Conseco 23 Ordinary Course Motion.Pdf
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11) D lit 1B2002 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) Chapter 11 ) 2/]49 Conseeo, Inc., et al.,1 ) 0 ) Case No. 02 B 8"l Debtors ) (Jointly Administe~d) ) Honorable ts-.. Tj,re ) ) Docket under 02 B _ APPLICATION FOR ENTRY OF AN ORDER PURSUANT TO SECTIONS 1107(a) AND 1108 OF THE BANKRUPTCY CODE AUTHORIZING THE DEBTORS TO EMPLOY AND COMPENSATE CERTAIN PROFESSIONALS UTILIZED IN THE ORDINARY COURSE OF THE DEBTORS' BUSINESSES The above-captioned debtors and debtors in possession (collectively, the "Debtors") hereby submit this application (the "Application") for entry of an order pursuant to sections 1107(a) and 1108 of the Bankruptcy Code authorizing the Debtors to employ and compensate certain professionals utilized in the ordinary course of the Debtors' businesses. In support ofthis Application, the Debtors respectfully state as follows'? Jurisdiction I. The Court has jurisdiction over this Application pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding within the meaning of28 U.S.C. § 157(b)(2). 2. Venue of this proceeding and the Application is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. FII~ED UNITED STATES 8l,;iLi!UPICY COURT IWHTlIU"j UISliller UF ILLINUIS Ole 17 2002 Kf;iNNETH S. GARDNER. CLERK The Debtors: are the following entities: Conscco, lnc., CU-IC, Incorporated, CTI~,::i~~ge'r.ltlCtC}roup, tnc., Consecc Ptnance Corp., and Consecc Finance Servicing Corp. 2 The facts and ctrcumstances supporting this Application aTC set forth in the Affidavit of William J, Shea, President and Chief Executive Officer ofConseco, Inc. in support of certain Firstday motions, filed contemporaneously herewith. 3. The bases for the relief requested herein are Sections I05(a), 363(c), ll07(a) and llOS of Title II of the United States Code as amended from time to time (the "Bankruptcy Code"). Background 4. [TO BE INSERTED] Relief Requested 5. The Debtors respectfully request that the Court approve their employment of the Ordinary Course Professionals (as defined herein) pursuant to procedures set forth in this Application, without requiring the submission of separate retention applications for each Ordinary Course Professional. Basis for Relief 6. The Debtors' employees, in the day-to-day performance of their duties, regularly call upon certain professionals, including, but not limited to, attorneys, accountants, actuaries, consultants and third party contractors (collectively, the "Ordinary Course Professionals"), to assist them in carrying out their assigned responsibilities. The Ordinary Course Professionals utilized or expected to be utilized by the Debtors during the pendency of these Chapter 11 Cases are identified on Exhibit A to this Application.' The Debtors cannot continue to operate their businesses with sound business practice unless they retain and pay for the services of the Ordinary Course Professionals. The uninterrupted services of the Ordinary Course Professionals are vital to the Debtors' continuing operations and their ultimate ability to reorganIze. If the expertise and hackground knowledge of certain of the Ordinary Course Professionals with respect to the particular areas and mailers for whicb they were responsible 2 The Debtors reserve the right toamend ,Exhibit. A from time totime. 2 prior to the Petition Date are lost, the estates undoubtedly will incur additional and unnecessary expenses because the Debtors will be forced to retain other professionals without such background and expertise. 7. The Ordinary Course Professionals will not be involved in the administration of the Chapter II Cases, but rather will provide services in connection with the Debtors' ongoing business operations or services ordinarily provided by, or in connection with, in-house counsel to a corporation. As a result, the Debtors do not believe that the Ordinary Course Professionals are "professionals," as that term is used in section 327 of the Bankruptcy Code, whose retention must be approved by the Court. See In re First Merchants Acceptance Corp., Case No. 97-1500, 1997 Bankr. LEXTS 2245, at 8-9 (Bankr. D. Del. Dec. 15, 1997). 8. The First Merchants criteria is consistent with those utilized by other courts when examining the types of duties to be undertaken by a "professional." See~, Elstead v. Nolden (In re That's Entertainment Mktg. Group), 168 B.R. 226, 230 (N.D. Cal. 1994) (only the retention of professionals whose duties are central to the administration of the estate requires prior court approval pursuant to Section 327); In re Madison Management Group, Inc., 137 B.R. 275, 283 (Bankr. N.D. III. 1992) (same); Outboard Marine Corporation, Case No. 00 B 37405 (Bankr. N.D. TIl. Dec. 22, 2000) (same); In re Mercury Finance Company, Case No. 98 B 21816 (Bankr. N.D, III. July 6, 1998) (same); In re D'Lites ofAm., Inc., 108 B.R. 352,355 (Bankr. N.D. Ga. 1989) (Section 327 approval is not necessary for "one who provides services to debtor that are necessary regardless of whether petition was filed"). Nevertheless, out of an abundance of caution, the Debtors seck the relief requested in this Application to avoid any subsequent controversy regarding the Debtors' employment and payment ofthe Ordinary Course Professionals during the pendency of the Chapter 11 Cases. The Debtors shall seek specific 3 Court authority to employ all professionals involved in the actual administration of the Chapter II Cases pursuant to section 327 ofthe Bankruptcy Code. 9. The operation ofthe Debtors' businesses would be hindered ifthe Debtors were required to submit to the Court an application, affidavit and proposed retention order for each Ordinary Course Professional, and if each Ordinary Course Professional were required to apply for approval of its employment and compensation pursuant to section 327 of the Bankruptcy Code. Further, a number of the Ordinary Course Professionals are unfamiliar with the fee application procedures employed in bankruptcy cases, Some of the Ordinary Course Professionals might be unwilling to work with the Debtors ifthese requirements are imposed. 10. More importantly, the cost of preparing and prosecuting these retention and fcc applications would be significant and unnecessary because such costs would ultimately be borne by the Debtors' estates. Moreover, a requirement tbat each of the Ordinary Course Professionals file retention pleadings and follow the ordinary fee application process required of other bankruptcy professionals would flood the Clerk's office, the Court and the United States Trustee's office with unnecessary fee applications. As a result, this Application proposes that this Court authorize an alternate procedure to alleviate such administrative burdens. II. The Debtors proposc that they be permitted to pay, without formal application to the Court by any Ordinary Course Professional, 100% ofthe postpetition fees and disbursements to each Ordinary Course Professional that are less than or equal to $50,000 per month upon the submission to the Debtors of appropriate invoices setting forth in reasonable detaiI the nature of the services rendered after the Petition Date. The Debtors further propose that, to the extent that the fees and expenses contained in such invoices exceed $50,000 per month for any particular Ordinary Course Professional, the Debtors shall not pay the invoice, and the particular Ordinary Course Professional shall, on or before the 30th day of the month 4 following the month for which compensation is sought (the "Monthly Invoice Date"), submit its monthly invoice to: (a) the Debtors at Conseco, Inc., 11825 N. Pennsylvania Street, P.O. Box 1911 (46082), Carmel, IN 46032 Attn: David K. Herzog; (b) counsel to the Debtors, Kirkland & Ellis, 200 E. Randolph Dr., Chicago, Illinois 60601, Attn: James H.M. Sprayregen, r.c., and (c) the United States Trustee, 227 West Monroe Street, Suite 3350, Chicago, Illinois 60606, Attn: Ira Bodenstein (colleetivcly, the "Interested Parties"). 12. The Interested Parties shall have twenty (20) days after the Monthly Invoice Date to review the invoice and file with the Court, and provide notice to the Ordinary Course Professional and all other interested parties, an objection to the fees and expenses requested by such Ordinary Course Professional(s). If any Interested Party objects to the payment of fees or expenses for a particular Ordinary Course Professional, then that Ordinary Course Professional shall be required to submit a formal application to the Court for such compensation in compliance with Sections 327 and 330 ofthe Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules and all applicable orders of this Court. If no objections are filed within twenty (20) days ofthe Monthly Invoice Date, the Debtors shall be authorized to pay the particular Ordinary Course Professional(s) without further order ofthe Court. 13. The Debtors propose to file a statement with the Court and to serve such statement on the United States Trustee on March 31, June 30, September 30, and December 31 of every year (except December 31, 2002) that these Chapter 11 Cases are pending (the "Quarterly Statements"). This statement shall include the following information for each Ordinary Course Professional: (a) the name of such Ordinary Course Professional; (b) the aggregate amounts paid as compensation for services rendered and reimbursement of expenses 5 incurred by such Ordinary Course Professional during the previous 90 days; and (c) a general description ofthe services rendered by each Ordinary Course Professional.t 14. Although some of the Ordinary Course Professionals may hold mmor amounts of unsecured claims against the Debtors for prepetition services rendered, the Debtors do not believe that any of the Ordinary Course Professionals have an interest materially adverse to the Debtors, their creditors, or other parties in interest, and thus none would be retained who do not meet the special counsel retention requirement ofsection 327(e) oflhe Bankruptcy Code. By this Application, the Debtors are not requesting authority to pay prepetition amounts owed to Ordinary Course Professionals.