1 United States Bankruptcy Court Southern District of Florida West Palm Beach Division Liquidating Trustee's Amended Applicatio
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Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 1 of 20 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA WEST PALM BEACH DIVISION www.flsb.uscourts.gov In re: Chapter 11 PALM BEACH FINANCE PARTNERS, L.P., Case No.: 09-36379-PGH PAL BEACH FINANCE II, L.P., Case No.: 09-36396-PGH (Jointly Administered) Debtors. / LIQUIDATING TRUSTEE'S AMENDED1 APPLICATION TO EMPLOY LYNN E. TURNER AND LITINOMICS, INC., NUNC PRO TUNC TO DECEMBER 18, 2013 Barry E. Mukamal, in his capacity as liquidating trustee (the “Liquidating Trustee”) for the Palm Beach Finance Partners Liquidating Trust (“PBF”) and Palm Beach Finance II Liquidating Trust (“PBF II”), by and through undersigned counsel and pursuant to 11 U.S.C. § 327(a) and Fed. R. Bank. P. 2014(a), respectfully requests an that this Court enter an Order, nunc pro tunc to December 18, 2013, authorizing the employment of Lynn E. Turner (“Mr. Turner”) and the firm of LitiNomics, Inc., (“LitiNomics”; and together with Mr. Turner, the “Applicant”). In support, the Liquidating Trustee states as follows: 1. On November 30, 2009, the Debtors filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code [ECF No. 1]. By subsequent Order of this Court, the cases are jointly administered. 2. On January 28, 2010, the Court entered the Agreed Order Directing Appointment of Chapter 11 Trustee and Denying United States Trustee's Motion to Convert Cases to Cases under Chapter 7 [ECF No. 100]. 1 The Application is amended to include additional provisions relating to the payment structure of compensation for professional services and reimbursement of expenses. 1 LAW OFFICES OF MELAND RUSSIN & BUDWICK, P.A. 3200 SOUTHEAST FINANCIAL CENTER, 200 SOUTH BISCAYNE BOULEVARD, MIAMI, FLORIDA 33131 • TELEPHONE (305) 358-6363 {Firm Clients/4189/4189-1/01370695.DOC.} Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 2 of 20 3. On January 29, 2010, the United States Trustee appointed the Liquidating Trustee as Chapter 11 Trustee in both of the Debtors’ estates [ECF No. 107]. 4. On October 19, 2010, the Court confirmed the Second Amended Joint Plan of Liquidation of Barry Mukamal, as Chapter 11 Trustee of Palm Beach Finance Partners, LP and Palm Beach Finance II, LP, and Geoffrey Varga, as Joint Official Liquidator of Palm Beach Offshore, Ltd., and Palm Beach Offshore II, Ltd. [ECF No. 245] (the “Plan”). 5. The Liquidating Trustee is the Liquidating Trustee by virtue of this Court’s Order Confirming Second Amended Joint Plan of Liquidation dated October 21, 2010 [ECF No. 444]. 6. Article 7.1.11 of the Plan states, among other things, that professionals retained shall: (i) be entitled to monthly interim compensation for fees and expenses incurred and; (ii) professionals shall, no less frequently than once every four (4) months, submit applications to the Bankruptcy Court for final approval of same. 7. Article 1.76 of the Plan, entitled “Pro Rata Allocation Formula”, provides for a pro rata allocation formula supporting an 18%/82% allocation between the PBF and PBF II estates, respectively, based upon the total assets of each entity. The Trustee believes that this formula is the proper methodology to allocate certain fees and expenses between the two estates. 8. The Liquidating Trustee desires to employ the Applicant as an expert for the purposes of providing independent, objective analyses related to financial, accounting and auditing issues, consultation to the Liquidating Trustee regarding Mukamal v. General Electric Capital Corp., Adv. No. 12-1979, and other services as the Liquidating Trustee may reasonably request on related issues. 2 LAW OFFICES OF MELAND RUSSIN & BUDWICK, P.A. 3200 SOUTHEAST FINANCIAL CENTER, 200 SOUTH BISCAYNE BOULEVARD, MIAMI, FLORIDA 33131 • TELEPHONE (305) 358-6363 {Firm Clients/4189/4189-1/01370695.DOC.} Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 3 of 20 9. Mr. Turner is a Managing Director within the LitiNomics forensic accounting practice and his hourly rate for this engagement will be $750.00. The hourly rates for LitiNomics’ staff, if utilized by Mr. Turner, range from $75.00 to $550.00. 10. The Applicant will apply for compensation for professional services rendered and reimbursement of expenses incurred in compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, guidelines established by the Office of the United States Trustee for the Southern District of Florida, the Plan and related documents, including the Liquidating Trust Agreements, and any other applicable procedures and orders of the Court. 11. The Liquidating Trustee believes that the Applicant is qualified to be retained by the Liquidating Trustee based on his professional expertise in financial reporting and auditing. In support, Mr. Turner’s curriculum vitae is attached as Exhibit 1. 12. To the best of the Liquidating Trustee’s knowledge, the Applicant does not (i) have any connection with the Debtors or the Debtors’ estates; or (ii) represent any interest adverse to the Liquidating Trustee, the Debtors or the Debtors’ estates. 13. Attached as Exhibit 2 is Mr. Turner’s fully executed and notarized affidavit demonstrating that he is disinterested as required by 11 U.S.C. § 327(a) and a verified statement as required under Fed. R. Bank. P. 2014. 14. The Liquidating Trustee believes that the employment of the Applicant is in the best interests of the Debtors’ estates and their creditors. WHEREFORE, the Liquidating Trustee respectfully requests the Court enter an Order (similar in form to Exhibit 3) (i) authorizing the retention of the Applicant, nunc pro tunc to 3 LAW OFFICES OF MELAND RUSSIN & BUDWICK, P.A. 3200 SOUTHEAST FINANCIAL CENTER, 200 SOUTH BISCAYNE BOULEVARD, MIAMI, FLORIDA 33131 • TELEPHONE (305) 358-6363 {Firm Clients/4189/4189-1/01370695.DOC.} Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 4 of 20 December 18, 2013 upon the terms and conditions set forth above; and (ii) for all other relief this Court deems just and proper. CERTIFICATE OF SERVICE I HEREBY CERTIFY that, on December 19, 2013, a true and correct copy of the foregoing was served via the Court’s Notice of Electronic Filing upon all Registered Users on the list attached as Exhibit 4 and was mailed via U.S. Regular Mail to all parties on the list attached as Exhibit 5. Dated: December 19, 2013. s/ Solomon B. Genet Solomon B. Genet, Esquire Florida Bar No. 617911 [email protected] MELAND RUSSIN & BUDWICK, P.A. 3200 Southeast Financial Center 200 South Biscayne Boulevard Miami, Florida 33131 Telephone: (305) 358-6363 Telecopy: (305) 358-1221 Attorneys for the Liquidating Trustee 4 LAW OFFICES OF MELAND RUSSIN & BUDWICK, P.A. 3200 SOUTHEAST FINANCIAL CENTER, 200 SOUTH BISCAYNE BOULEVARD, MIAMI, FLORIDA 33131 • TELEPHONE (305) 358-6363 {Firm Clients/4189/4189-1/01370695.DOC.} Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 5 of 20 Lynn E. Turner Managing Director 444 South Flower Street, Suite 2140 Los Angeles, CA 90071 main: 213.222.0870 fax : 888.222.6001 [email protected] Lynn E. Turner is a Managing Director within the LitiNomics forensic accounting practice. With more than 35 years of business, regulatory, and academic experience, he is a noted expert on financial reporting and auditing requirements. At LitiNomics, Mr. Turner focuses on complex investigations regarding financial reporting and misappropriation of assets, as well as various aspects of corporate governance, securities litigation, accountant liability, and technical accounting matters. Mr. Turner possesses a unique perspective and broad range of expertise gained from filling a variety of roles during his professional career, including: x Chief Accountant of the Securities and Exchange Commission (SEC) x Partner with Coopers & Lybrand, a major international accounting and auditing firm and predecessor to PricewaterhouseCoopers x Member of Boards of Directors and Audit Committees of public companies x Trustee of both a mutual fund and a public pension fund x Chief Financial Officer (CFO) and an executive in industry x Managing Director of a proxy and financial research firm x Professor of accounting x Appointed to the Treasury Committee on the Auditing Profession by Treasury Secretary Paulson in 2007. Mr. Turner served as the Chief Accountant of the SEC from July 1998 to August 2001. As Chief Accountant, he was the principal advisor to the SEC Chairman and Commission on auditing, financial reporting, disclosures, and related corporate governance matters for publicly traded companies. Mr. Turner worked regularly with Congress, federal and state government agencies, international regulators, industry representatives, and the accounting profession to develop and implement rules and regulations. During Mr. Turner’s tenure as Chief Accountant of the SEC: x The Blue Ribbon Panel on the Effectiveness of Audit Committees was instituted and he oversaw the development of the resulting SEC rules, including for the first time ever, a report of audit committees to investors. x SEC required vast majority of public companies to have their quarterly financial statements reviewed by an independent auditor prior to filing with the SEC. x He instituted and oversaw the O’Malley Panel on Audit Effectiveness and development of new auditing standards. x Initiated the first monetary fine of an independent auditing firm for a lack of independence. Page 1 of 4 EXHIBIT 1 Case 09-36379-PGH Doc 2053 Filed 12/19/13 Page 6 of 20 x Negotiated with three international auditing firms regarding the spinoff of their consulting practices. x SEC initiated the first complete rewrite of the auditor independence rules in 60 years. x SEC required companies, for the first time, to disclose the amounts paid for audit and non- audit fees. x Negotiated the creation of the new International Accounting Standards Board. x SEC issued the first concept release regarding establishment of international accounting standards.