HERBERT A. ROSS
U.S. Bankruptcy Judge

      Frank Avezac, the chapter 7 trustee, claims the following expenses in his first and final account (Docket No. 265, filed May 16, 1990):

Avezac noted on the First and Final Accounting at page 3 that the secretarial time and postage were high because "[e]xtensive secretarial time and postage expenses were required in connection with the collection of the accounts receivable."

      In his remaining cases, the ones he indicates are his profitable cases, he has started including in his first and final accounts exorbitant claims for secretarial time. He has explained that the designation of "secretary" was just a shorthand way of designating a paraprofessional with accounting skills. The individual in all the cases was Ms. Vicky Tyo. The court heard six of these cases on June 4-6, 1990.⁽¹⁾ In those cases, Mr. Avezac claimed unusually high costs, and the court reduced the allowance for secretarial time to $150.00 per case for five of them and allowed $500.00 for one. This was done because the United States trustee indicated a policy to permit a small amount of office expense as overhead was being explored by the United States trustee for the 18th Region.

      In those cases, as this one, Mr. Avezac testified he had learned from a local attorney, Jeff Carney, that a trustee can recover his or her office expenses. The United States trustee opposed the award of the costs claim in this case and the six other     1 ABR 467  cases. She said this was part of the trustee's overhead, and should not be allowed.

      At the hearing on the six cases, Mr. Avezac said he had only considered charging Ms. Tyo's cost after a conversation with an attorney, Jeff Carney. This conversation took place in early 1989. In Greg's Plumbing, however, Ms. Tyo's fees were mostly incurred in 1987. The justification Mr. Avezac gave for incurring these costs was that the estate had over $1.1 million dollars in accounts receivable and Ms. Tyo's services were needed to bill these accounts out. The trustee established that the estate recovered only $27,000 of receivables, all before Ms. Tyo began her collection effort.

      The court recognizes that trustees and their attorneys often do a superb job, but through the exigencies of the case are not able to recover much to disperse as dividends. Cf. In re James Contracting Group, Inc, 120 B.R. 868, 872 (Bankr.N.D.Ohio 1990), dealing with attorney fees as an administrative expense, but equally applicable to trustee's expenses. Conversely, James also pointed out that bankruptcy attorneys often spend unrealistic amounts of time when common sense or good business judgment should have indicated otherwise -- the same is true of trustees. In sorting out whether the fees or costs claimed are justified, the court must avoid merely imposing its hindsight on the application, but must try to visualize whether incurring the costs was a     1 ABR 468  justifiable business risk. Also, the court must determine if a trustee is padding an application.

      I determine that the trustee has not established the right to $4,256.00 for 76 hours of secretarial time at $56.00 per hour. Attached as Appendix A is replication of the Tyo time sheet. The trustee has not attempted to show that these accounts were collectable, what their aging was, and why it was necessary to pay $56.00 per hour for sending these bills out. Nonetheless, the court will allow $500.00 as reasonable secretarial expense (enough for one week of secretarial help at Alaska rates).

      Mr. Avezac's trusteeship in this case, as well as the six others referred to in footnote 1, was marked by his contentiousness in dealing with the Estate Administrator whose job it was to monitor the progress of case closing. He said he hired Ms. Tyo to assist with handling cases, but the court finds he hired her principally to do the trustee's work. The trustee's commission is set at $270.00 for the first $3,000.00 of money handled and 3% for the balance over $3,000.00. The trustee cannot choose to serve and subcontract the job out to another person and collect costs for the use of that person and the trustee's commission too.

      The U.S. Trustee cites many cases stating that overhead is not allowable for a trustee. E.g. In re A-1 Hydro Mechanics Corp., 106 B.R. 198 (Bankr.D.Haw. 1989) and In re Orthopaedic Technology, Inc., 97 B.R. 596 (Bankr.D.Colo. 1989). See also, In re Williams, 102 B.R. 197 (Bankr.N.D.Cal. 1989). There are well     1 ABR 469  reasoned cases, however, recognizing that a reasonable amount of overhead may be justified. See e.g. In re Miquel, 123 B.R. 634 (Bankr.E.D.Cal. 1991).

      In this case, however, I am convinced the trustee used poor judgment in purporting to commit to a large expense without a reasonable likelihood of success. In any event, a less costly approach (such as form letters) might have been attempted. It is the trustee's burden to establish the expenses sought were reasonable. In re Clinton Hardesty Const., 116 B.R. 773, 774 (Bankr.D.Haw. 1990). In this case, the trustee has failed to convince the court as to the reasonableness of the Tyo billing.

      The court will allow all expenses claimed by the trustee, except that "secretarial expense" shall be limited to $500.

    1 ABR 466  1. The six cases are: Case No. 3-86-00108, In re Thomas Murphy; Case No. 3-86-00854, In re A.C.P., Inc.; Case No. 3-87-00077, In re Rita Cheryl Rosenberg; Case No. 3-87-00105, In re Signs by Fred, Inc.; Case No. 3-87-00228, In re John W. Myers and Leona Y. Myers; and, 3-87-00388, In re The Alaska Fence Company. The court understands Mr. Azevac has appealed the court's ruling on his cost claims in these cases.