firm has received $21,738, $17,500, and $7500, for a total of $46,738. Mr. Lazzo testified that despite the fee application stating the $46,738 had been applied, the law firm would be paid from the retainers only if the Court approves the fees. Both Mr. Lazzo and Mr. Balbierz enter their time contemporaneously, at the time services are rendered. Each reviews their own time records, and then Mr. Lazzo reviews all billing statements before they are sent out. Mr. Lazzo testified both he and Mr. Balbierz split work on Debtor's case, testifying the two of them had distinct areas of responsibility, with Mr. Lazzo also supervising. Mr. Lazzo testified that Mr. Balbierz assisted with obtaining information and documents and assisted

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and briefed the state court default judgment/penalty issue. Mr. Balbierz also handled the sale of Debtor's real property and an adversary proceeding to resolve a cloud on the title of one of the pieces of real property. Mr. Lazzo testified conferences between himself and Mr. Balbierz were necessary because the issues Mr. Balbierz worked on had an impact on Debtor's plan and the creditors of the case, where Mr. Lazzo was central. Mr. Lazzo believed coordination was necessary to eliminate duplication and maximize efficiency. The law firm has no policy on office conferences and billing for the same.

As an example of billing for an intraoffice conference, on October 15, 2025, Mr. Lazzo and Mr. Balbierz both spent 0.6 of an hour in a conference, each billing Debtor $210 for that conference. Both time entries state: "Conference . . . to discuss Chapter 11 Plan, equipment auction, escrow contract default, UST Motion to Dismiss, etc."³¹Mr. Lazzo testified multiple of those matters discussed had been

"assigned" to Mr. Balbierz, and the conference was necessary to split up and complete the work. Similarly, on November 18, 2025, Mr. Lazzo and Mr. Balbierz each spent 0.5 of an hour in an office conference, billing $175 each, discussing:

"case, action plan, [secured creditor] objection, [auctioneer] employment, etc."³² Another example occurred on December 31, 2025, when Mr. Lazzo and Mr. Balbierz both spent 0.6 of an hour in a conference, each billing Debtor $210 for that

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conference, discussing: "resolution with [secured creditors'] counsel on secured claim, terms, other pending matters in case."³³Mr. Lazzo also conferenced with Mr. Balbierz other times that week: according to Mr. Lazzo, counsel for the secured creditor and Mr. Balbierz were no longer able to work together, so Mr. Lazzo needed to work with the secured creditors' counsel to get the issue resolved. At filing, Mr. Lazzo knew he had a ninety-day deadline to file a Subchapter V plan. Mr. Lazzo also testified, however, that he knew Debtor's tax returns were not yet complete and the issue with the state court foreclosure default judgment was not yet resolved. In October 2025, Mr. Lazzo either began drafting the plan, or at minimum, had outlined the plan.³⁴Mr. Lazzo considered the statute governing extensions to permit extension when there is justification. Mr. Lazzo testified he wanted additional time to gather the information and resolve what he considered to be the most significant issues in the case, and although he believed the tax returns were arguably within Debtor's control, the resolution of the state court foreclosure case was in the Court's control.³⁵As a result, on October 24, 2025, the law firm filed its motion asking for an additional forty-five days to file a Subchapter V plan.

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Mr. Lazzo testified he knew there was some risk of an adverse ruling because there was a split of authority amongst courts who had considered the statute governing extensions of time. He testified that although there was no ruling from the bankruptcy court within the District of Kansas, he believed this Court's view of such motions would be a strict interpretation of the governing statute. Because he had no creditor opposition in the case, however, Mr. Lazzo thought the motion was likely to benefit the estate and would only be denied if the Court sua sponte denied it. Mr. Lazzo did not anticipate opposition from the U.S. Trustee. After the U.S. Trustee objected to the motion, Mr. Lazzo ultimately filed an amended petition to withdraw the Subchapter V election.

Mr. Lazzo testified he believes the law firm's fees are reasonable: there were novel issues in the case needing resolution, such as the secured creditor's claim which involved issues of state law concerning liquidated damages and penalties, issues concerning the marketing and liquidating of assets, membership and termination of membership issues, a piece of real property in another state, and difficulties communicating with the client.

III. Conclusions of Law A. Jurisdiction and Burden of Proof

The employment and compensation of officers of the estate is governed by §§ 327, 329, and 330 and Rules 2014 and 2016 and are core matters under 28 U.S.C. §

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157(b)(2)(A) ("matters concerning the administration of the estate"), over which this Court may exercise subject matter jurisdiction.³⁶Venue is proper in this District.³⁷ The party seeking compensation under the Bankruptcy Code has the burden of proof on all issues related to the fee application.³⁸Counsel has the duty to perform the obligations under the Code with respect to compensation, and to show that the proposed terms and conditions of employment are reasonable.³⁹

B. Employment and Compensation

A Chapter 11 small business debtor may employ an attorney to represent or assist the debtor in possession in performing its duties during the Chapter 11 case, subject to court approval thereof.⁴⁰Under § 327(a), the attorney must be disinterested and must not hold or represent an interest adverse to the estate. Under § 1107(b), "a person is not disqualified for employment under section 327 . . . solely because of such person's employment by or representation of the debtor before

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the commencement of the case." But under § 328(c), the court "may deny allowance of compensation for services" if at any time "such professional person is not a disinterested person." The term "disinterested person" is defined by § 101(14)(C):

The term 'disinterested person' means a person that- - (A) is not a creditor, an equity security holder, or an insider; (B) is not and was not, within 2 years before the date of the filing of the petition, a director, officer, or employee of the debtor; and (C) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason. Section 101(10)(A) defines "creditor" as an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor."

Rule 2014 then governs the procedure for employment, and mandates that the application to employ state specific facts showing the necessity for the employment, the name of the person to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and, to the best of the applicant's knowledge, all of the person's connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee.⁴¹The application to employ must also be accompanied by a verified statement that discloses the connections required to be

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disclosed in the application.⁴²The purpose of the Rule 2014 disclosures are so the court may "evaluate fully whether the professional is actually 'disinterested.'"⁴³ To fulfill the requirements imposed by Rule 2014, an "attorney has a duty to fully disclose any connections with the debtor or creditors that might create a possible conflict, and all fee arrangements with the debtor in possession."⁴⁴ Proposed counsel for the debtor maintains a "duty to disclose any actual or potential conflicts of interest with the estate."⁴⁵The affidavit in support of an application to employ must contain "specific facts" that enable the Court to rule out conflicts.⁴⁶ And this Court's Local Rule requires "prompt" supplementation after "learning of any additional material information."⁴⁷

In addition, under § 329(a), an attorney representing a debtor in a bankruptcy case must "file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation." Under Rule 2016(b), within fourteen days of the petition, every debtor's attorney must file and send to the U.S. Trustee the statement required by §

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329. Supplemental statements must then be filed within fourteen days after any payment or agreement to pay not previously disclosed.⁴⁸ And finally, compensation is governed further by § 330. Under § 330(a)(1), this Court may award to a professional employed under § 327 the "reasonable compensation for actual, necessary services rendered."⁴⁹The Court may award less compensation than is requested.⁵⁰Under § 331, an attorney whose employment has been approved by the Court may then seek interim compensation from the Court, prior to final approval of that compensation under § 330.⁵¹Rule 2016 also governs the procedure for applications for compensation. Under subsection (a) of Rule 2016, an entity seeking compensation, interim or final, must file an application with a detailed statement of the services rendered, time expended, and expenses incurred, and the amounts requested.⁵²

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C. Prepetition Fees

Of the $73,425 in fees requested,⁵³the law firm seeks approval of $7140 in prepetition fees owed to the firm by Debtor. The Court denies these fees for the law firm's failure to disclose and its lack of disinterestedness. The law firm failed in its disclosure requirements to this Court. On the day the petition was filed, July 28, 2025, both Mr. Lazzo and Mr. Balbierz filed deficient affidavits in support of the application to employ. The affidavits stated the law firm was disinterested, but that was not correct. The law firm was a creditor in Debtor's case since it was owed $7140 in fees that had not been paid at the time of filing. The retainer—the gift of funds to Debtor, with no expectation of repayment—was disclosed the next day, on July 29, 2025, in the Rule 2016(b) Fee Disclosure. But despite the U.S. Trustee objecting to the deficient Rule 2014 affidavits in its objection to the application to employ, the law firm did nothing to supplement at that point.

After the U.S. Trustee filed a motion to dismiss or convert, based at least in part on the failure to provide information in the case, almost two full months after the case was filed, counsel filed new affidavits in support of an amended application to employ. In the amended application to employ counsel stated no money was owed to the law firm at the time of filing. But this was also incorrect. And by that point, based on Mr. Lazzo's testimony, counsel would have (or should have) known that

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was incorrect. The amended affidavits also said counsel was disinterested; but again, that was incorrect.

To this day, counsel has never filed fully accurate disclosures about the state of the retainer at filing and what was owed by Debtor to the law firm at filing. Not only that, in the first interim application for payment of fees and expenses, the law firm incorrectly stated the fees sought covered time billed postpetition, while the itemization begins prepetition. In short, full and complete disclosures of the fees owed prepetition and the status of the law firm in relation to Debtor were not made. In addition to these disclosure failures, the Court also denies the prepetition fees for the reason that forms the other side of this same coin; because the law firm has not carried its burden to show it was disinterested at the time the case was filed. Counsel must be disinterested at the time of employment, as required by § 327(a).

The question of "disinterested person" asks whether the law firm's attorneys, individually, hold "an interest materially adverse to the interest of the estate."⁵⁴ The requirements of § 327 "serve the important policy of ensuring that all professionals appointed pursuant to section 327(a) tender undivided loyalty and provided untainted advice and assistance in furtherance of their fiduciary

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responsibilities."⁵⁵In the Tenth Circuit, the disinterestedness requirement excludes an attorney "with some interest or relationship that would even faintly color the independence and impartial attitude required by the Code and Bankruptcy Rules."⁵⁶ The law firm's position is that at the time of filing Debtor did not owe any fees because the law firm had the retainer money gifted from Mr. Graumann in its trust account in an amount sufficient to cover the fees, even though the firm had not yet applied those funds. But at the time of the filing of the case, the fees were, and still are, owed to the firm by Debtor. Furthermore, the firm had no agreement with Mr. Graumann, only with Debtor, and in its Amended Application to Employ the firm expressly stated the funds were "a gift."⁵⁷The money in the trust account gifted by Mr. Graumann is Debtor's money,⁵⁸and as such, an estate asset.⁵⁹

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Counsel asks to excuse its errors based on the rushed filing, but even if that were a valid excuse, it would not excuse the failure to correct or supplement. An emergency bankruptcy filing does not excuse disclosure failures. In Jensen v. U.S. Trustee (In re Smitty's Truck Stop, Inc.), the debtor, like herein, filed an emergency bankruptcy petition and did not fully comply with disclosure requirements.⁶⁰The Tenth Circuit BAP foreclosed any argument that counsel's failures to disclose should be excused: it does not matter that a bankruptcy petition is filed on an emergency basis, that a failure to disclose was not done in bad faith, or that a later (non-disclosure statement document) disclosed the information. The BAP stated:

Appellant attempts to excuse himself by arguing that the Chapter 11 was filed on an emergency basis, implying that this omission was simply an oversight. However, this does not excuse his failure to file a supplemental statement to correct the error. Appellant further asserts that his failure to disclose the retainer to the court was not done in bad faith or in an effort to conceal. The court did not specifically find bad faith or an effort to conceal, but those findings are not necessary to hold Appellant in violation of § 329 and Rule 2016(b). Even a negligent or inadvertent failure to disclose the retainer is sufficient to deny fees. Appellant also argues that the retainer was disclosed in [the debtor's] statement of affairs. If we accepted this argument, we would nullify the § 329 and Rule 2016(b) disclosure requirements, which are designed to enable courts to oversee the fee arrangement between debtor and its counsel. More importantly, it is not the court's job to search through the record to find all relevant facts relating to an attorney's employment. It is counsel's duty to provide the court with the information necessary to determine whether to appoint counsel.⁶¹

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In In re Smitty's Truck Stop, Inc. the failures to disclose related to a retainer and the source of that retainer. Here, the failures to disclose related to the prepetition fees owed and counsel's disinterestedness. But the impact is the same:

both the U.S. Trustee and this Court had to search for information that should have been disclosed initially, and counsel should have supplemented the Rule 2014 statements.⁶²Even at the time the amended application to employ was filed in late- September 2025, which by counsel's own admission, he would have known about the prepetition fees owed at that time, the issue was not disclosed. In the future, counsel should spontaneously, timely, and completely disclose all connections, any retainers, and any fees owed at the beginning of each case, to avoid the situation at hand.⁶³

Counsel also argues pre-filing charges should not make counsel disqualified, citing In re Schupbach Investments, wherein Judge Somers of this Court discussed a 1987 First Circuit case, noting in dicta that standard prepetition services '"will not serve to disqualify an otherwise eligible attorney'" based on disinterestedness.⁶⁴But that conclusion has since been rejected by many bankruptcy courts to consider the

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issue based on the plain reading of § 327 and § 101(14).⁶⁵And the Tenth Circuit, although not ruling on the exact issue, has strictly construed § 327(a).⁶⁶In the Tenth Circuit, employment is a prerequisite to payment.⁶⁷And many bankruptcy courts have found that a law firm's prepetition unpaid services render it disinterested at the time of the filing of the petition.⁶⁸ Further, the Circuits that have addressed the issue since the First Circuit's dicta have concluded a prepetition claim is disqualifying, as it makes the professional a creditor and therefore not disinterested as required by § 327(a) and

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the definitions in § 101(14) (disinterestedness) and § 101(10)(A) (creditor).⁶⁹Section 1107(b), which states that notwithstanding § 327(a), counsel is not disqualified

"solely because of such person's employment by or representation of the debtor before the commencement of the case," does not change this result. Section 1107(b) does not address Chapter 11 debtors' counsel who not only was previously employed by the debtor but is also still owed fees. In other words, § 1107(b) does not address counsel who hold a claim against the estate at filing because of the prior retention. The Court concludes the prepetition fees of $7140 sought by the law firm must be denied. Not only were the law firm's disclosures in this case inadequate,⁷⁰ but approval of the fees would make the law firm not disinterested at the filing of the case. As noted above, it is the law firm's duty to perform its obligations under the Code and Federal Rules of Bankruptcy Procedure with respect to employment and compensation, and to show that the proposed terms and conditions of

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employment are reasonable.⁷¹Because to be employed a professional must be disinterested, the Court declines to approve prepetition fees and destroy the law firm's disinterestedness. The Court concludes the denial of the payment of the $7140 from estate funds remedies these issues and ensures compliance with the Bankruptcy Code.⁷²

D. Postpetition Fees

As noted above, compensation of professionals is governed by § 330. Under § 330(a)(1), this Court may award to a professional employed under § 327 the

"reasonable compensation for actual, necessary services rendered."⁷³"Bankruptcy courts have broken down the elements of § 330(a) as follows: To be compensable, the

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fees must be for services that were 'actual' and 'necessary.' If the applicant clears these hurdles, then the fees must be 'reasonable.'"⁷⁴

The law firm seeks total postpetition fees of $66,285 and expenses of $1795.⁷⁵ The U.S. Trustee objects to $4490 of the postpetition requested fees, arguing no fees should be awarded for "unreasonable" work.

1. $1200 Requested for the Motion to Extend Specifically, the U.S. Trustee argues $1200 requested by the law firm for filing the motion to extend the Subchapter V plan filing deadline was unreasonable, because counsel "did not even attempt to satisfy the standard" for those motions and the work did not benefit the estate.⁷⁶

The deadline to file a Subchapter V plan is set by § 1189(b), which states:

The debtor shall file a plan not later than 90 days after the order for relief under this chapter, except that the court may extend the period if the need for the extension is attributable to circumstances for which the debtor should not justly be held accountable.

Although bankruptcy courts "agree that § 1189(b) imposes a stricter standard than the 'for cause' standard set forth in § 1121(d)(1) that governs extensions of time to file a plan in chapter 11 cases not governed by subchapter V," there is disagreement about what "circumstances" qualify for an extension under § 1189.⁷⁷"The

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disagreement centers around whether the court may only consider whether the delay was due to circumstances beyond the debtor's reasonable control or whether the court can take other things into account that relate to the subchapter V case, such as undue prejudice, lack of good faith, or whether the debtor has made progress in drafting a plan."⁷⁸Some courts have adopted an equitable approach, focusing on the word "justly" in § 1189(b).⁷⁹Other courts have adopted a strict interpretation foreclosing equitable considerations, arguing it is required by the plain meaning of the statute.⁸⁰This Court has not issued a decision on the question. In the motion to extend, filed before the expiration of the statutory deadline, counsel acknowledged the upcoming deadline and the statutory standard for requesting an extension under § 1189(b). The motion then proffered two bases for an extension: 1) that Debtor's accountant had failed to timely complete a needed tax return and 2) the pending motion to determine the secured claim. First, the Court disagrees with the U.S. Trustee's contention that counsel did not attempt to meet the § 1189(b) standard. There are varying versions of the types of "circumstances" that qualify for an extension, and counsel stated Debtor's circumstances at the time. Second, the U.S. Trustee's contention the services at issue—the motion—were not necessary to the administration of, or beneficial

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toward the completion of the case and therefore were not reasonable is also not well taken. Measuring the benefit to an estate from a professional's work is a nuanced question:

"Benefit" to the estate is measured by considering whether the services were necessary to the administration of, or beneficial toward the completion of a case under this title. The appropriate time for measuring benefit to the estate is as of the time the services are provided, and not at the time the court ultimately reviews the fee application. Further, benefit to the estate for services provided by counsel for a Chapter 11 debtor in possession is not restricted to success measured by confirmation of a plan or the prospect of confirming a plan. Courts may allow compensation where counsel's services promoted the bankruptcy process and contributed to the administration of the estate, but did not otherwise provide an economic benefit to the estate.⁸¹ Here, at the time the motion was filed, counsel knew Debtor would not be able to get a Subchapter V plan timely filed without an extension because of the two pending issues. The motion was not "successful" because of the U.S. Trustee's objection and Debtor's ultimate redesignation to a small business Chapter 11, but this Court had not, and has not, issued a decision interpreting § 1189(b), and the law firm's motion, if successful, would have saved the Subchapter V option for Debtor. The motion was integral to the bankruptcy process in this case and contributed to the administration of Debtor's bankruptcy estate. It was not unreasonable to file the motion to extend the deadline for the filing of a Subchapter V plan. There are bankruptcy courts that permit those extensions based on

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equitable considerations, and at the time the motion was filed, the law firm took a reasonable action to secure an extension and keep Debtor within Subchapter V.⁸²

2. $3290 Requested for Intraoffice Conferences The law firm's fee request includes multiple conferences between Mr. Lazzo and Mr. Balbierz. The U.S. Trustee argues $3290 in the fee request for multiple conferences between Mr. Lazzo and Mr. Balbierz should not be compensated, as more than one attorney should not charge for a conference unless counsel can show the bankruptcy estate benefitted from each individual's specific area of expertise.⁸³ The law firm argues those conferences were necessary for the efficient handling of Debtor's case: that it was most efficient to split up the large volume of work, but that different aspects impacted others, and so conferences were necessary to coordinate efforts. The U.S. Trustee argues conferences are fine, but only one lawyer should charge for them unless there is a showing the bankruptcy estate benefitted from each individual's specific area of expertise. The Court declines to impose the U.S. Trustee's requested bright-line rule, and instead assesses such conferences for reasonableness.⁸⁴Fees for intraoffice conferences where multiple lawyers each charge for the same conference would not

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be appropriate if the conference was for training associates or new professionals.⁸⁵ In addition, time spent on generalized "conferences" between attorneys may not be compensable when the billing entries are not sufficiently specific and do not indicate what happened at the conference.⁸⁶But attorney conferences to monitor progress on delegated tasks, compare status on duties divided among attorneys, or to strategize next steps or case direction are examples of the very types of communication between attorneys that ultimately save the bankruptcy estate time and money when compared to each attorney handling his or her own tasks in a silo and not coordinating with the others. It is unrealistic to expect attorneys working on a project to read each other's minds, and it is unfair to expect them to work for free when coordinating with each other.⁸⁷When more than one attorney bills for a conference, however, there should be some justification for both lawyers' need to participate in that conference.⁸⁸

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The Court has reviewed the itemization and counsel's testimony and finds no duplication of services.⁸⁹The conferences were brief, often lasting less than an hour, and covered multiple topics. Mr. Lazzo took the lead on the typical bankruptcy case issues, while Mr. Balbierz took the lead on the more typical litigation-oriented issues. Of course, those issues would impact each other, and counsel needed to discuss those impacts. As a result, both lawyers were justified to bill for the conferences as they each contributed to the conferences.

3. Application of § 330(a)(3) and Johnson Factors Per § 330(a)(3), to determine the amount of reasonable compensation, a bankruptcy court must assess "all relevant factors," which includes:

(A) the time spent on such services;

(B) the rates charged for such services;

(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title;

(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed;

(E) with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field; and

(F) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.⁹⁰

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In the Tenth Circuit, these § 330(a)(3) factors must be considered, along with twelve additional factors set out in Johnson v. Georgia Highway Exp., Inc. (the "Johnson factors").⁹¹The Johnson factors are

(1) The time and labor required;

(2) The novelty and difficulty of the questions;

(3) The skill requisite to perform the legal service properly;

(4) The preclusion of other employment by the attorney due to acceptance of the case;

(5) The customary fee;

(6) Whether the fee is fixed or contingent;

(7) Time limitations imposed by the client or the circumstances;

(8) The amount involved and the results obtained;

(9) The experience, reputation, and ability of the attorneys;

(10) The "undesirability" of the case;

(11) The nature and length of the professional relationship with the client; and

(12) Awards in similar cases.⁹² As noted above, the "burden is on the party requesting fees to establish that its request is reasonable."⁹³

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The Court has considered all the relevant factors and concludes not only the challenged fees of $1200 for the motion to extend and the $3290 for the office conferences, but also the overall postpetition fees of $66,285 are reasonable. First, the Court considers the § 330(a)(3) factors. The time spent on the individual services and the time spent overall on the case to date has been reasonable. The rates by both Mr. Lazzo and Mr. Balbierz are in line, if not below, market rates for the services provided. The Court has already concluded the services addressed above were necessary and beneficial toward the completion of this case, and the Court has reviewed the itemization in full, also concluding the services overall were necessary and beneficial. The law firm spent a reasonable amount of time on the tasks at hand considering the overall complexity of this case and the nature of the issues at play. Both Mr. Lazzo and Mr. Balbierz are experienced bankruptcy counsel and showed the appropriate level of skill commensurate with their experience. And the fees sought are reasonable in comparison to customary compensation charged from skilled bankruptcy practitioners in this area.

The Court next considers the relevant Johnson factors. As just addressed, the time and labor required and spent in this case was reasonable based on the additional nuances in this bankruptcy proceeding. There were unusual issues that needed to be resolved within the bankruptcy case. The law firm showed the appropriate skill to perform these services and the fees are customary and reasonable for the work performed. The client in this case imposed additional issues based on the emergency nature of the case filing and Debtor's delay in getting

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information to the law firm. The Court is familiar generally with rates and charges by law firms for both bankruptcy work and non-bankruptcy work and the fees sought are not excessive compared to awards made in similar cases. After considering the record in this case, the testimony at the evidentiary hearing, and all relevant circumstances, including the factors set forth in § 330(a)(3) and the Johnson factors, the Court concludes the requested postpetition fees of $66,285 are "reasonable compensation for actual, necessary services rendered."⁹⁴

IV. Conclusion

The Court grants in part and denies in part the law firm's interim fee application.⁹⁵The Court disallows the prepetition fees of $7140 and allows the postpetition fees of $66,285.

It is so Ordered.

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