Objection of Trustee to Application — In re Panthera Enterprises, LLC, Case No. 19-00787 (Dkt. 247, Bankr. N.D. W. Va.)

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In In re Panthera Enterprises, LLC, Case No. 19-00787, Aaron C. Amore, Chapter 7 Trustee, files an objection to the Application for Final Compensation and Reimbursement of Expenses by Bernstein-Burkley, P.C, counsel for the Chapter 11 Debtor. The objection sets out the legal standard under 11 U.S.C. § 330 and the twelve Johnson factors. It objects to the requested fees for monthly operating reports and for the plan and disclosure statement, noting that no plan or disclosure statement was filed, and to any time and expense billed for the Panthera AP adversary proceeding. The Trustee does not object to fees for insurance, professional retentions or fee applications. It is signed /s/ Aaron C. Amore.

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

IN RE:

PANTHERA ENTERPRISES, LLC

Case No. 19-00787

Debtor.

Chapter 7

OBJECTION OF TRUSTEE TO APPLICATION FOR FINAL
COMPENSATION AND REIMBURSEMENT OF EXPENSES BY
BERNSTEIN-BURKLEY, P.C, COUNSEL FOR THE CHAPTER 11 DEBTOR,
PANTHERA ENTERPRISES, LLC

Now comes, Aaron C. Amore, Chapter 7 Trustee, for the Estate of Panthera
Enterprises, LLC (“Debtor”) and files his Objection to Final Compensation And
Reimbursement of Expenses By Bernstein-Burkley, P.C, (hereafter “Applicant”)
counsel for the Chapter 11 Debtor, Panthera Enterprises, LLC.
LEGAL STANDARD
A bankruptcy court “may allow reasonable compensation to the debtor's
attorney for representing the interests of the debtor in connection with the
bankruptcy case based on a consideration of the benefit and necessity of such
services to the debtor and the other factors set forth in this section.” 11 U.S.C. §
330(a)(4)(B). The “other factors” include those set forth in § 330(a)(3):
(A) the time spent on such services;
(B) the rates charged for such services;
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(C) whether the services were necessary to the administration of, or beneficial
at the time at which the service was rendered toward the completion of [the
case];
(D) whether the services were performed within a reasonable amount of time
commensurate with the complexity, importance, and nature of the problem,
issue, or task addressed;
(E) with respect to a professional person, whether the person is board
certified or otherwise has demonstrated skill and experience in the
bankruptcy field; and
(F) whether the compensation is reasonable based on the customary
compensation charged by comparably skilled practitioners in cases other than
cases under this title. 11 U.S.C. § 330(a)(3).
In addition to these considerations, the Fourth Circuit has instructed
bankruptcy courts to evaluate fee applications in light of the following twelve
factors (the “Johnson factors”): (1) the time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill required to properly perform the legal
services rendered; (4) the attorney's opportunity costs in pressing the instant
litigation; (5) the customary fee for like work; (6) the attorney's expectations at the
outset of the litigation; (7) the time limitations imposed by the client or
circumstances; (8) the amount in controversy and the results obtained; (9) the
experience, reputation and ability of the attorney; (10) the undesirability of the case
within the legal community in which the suit arose; (11) the nature and length of
the professional relationship between attorney and client; and (12) attorneys' fees
awards in similar cases. Harman v. Levin, 772 F.2d 1150, 1152 n.1 (4th Cir. 1985)
(citing Barber, 577 F.2d at 226 n.28, and Johnson v. Ga. Highway Express, Inc., 488
F.2d 714 (5th Cir. 1974)).
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Facts Relevant to Inquiry
1. Panthera Enterprises, LLC (“Debtor” or “Panthera”) filed a Chapter 11
Voluntary Bankruptcy Petition on September 13, 2019.
2. On September 23, 2019, Bernstein-Burkley filed an Application for
Employment as Counsel to the Debtor with this Honorable Court, and was
employed pursuant to the entry of the Order of Court dated October 10, 2019.
3. On July 21, 2020, by Order of Court, this matter was converted from Chapter
11 to Chapter 7 and Aaron C. Amore was appointed as the panel trustee
assigned to the case.
4. On October 19, 2020 Applicant filed Final Application for Compensation and
Reimbursement of Expenses.
The Trustee has reviewed the Final Application for Compensation and
Reimbursement of Expenses and interposes the following objections:
.02 Petition. Trustee objects to the time and claimed fees to review, prepare and
draft the petition and schedules in this matter. 46.75 hours are claimed in this
category. The majority of the information listed in the schedules appears to be data
entry of creditors. Many of the debts asserted to be owed by the Debtor are really
debts owed by other entities and several claims filed in the case were omitted on the
schedules. For example, James Michael Dowty is listed as a creditor on schedule F
(3.15)  in the amount of $122,036.11 but most of his claim (no. 17) appears to be
from salary owed to him for his work for Panthera Worldwide, LLC ($108,732) as
confirmed by James Punelli, along with $10,000 in monies loaned to Panthera
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(which entity is unclear) and another loan to Raymond Jones in the amount of
$18,000.  Bruce Hardy is not listed on schedule F but appears to have loaned the
Debtor $100,000 and $350,000 according to his proof of claim (no 19.). The Trustee
continues to find errors in the schedules and statement of financial affairs as he
receives and reviews information in this case.
.07 Monthly Operating Reports The Trustee objects to the requested legal
fees charged for the review, finalization and filing of monthly operating reports
(“MOR”). The reports filed in this case were replete with errors that went
unaddressed and unexplained. The initial operating report (Doc 26) represented
that the Debtor would have minimal cash available aside from billings to contract
customers.
The first MOR for the period of September 2019 indicates that the Debtor listed
an account payable to Panthera Training Center in the amount of $138,750.00. No
such debt to Panthera Training Center was scheduled and no account payable or
other obligation listed anywhere on the Debtor’s schedules, statement of financial
affairs or other filed documents. Panthera Training Center, LLC was listed as
having received $217,464.00 in the 90 days prior to the filing of the petition. The
September MOR showed no cash receipts not on the attached Exhibit C to the MOR.
The October 2019 MOR showed the income received from the DEA contract
which was, per its lease with Panthera Training (“hereafter “PT”), due to PT by way
of wire transfer. The funds were diverted by the Debtor. The MOR does note the
funds were paid in error and would be refunded and reflected in the November
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MOR. The transfer of funds is a red flag to counsel. The funds should have been
immediately reimbursed to the DIP account. The MOR for November of 2019 is
mostly devoid of information but notes on Exhibit C the following;
“Please note that there was a miscommunication/oversight during the month of
November and the October 21, 2019 $134,160.00 payment to Panthera Training
Center was not refunded during the month of November as planned, but has
since been returned in December and will reflect the same on the next report.”

The MOR for November 2019 shows cash receipts of $100,016.43, but this appears
to be the repayment of diverted funds to the Debtor in the form of two transfers of
$50,000.00. A sentence on Exhibit C of the MOR  indicated that “[p]lease note that
the remaining $34,160.00 that was paid to Panthera Training Center, LLC will
be refunded and reflected on the January operating report.” There did not appear to
be any accounting of where the funds went, if and how they were spent, or any real
verifiable information from the Debtor or its counsel.
The January 2020 MOR, Exhibit C reflects that $30,200.00 was paid to PT for its
work performed pursuant to the Lease and for which payment was made in
September of 2019. However, the funds were really transferred in February of 2020.
PT initiated a legal action in Loudon County Virginia, which enabled it to subpoena
the Panthera Training Center, LLC’s bank for statements that might establish
what happened to the diverted funds and why they were not immediately repaid.

The MORs also included what appear to be account receivables but provided
no real explanation. These appear to represent funds the Debtor thought were due
from PT related to “Liability ins Due under the Lease” which was not an obligation
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owed by PT. PT was required to maintain its own liability insurance as part of the
lease. Proof of said insurance was provided to the Court. Further, the Court directed
the Debtor to obtain insurance which was required pursuant to its deed of trust and
agreement with its secured creditor, West Virginia Economic Development
Authority.

Counsel’s failure to monitor, investigate and take corrective actions caused
irreparable harm both to PT as well as the Debtor’s credibility and compliance with
the Court’s operating order as well as the provisions of 11 U.S.C § 308, 18 U.S.C.
§§152, 153 & 157. The Trustee objects to the requested fee pursuant to the work
done on the monthly operating reports.
.12 Plan and Disclosure Statement. The Trustee is unable to assess the
claimed time expended as no plan or disclosure statement was filed in this case.
Applicant requests fees of $17,449.50 this category. The Trustee is aware of two
motions to extend the exclusivity period but these motions would certainly take less
than a few hours of legal work. The Trustee objects to the requested fee for this
category.
.13 Insurance. The Trustee does not object to the requested fees for time
expended regarding insurance.
.14 Taxes.  More time should have been expended related to the review of tax
claims. The Debtor continued to be taxed on property it no longer owned (Personal
property was conveyed in June of 2018). The Applicants failure to review and assess
the personal property taxes is a major error. The failure of the Applicant to review
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the tax returns of the Debtor has resulted in significant issues.  The 2019 Panthera
Enterprises, LLC beginning retained earnings was 9,275,213, but the ending tax
return balance for 2018 was 8,016,577. The 2019 Panthera Training Center, LLC
beginning retained earnings was 275,555, but the ending tax return balance for
2018 was 11,226,436. There is a $10 million dollar retained earnings reporting that
simply disappeared.
West Virginia State Tax Department filed a proof of claim (No.1-2) which lists a
propriety estimated pass through taxes for the year ending 12/31/17 and 12/31/18 in
the amount of $50,000.00 each year with interest of $13,000.00 per year. These
figures are estimated since no returns were filed for those years. There is also an
estimated withholding amount of $1,000 for the period ending 3/31/18. Unsecured
claims are also asserted in the amount of $16,000.00 for 2017 and 2017 for each
year. There does not appear to have been any effort made to get the returns filed or
correct the estimated claim amounts. The West Virginia Tax claims were filed
shortly after the filing of the case on September 27, 2019.
.16 Claims.  The Trustee believes that little if any real review was made
related to the claims in this case. More diligent and through work would have
reviewed defects and glaring legal issues with the taxing authorities. The Trustee
objects to this request.
.17 Miscellaneous Motions. The Trustee is aware of several contested
motions at the outset of this case including motions to dismiss and or convert the
case as well as a motion for relief from stay. The Applicant would have to defend
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these actions simply to preserve the case. However, several contested hearings were
the result of the Debtor’s actions as well as Counsel’s failure to monitor and review
monthly operating reports. The diversion of funds and failure to truthfully prepare
and file monthly operating reports lead to the renewed motion to convert this case.
The Trustee is also aware of several evidentiary hearings conducted by the Court.
The Trustee does not oppose the time expended defending motions to convert or
dismiss, the motion for relief from stay nor its participation in the Neff v. Panthera
Enterprises, LLC et al (2:20-ap-00010) adversary proceeding. The Trustee requests
specific time entries related to these motions/actions such that he can determine if
they are appropriately billed. He reserves the right to object further depending on
the records provided.
.18 Adversary Proceedings.  The Trustee is unable to ascertain the exact
amounts attributable to the Neff adversary proceeding as opposed to the Panthera
Enterprises, LLC v. Panthera Training  (No. 2:19-51) (“Panthera AP”) adversary
proceeding. The Trustee does not object to fees billed by the Applicant related to the
Neff AP.
The Trustee objects to any time and/or expense billed related to the Panthera
AP. The Trustee incorporates by reference his Motion to Compromise the Panthera
AP to this objection. The Trustee will not go into specific detail in this objection
other than to state that the Panthera AP appears to have been a tactic to breach the
lease with PT to regain possession of the training facility without any real lawful
basis. It appears that the bulk of billable time and expenditures was made related
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to the Panthera AP. Doc 283-3 beginning at page 44 through and including page 55
all appear to be related to the Panthera AP totaling  331.80 hours and fees of
$97,526.00. Further, the Trustee, in order to disprove the claims of the Debtor,
engaged an auditor at the expense of the estate to confirm the accuracy of PT’s
records and its compliance with the lease provision.
.20 Professional Retentions. .21 Fee Applications. The Trustee has no
objection to the work done in these two areas.
Conclusion:
(A) the time spent on such services; The Applicant spent much of its time
defending against actions related to the Debtor’s initial tactics, its failure to
pay due real estate taxes, its failure to keep and maintain property insurance
and its initial attempt to retake possession, custody and control of the real
property despite the existing lease to PT. Much of the litigation was self-
inflicted. It appears the initial assessment was a termination of the lease
agreement and take-over of the training which was being done by PT. Such
an action, absent substantial cause, would result in damages against the
Debtor. The failure to investigate, assess and consider the claims asserted by
the principals, lead to a protracted litigation whose was result was almost
assuredly going to be a defeat with damages and costs flowing from such an
action.
(B) the rates charged for such services; The Trustee does not believe the
rates charged by the Applicant are excessive. However, the Trustee notes on
the time sheets that there are two rates for attorneys and paralegals and he
is unsure as to why two billable rates are applied. No explanation as to the
basis of the rate change was provided, although the application field with the
Court permits such increases  due to several factors. Those are not
enumerated in the Application.
(C) whether the services were necessary to the administration of, or
beneficial at the time at which the service was rendered toward the
completion of [the case]; The Trustee is of the opinion that the Applicant
substantially failed to provide services that were necessary to the
administration or beneficial at the time rendered toward a successful
completion of the case.
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(D) whether the services were performed within a reasonable
amount of time commensurate with the complexity, importance, and
nature of the problem, issue, or task addressed; The Trustee believes
the actions of the Debtor, furthered by the Applicant lead to many of the
contested issues that should have been resolved or avoided at the initiation of
the case.
(E) with respect to a professional person, whether the person is
board certified or otherwise has demonstrated skill and experience
in the bankruptcy field; Trustee is unaware of board certification of any of
the attorneys as the application fails to note. The Trustee is aware that the
Applicant firm has filed several chapter 11 cases
(F) whether the compensation is reasonable based on the customary
compensation charged by comparably skilled practitioners in cases
other than cases under this title. 11 U.S.C. § 330(a)(3). The Trustee
believes the compensation is well in excess of the work done and required in
such cases given the relative simplicity of the Debtor’s contracts and scaled
down operations. It owned no personal property, had no employees and the
sole asset was subject to a long-term lease. The enormity of work done is not
consistent with the lack of complexity in this case. The hourly rates are
consistent with chapter 11 practitioners, but the hours expended are not.
The Trustee also objects to any fees charged by the Applicant for services
rendered after the conversion of the case to a chapter 7 on July 21, 2020. Once a
case is converted from a chapter 11 to a chapter 7, counsel for the debtor is not
permitted to continue to charge fees to the estate, absent employment by the
Chapter 7 Trustee. No such employment has occurred as between the Applicant and
the Trustee. In Lamie V. United States Trustee (02-693) 540 U.S. 526 (2004) 290
F.3d 739, affirmed, the United States Supreme Court found held that
“in a chapter 7 proceeding §330(a)(1) does not authorize payment of
attorney’s fees unless the attorney has been appointed under §327 of the
Code. See 11 U.S.C. § 327 and 701 et seq. Petitioner was not so appointed,
and his fee request was denied. Id.

Although there is not a large volume of billable entries after the date of conversion,
the time sheets attached as an exhibit reference multiple entries after the July 21,
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2020 conversion date. These need to be removed from the Application and request
for fees and expenses.

Wherefore, the Trustee prays this Court deny the Application for Final
Compensation And Reimbursement of Expenses By Bernstein-Burkley, P.C, and
grant further relief as this Court deems just and necessary.

Aaron C. Amore, Trustee

Panthera Enterprises, LLC
By counsel

/s/ Aaron C. Amore

Aaron C. Amore, Esq. WVSB# 6455
AMORE LAW, PLLC
206 West Liberty Street
P.O. Box 386
Charles Town, WV 25414
Telephone:  (304) 885-4111
Facsimile:  (866) 417-8796

E-mail:  aaron@amorelaw.com

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CERTIFICATE OF SERVICE

I hereby certify that the foregoing Objection to Final Compensation And
Reimbursement of Expenses By Bernstein-Burkley, P.C,  was served upon the
following individuals at the addresses listed below, via CM/ECF and/or email on
this 11th November 2020 to the following:
Via Email:
Kelly T. Smith ksmith@sek.com
Jack Lantzy jlantzy@sek.com
Mark A. Lindsay mlindsay@bernsteinlaw.com
Rob Duncan tarpon777@yahoo.com
Rob Duncan  as manager of TR&L tkelsey@woodsrogers.com
Bruce & Stacie Hardy bsrhardy@comcast.net

CM/ECF
Debra Lee Allen     dallen@spilmanlaw.com
Aaron C. Amore     aaron@amorelaw.com,
jackie@amorelaw.com;c.ar70274@notify.bestcase.com;alaina@amorelaw.com Aaron
C. Amore     amorewvt@gmail.com,
aca@trustesolutions.net;jackiewvt@gmail.com;annwvt@gmail.com
Robert S. Bernstein     rbernstein@bernsteinlaw.com,
cwirick@bernsteinlaw.com;cwirick@ecf.courtdrive.com;rbernstein@ecf.courtdrive.co
m
Elizabeth B. Carroll     elizabeth_carroll@vawb.uscourts.gov
Julia A. Chincheck     jchincheck@bowlesrice.com
Spencer D. Elliott     selliott@lgcr.com
Douglas Kahle     dkahle@basnightkinser.com
Gary O. Kinder     gary.o.kinder@usdoj.gov
Travis Alan Knobbe     tknobbe@spilmanlaw.com, dambrose@spilmanlaw.com
Sabrina B. Lee     sabrina_lee@vawb.uscourts.gov
William J. Leon     jayleon@comcast.net
Salene Rae Mazur Kraemer     skraemer@bernsteinlaw.com,
salene@ecf.courtdrive.com,
John J. Richardson     jrichardson@bernsteinlaw.com
Zachary James Rosencrance     zrosencrance@bowlesrice.com,
ajones@bowlesrice.com
Anita M. Swaton     Anita_Swaton@wvnb.uscourts.gov
United States Trustee     ustpregion04.ct.ecf@usdoj.gov
Eric Michael Wilson     eric.m.wilson@wv.gov, lora.l.rutledge@wv.gov
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Manual Notice List
Notice was not mailed to the parties below as no addresses were provided. To the
extent the Trustee has email addresses the below notice parties, they were emailed.
Rob Duncan
Manager/Duncan Development Group, LLC
Rob Duncan
Manager/TR&L, LLC,
a Virginia Limited Liability Company
Successor to SMI, LLC,
a Virginia Limited Liability Company

Bruce Hardy
Stacie Hardy
Anthony McIntyre
Timothy Miller

/s/ Aaron C. Amore

Aaron C. Amore, Esq.

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