In The 1031 Tax Group bankruptcy, the trustee came on board after a period where the bankruptcy was handled as a debtor in possession, similar to Summits’ bankruptcy.  The trustee thoroughly reviewed all the pre-trustee professional bills and started developing claims against all the professionals for malpractice.  Because of those efforts, the trustee was able to move all of those fee applications to the back of the line through settlements with the respective firms.  That means those professionals do not get paid a dime until the creditors get 100% of their money back and all the post-trustee professionals are paid in full.  That means they won’t ever be paid.  Here are the folks that didn’t get paid because they weren’t doing their jobs in the best interest of the creditors:

Counsel for the Creditors’ Committee-  $2,585,142

Creditors’ Committee Financial Advisors-  $1,137,764

CRO and financial advisor for the debtors-  $3,680,109

There is one firm left that has not settled but the trustee is confident he’ll reach the same settlement terms.

 Debtors’ Counsel- $3,349,187

 All in all, over $11 million in professional fees essentially got rejected and will not be paid in The 1031 Tax Group case.

 Is your trustee, KEVIN PADRICK, representing your interests in objectively reviewing the fee applications with a fine tooth comb?  Is he challenging bills for work that was not in the best interests of the creditors?  How could he?  He’d be challenging the fee applications of his own company!!  He’d be challenging the fee applications of those other firms (Perkins Coie and Sussman Shank) who he may have made a deal with to get his Summit trustee pre-funded job!  And why would he thoroughly review the bills of the firm that he hired as his own legal counsel to protect himself (that the creditors are billed for in full!)?

 Why should you pay the professional fees for all the time Kevin Padrick spent trying to get his job?  Who is the objective party that will be reviewing these thoroughly?  Is the trustee on your side when it comes to fees?  No way!!  His self-interest makes it impossible for him to do his job objectively.  You see, attorneys don’t always do their work in the best interest of their clients, just as was shown in The 1031 Tax Group case.  And the professional fees can be challenged and rejected OR moved to the back of the line.

What about the Summit Accommodators case?  Who will make sure all these fees were necessary and in the best interests of creditors?  Kevin Padrick?