1. INTRODUCTION- The court reduced the Seventh Quarterly Fee Application of Bankston & McCollum (B&M) by $6,979 for the item designated as Matter 301 in an order entered on December 10, 1997 (Docket Entry 3313). The order is supported by a Memorandum (Docket Entry 3314). Matter 301 involved B&M's work for the period of May 1, 1997, through July 31, 1997, on a motion filed by the trustee for approval of payment of administrative expenses in the chapter 7 case.

A Motion For Reconsideration Re Seventh Quarterly Fee Application Of Bankston & McCollum was filed on December 31, 1997 (Docket Entry 3337).

The fees were reduced because, in the court's opinion, the motion to approve certain expenditures as administrative expenses was unnecessary and not beneficial to the estate. Alternatively, in the context of this case, the amount sought is excessive.

The motion for reconsideration will be denied, but the court will afford B&M the right to a hearing, and remand the denial if a hearing convinces the court it was mistaken.

5 ABR 156      2. BACKGROUND- B&M filed a Motion To Approve Certain Cash Collateral Expenditures as Administrative Expenses relating to $1,039,379 of cash collateral expenditures for the chapter 7 period from October 15, 1995, to December 31, 1996. See, Docket Entry 2988, filed May 21, 1997, and the related notice and affidavit of William Barstow (Docket Entries 2989 - 2990). It is an extensive motion, consisting of 32 pages. The affidavit of Mr. Barstow is likewise voluminous.

The motion was apparently not controversial. There were no objections. The administrative expenses for which approval was sought had already been paid. The motion was set for a hearing on August 1, 1997, and at that time, the court was presented with a stipulated order (Docket Entry 3104, filed August 1, 1997). The order was signed off by Spencer Sneed representing GPA, a claimant to the cash collateral, Michael Mills for the trustee, and U.S. Trustee Barbara Franklin.

In the Seventh Quarterly Fee Application, B&M sought $6,979 for its work on research, preparing, and presenting the motion to approve the payment of the administrative expenses, the principal, if not the sole work, done under the Matter 301 category.

In reviewing the file, it appeared that the work on this matter began during the Sixth Quarterly Fee Application period, February through April 1997. B&M charged $2,253 for this billing period.

A summary of the monthly charges and time spent by attorney Michael Mills, and paralegal Michele Droege for the application to obtain approval of the already paid administrative expenses is:

B&M indicates in the motion for reconsideration that the task had been undertaken due to a concern raised by the U.S. Trustee that the trustee obtain court approval for the chapter 7 administrative expenses incurred. The U.S. Trustee first contacted the trustee in late February or early March 1997. The U.S. Trustee, in fact, assisted B&M in finding authority for bringing the motion when it did (Docket Entry 3337, pages 2-3).

The time records submitted with the Sixth and Seventh Quarterly Fee Applications show only a few contacts with Spencer Sneed, attorney for GPA, the entity asserting a secured interest in the cash collateral. The motion for reconsideration does not indicate that GPA was disputing the administrative expenses involved. If it had, a negotiated resolution would have been more appropriate rather than a $9,233 expense to present the motion for approval of administrative expenses already paid.

5 ABR 158      The U.S. Trustee filed a terse response to B&M's motion to reconsider on January 7, 1998 (Docket Entry 3352), indicating that it had raised a concern and cited Sousa v. Miguel, 32 F3d 1370 (9^th Cir 1994) to the trustee. B&M must have recognized there might be a problem with the efficacy of filing the motion when it did, since it discussed it with the U.S. Trustee.

It is not as if the trustee had not previously made disclosures about his payment of administrative expenses prior to the motion for approval of them. The record reflects:

• On May 2, 1996, the trustee applied for interim compensation, and made an extensive disclosure of his activities, including the Denver Task Force and preservation of records (Docket Entry 2039).
  
  
• On March 7, 1997, the trustee applied again for interim fees (Docket Entry 2899). This was supplemented by a pleading which contained a printout of all the trustee's income and expenses from October 1995, to December 31, 1996, the same period as involved in the B&M motion. 5 ABR 159      Supplement to Application For Award of Interim Trustee's Fees, Exhibit 2 (Docket Entry 2921).

In fact, the B&M motion for approval of the administrative expenses adopts a similar format to the motions for trustee's compensation filed by John Siemers on behalf of the trustee.

The Motion To Approve Certain Cash Collateral Expenditures As Administrative Expenses filed on May 21, 1997 (Docket Entry 2988), and the affidavit of William Barstow (Docket Entry 2990), repeat much of the disclosure given in a Supplement To Application for Award of Interim Trustee's Fees filed March 26, 1997 (Docket Entry 2921). This contains a rather complete analysis of expenses of the trustee from November 1995, through December 31, 1996.

I am under the impression that the use of cash collateral has been closely monitored by GPA and the parties have generally operated under the auspices of negotiated budgets.

3. ANALYSIS- B&M's fee application is itself an administrative expense. It should only be allowed to the extent the fees are reasonably necessary. 11 USC § 503(b)(2) concerns compensation for professionals, and refers to 11 USC § 330(a).

Section 330(a) includes a provision that the fees sought were for services "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." The court may, on its own motion, reduce the fees sought. 11 USC § 330(a)(2).

The analysis in the motion for approval of administrative expenses (Docket Entry 2988) is organized by topic, which makes it more comprehensible, whereas Barstow's earlier Supplement to his interim fee application is chronological (Docket Entry 2921). But, lacking a dispute to be resolved at the time of the motion, it is difficult to defend the $9,233 cost for the motion.

B&M has provided scant justification for the estate incurring $9,233 in fees for approval of administrative expense payments already made and previously disclosed. These payments and the budget were scrutinized by GPA. The payments were disclosed to the creditors before B&M's motion. They were discussed 5 ABR 160      obliquely in the fee applications of many professionals, such as accountants David Mork and Russ Minkemann, attorney John Siemers, etc.

Under the facts of this case, these fees do not appear to be necessary, and should not be allowed. Compare, In re Auto Parts Club, Inc., 211 BR 29, 33 (9^th Cir BAP 1997) and In re CIC Investment Corp., 192 BR 549, 554 (9^th Cir BAP 1996).

Sousa is a chapter 7 trustee overhead case, not a case dealing with administrative expenses in the general sense. It deals with run-of-the-mill trustee's overhead issues. No one would expect Mr. Barstow to handle the enormous responsibilities of this case without substantial payments for administrative expenses to preserve and liquidate the assets.

The motion to reconsider the reduction of fees awarded B&M for its Seventh Quarterly Fee Application will be denied. I will not revisit the Sixth Quarterly Fee Application, which awarded B&M about 25% of the $9,233 total sought for working on the trustee's administrative expense motion. In the context of this case, that is more than adequate compensation.

I will require B&M to deduct from any future applications B&M's attorney fees for defending its Seventh Quarterly Fee Application, including its motion for reconsideration. Cf., In re Riverside-Linden Investment Co., 945 F2d 320, 322 (9^th Cir 1991) (court has discretion to deny fees sought for unsuccessfully defending fee application), distinguishing In re Nucorp Energy, Inc., 764 F2d 655, 662 (9th Cir 1985) (fees are recoverable for preparing a fee application).

The $6,979 is not an insignificant amount, but, it is not a large item when 5 ABR 161      taken in context. The court has approved over $500,000 in chapter 7 fees for B&M, and only questioned a small percentage of them.

4. CONCLUSION- A separate order will be entered, based on this memorandum. I will grant 30 days to appeal the order denying the motion to reconsider to be filed concurrent with this memorandum. In that interim, B&M may have a hearing on the merits. Should B&M convince me I am mistaken, I will remand the order.

Any testimony at a hearing requested by B&M should be prefiled as sworn declarations, to the extent they are reasonably available to B&M.

DATED: February 2, 1998

HERBERT A. ROSS
U.S. Bankruptcy Judge