(a) Authorization to Use Estate Funds Up to $1,000 to Pay Certain Expenses. During the course of a chapter 7 case, a trustee may disburse up to $1,000 from estate funds to pay the following actual and necessary expenses of the estate without further authorization from the court (the “Authorized Allocation”):
(1) Actual cost of noticing, postage, copying;
(2) Costs to advertise sale;
(3) Computer charges;
(4) Long distance telephone;
(5) Postage;
(6) Moving or storage of estate assets;
(7) Teletransmission;
(8) Travel charges for trustee (includes lodging, meals, mileage and parking);
(9) Bank charges for research or copies;
(10) Court reporting fees;
(11) Delivery of documents;
(12) Expedited mail;
(13) Filing and process serving;
(14) Notary fees;
(15) Recording fees;
(16) Deposition/transcript fees;
(17) Witness fees;
(18) Locate and move assets;
(19) Prepare litigation support documents;
(20) Insurance;
(21) Locksmith;
(22) Rent;
(23) Security services; and
(24) Utilities.
(b) Bond Premiums and Taxes. In addition to payments that may be made from the
Authorized Allocation, the trustee may pay during the ordinary course of the trustee’s
administration of an estate:
(1) Bond premiums required by 11 U.S.C. § 322(a); and
(2) Obligations to taxing agencies arising under 11 U.S.C. § 507(a)(2), provided the
estate is and is likely to remain administratively solvent.
(c) Expenses for Preparation of Tax Returns. The trustee may, by a single application,
seek authorization to employ and pay a tax preparer a flat fee (not to exceed $750 unless the court orders otherwise) for preparation of tax returns for the estate. If the court grants such application, the trustee may pay the flat fee so ordered without further application or order. This amount is in addition to payments that may be made from the Authorized Allocation.
(d) Emergency Expenses. The trustee may exceed the Authorized Allocation to pay
emergency expenses, without prior court approval, to protect assets of the estate that might otherwise be lost or destroyed. Emergency expenses are limited to:
(1) Charges for storage of the debtor’s records to prevent the destruction of those
records and related necessary cartage costs;
(2) Insurance premiums to prevent liability to the estate;
(3) Locksmith charges to secure the debtor’s real property or business; and
(4) Security services to safeguard the debtor’s real or personal property. If the trustee disburses more than the Authorized Allocation to pay emergency expenses and other expenses for which the Authorized Allocation may be used, the trustee must file
and serve a cash disbursement motion, as described in subsection (f) of this rule, within 7 days after such expenses are paid.
(e) Procedures for Employment of Paraprofessionals and Payment of Paraprofessional Fees and Expenses. A trustee must obtain court approval to employ and to pay a paraprofessional.
(1) Definition. The term “paraprofessional” includes all persons or entities other than
“professionals” who perform services at the trustee’s request and seek payment for
services and expenses directly from the bankruptcy estate, including an agent, a
field representative, an adjuster, and a tax preparer.
(2) Employment. A trustee may seek court approval to employ a paraprofessional by
filing an employment application using court-approved form F 2016-2.1. The
court’s approval of the employment of any paraprofessional is not a judicial
determination as to whether services of the paraprofessional constitute “trustee
services.” The following is a nonexclusive list of services that the court deems
“trustee services” subject to the limitation on compensation contained in 11 U.S.C.
§ 326(a):
(A) Review schedules;
(B) Acceptance and qualification as a trustee;
(C) Routine investigation regarding location and status of assets;
(D) Initial contact with lessors, secured creditors, assignee for benefit creditors,
etc., if same can be accomplished from office;
(E) Turnover or inspection of documents, such as bank documents;
(F) UCC search review;
(G) Recruit and contract appraisers, brokers, and professionals;
(H) Mail forwarding notices;
(I) Routine collection of accounts receivable;
(J) Letters regarding compliance with LBR 2016-1;
(K) Conduct 11 U.S.C. § 341(a) examinations;
(L) Routine objections to exemption;
(M) Routine motions to dismiss;
(N) 11 U.S.C. § 707(b) referral to United States trustee;
(O) Routine documentation of notices of sale, abandonment, compromise, etc.;
(P) Appear at hearings on routine motions;
(Q) Review and execute certificates of sale, deed, or other transfer documents;
(R) Prepare and file notifications of asset case;
(S) Prepare and file cash disbursement motions and necessary attachments;
(T) Prepare exhibits to operating reports;
(U) Prepare quarterly bond reports;
(V) Prepare trustee’s interim reports;
(W) Routine claims review and objection;
(X) Prepare and file final reports and accounts and related orders;
(Y) Prepare motions to abandon or destroy books and records;
(Z) Prepare and file FRBP 3011 reports;
(AA) Prepare and file notices and motions to abandon assets and related orders;
(BB) Attend sales;
(CC) Monitor litigation;
(DD) Answer routine creditor correspondence and phone calls;
(EE) Prepare and file applications to employ paraprofessionals;
(FF) Review and comment on professional fee applications;
(GG) Participate in audits;
(HH) Answer United States trustee questions;
(II) Close and open bank accounts;
(JJ) Verify proposed disbursements;
(KK) Post receipts and disbursements;
(LL) Prepare details and calculations for payment of dividend;
(MM) Prepare dividend checks;
(NN) Organize and research bills;
(OO) Prepare checks for the trustee’s signature;
(PP) Prepare internal cash summary sheets;
(QQ) Reconcile bank accounts;
(RR) Prepare and make deposits; and
(SS) Additional routine work necessary for administration of the estate.
(3) Reimbursement of Fees and Expenses. A trustee may pay a paraprofessional only
upon specific order of the court.
(A) If the paraprofessional or trustee contends that the paraprofessional’s services are not “trustee services,” the trustee or paraprofessional must present evidence to support that contention. Absent adequate proof, the court may find that the services of the paraprofessional are “trustee services” subject to the limitation on compensation under 11 U.S.C. § 326(a).
(B) If a trustee refuses or neglects to file a fee application for the paraprofessional, the paraprofessional may file a separate fee application pursuant to 11 U.S.C. § 330. In addition to fulfilling the requirements of 11 U.S.C. § 330, FRBP 2014 and these rules, the paraprofessional’s fee application must include: (i) a declaration explaining why a separate fee application is necessary; and (ii) evidence establishing which services are “trustee services” and which are not. The paraprofessional must serve any separate fee application on the trustee, debtor, debtor’s counsel (if any), the
United States trustee, and all professionals and other paraprofessionals employed in the case, and must give notice of the application to all creditors.
(f) Cash Disbursements Motion.
(1) Filing and Service. If the trustee wishes to pay expenses not authorized by this
rule from estate funds, the trustee must file a cash disbursements motion to obtain
court approval of payments for emergency expenses and all other expenses the
trustee deems necessary for effective administration of the case. The cash
disbursements motion must be in substantially the same form as court-approved
form F 2016-2.2, Trustee’s Cash Disbursements Motion. The trustee must serve
the cash disbursements motion on the debtor, debtor’s counsel (if any), the United
States trustee, holders of the 20 largest unsecured claims, and any other party in
interest entitled to notice under FRBP 2002. Any objection to the cash disbursements motion must be filed and served on the trustee and trustee’s counsel, if any, within 14 days from the date the cash disbursements motion is served. The trustee must file the cash disbursements motion with the court within 21 days after service of the motion. If a timely objection has not been filed, the trustee must include a declaration to that effect. If a timely objection is filed, the trustee must set the matter for hearing and give written notice of the date, time and place of the hearing to the objecting party, debtor, debtor’s counsel (if any), and the United States trustee. The trustee may seek an expedited hearing pursuant to LBR 9075-1.
(2) Hearing. The court may set a hearing on a cash disbursements motion regardless
of whether an objection is filed. However, if the court does not advise the trustee
of a hearing on the motion within 7 days after the motion is filed, the trustee may
disburse funds from the estate to pay the expenses referred to in the motion to the
extent the trustee deems it necessary, pending an order of the court. If, thereafter,
the trustee receives notice that the court has issued an order in which the cash
disbursement motion has been disapproved in whole or in part, or that the court has
set a hearing, the trustee must stop paying the expenses for which authorization
was sought in the motion or otherwise comply with the provisions of the order.
The trustee may file a motion for reconsideration pursuant to LBR 9013-4.
(3) Personal Liability and Disclosure. Except as provided in this rule, a trustee who
makes a disbursement without prior court approval may be personally liable to the
estate for the amount of the disbursement. All disbursements made by the trustee
pursuant to this rule must be disclosed in the trustee’s final report and in all
applications for fees or costs by the trustee and by paraprofessionals employed in
the case by the trustee.
(g) Nonexclusive Remedy. Nothing in this rule precludes the trustee from seeking court approval to disburse estate funds by way of a noticed motion filed and served pursuant to LBR 9013-1.
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