Motion to Compromise Objections of Trustee and Panthera — In re Panthera Enterprises, LLC

Source document: Motion to Compromise Objections of Trustee and Panthera — In re Panthera Enterprises, LLC; document type: motion to compromise controversy, with certificate of service.

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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

MOTION TO COMPROMISE OBJECTIONS OF TRUSTEE AND PANTHERA
TRAINING, LLC 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, Trustee for the Bankruptcy Estate of Panthera
Enterprises, LLC, and moves the Court for approval of a compromise and
settlement of certain claims related to the First and Final Compensation And
Reimbursement of Expenses By Bernstein-Burkley, P.C, (hereafter “Applicant”)
counsel for the Chapter 11 Debtor, Panthera Enterprises, LLC and objections
thereto by the Trustee and Panthera Training, LLC.
Proposal to Resolve Application and Objections:
The Trustee and the U.S. Trustee agreed on the compromised proposal that a
Fifty (50%) percent reduction of the total application request was acceptable with
the balance being treated as a general unsecured claim. Panthera Training LLC
does not object to the proposal and defers to the Trustee and U.S. Trustee in this
regard. Bernstein-Burkley, P.C. will be allowed an administrative claim in the
amount of $131,994.10 and a general unsecured claim in the amount of $131,994.11
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LEGAL STANDARD
Request for Attorney’s Fees:
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;
(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
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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)).
Standard on Motion to Compromise:
A decision to compromise a claim is also reviewed under the business
judgment test. E.g., In re OptInRealBig.com, LLC, 345 B.R. 277, 292 (Bankr. D.
Colo. 2006) (“Where an application under Rule 9019 is appropriate, the Court's job
is to determine whether a given settlement is fair and equitable to the Estate. In
making its determination, the Court gives some deference to the business judgment
of the debtor-in-possession”). A review of that business judgment generally turns on
the outcome of four factors: (1) the probability of success in litigation; (2) the likely
difficulties in collection; (3) the complexity of the litigation involved, and the
expense, inconvenience and delay necessarily attending it; and (4) the paramount
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interest of the creditors. Fry’s Metals, Inc. v. Gibbons (In re RFE Industries, Inc.),
283 F.3d 159, 165 (3rd Cir. 2003). See also Protective Committee for Independent
Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)
(same); Drexel v. Loomis, 35 F.2d 800, 806 (8th Cir. 1929) (same). A compromise of
claims under Rule 9019 serves the purpose of binding the Bankruptcy Estate and
the creditor to the terms of the bargain struck by the parties. OptInRealBig.com,
345 B.R. at 291
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 (hereafter “Application”).
5. Panthera Training, LLC and the Trustee objected to the Application.
6. The Court conducted an initial review of the pleadings and requested the
parties engage in an informal discussion at the suggestion of the Assistant
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United States Trustee who agreed to facilitate such a meeting.
7. Panthera Training, LLC moved for an award of sanctions against the law
firm of Bernstein-Burkley, P.C. for what it asserts were baseless claims that
lead to the filing and pursuit of the adversary proceeding case 19-ap-51.
(“Panthera Training’s Motion”).
8. Bernstein-Burkley, P.C. responded in opposition to this motion.
9. The parties to these pleadings held a telephonic conference on February 19,
2021 with Gary O. Kinder, Assistant United States Trustee hosting.
10. The parties were able to negotiate the outline of a settlement of the fees to be
paid pursuant to the Application which was formalized through telephonic
and email communications thereafter.
11. The Court conducted a hearing on February 25, 2021 wherein it heard
arguments in support of the compromised agreement on the Application and
Panthera Training’s Motion for attorney’s fees and costs.
12. The Court was advised of the general settlement terms and set a hearing to
take up the matter but reserved the right to enter an order if no objections
were filed.
13. The Trustee obtained the legal file of Bernstein-Burkley, P.C. to review the
substantive work claimed in its Application. The Trustee reviewed
documents, email communications, notes and documents provided to counsel
in the course of the representation of the Debtor entity.

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Position and Assessment of Trustee and Review of Legal Standard:
The Debtor filed in the eve of a foreclosure sale which prevented the normal and
customary bankruptcy planning that is often critical in assessing the
appropriateness and viability of a chapter 11 filing. The principals of the Debtor
entity had constructed a maze of related and unrelated legal entities with multiple
name changes (both formal and informal) that created confusions. There are
multiple agreements entered into by one or more entities or jointly with some or all
entities. The funds were loaned to one entity but deposited directly to another
entity. The books were kept on separate chart of accounts but in one primary
program which allowed for the shifting of funds, debts and other accounting entries
that makes this case very difficult to sort through. The Trustee is still unwinding
information to correct tax returns and to determine what entity owes what debts.
The principals of the Debtor entity purposefully created the maze of legal
entities to move money, ownership of assets and payments to facilitate their
personal needs. The Debtor entity and its related companies (Panther Training
Center, LLC and Panthera WorldWide, LLC) borrowed large sums of money that
they could not repay. At the inception of the chapter 11 the Debtor lacked the
ability to pay its debts and even to maintain the bare minimum operating costs
related to the payment of taxes and insurance for the property, this despite an
agreement that Panthera Training, LLC would pay the debt obligation to West
Virginia Economic Development Authority (“WVEDA”).  The real estate owned by
the Debtor was over-encumbered by debt and a sale was an unlikely option,
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especially given the obligations of the Debtor set forth in the long-term lease,
assignment and subcontract agreements that further encumbered a sale of the
property and impacted the property’s value to be realized from such a sale.
The Debtor’s principals’ strategy early on appears to have been to move debt off
the books (reclassify debt as an equity contribution) and to seek to remove the
restrictive lease that devalued a sale of the property. To this end, the Debtor’s
primary focus became the adversary proceeding against Panthera Training, LLC.
The Trustee is of the opinion that this adversary was a baseless proceeding and that
many, if not all, of the claims could have been resolved prior to the filing of the suit.
The Debtor had the ability to seek to use cash collateral to hire an expert to conduct
an audit (as was its right under the lease) to further investigate the claims that
rent was not being properly calculated and paid per the lease. This action, along the
attempt to eject Panthera Training, LLC and the related defense of motions to
convert or dismiss by WVEDA constituted a substantial amount of the time
expended and represented on the Application.
Conclusion:
The complexity of this Debtor and its related entities are certainly factors the
Trustee has considered in arriving at the compromise. The Debtor and its related
entities were conducting no real business and were simply acting as pass-through
conduits pursuant to the lease and subcontracts with Panthera Training, LLC. The
legal issues presented were not significant at the inception of the case and the
income of the Debtor and its ability to fund a plan were negligible at the outset.
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The Trustee and the U.S. Trustee agreed on the compromised proposal that a
Fifty (50%) percent reduction of the total Application request was acceptable with
the balance being treated as a general unsecured claim. The Trustee believes that a
sale of the property of the Debtor is possible, despite the limitations placed on the
property by the lease agreement. Such a sale would bring funds into the Estate for a
portion of the payment of administrative claims, priority claims and a limited
return to the unsecured creditors. This return to the unsecured creditors is not
likely to be significant given the large number of claims and total debt in this
unsecured class. In addition, a sale would likely strip off junior lien holders which
would then be added to the general unsecured creditor class. At the end of the day,
the return to Bernstein-Burkley, P.C. as an unsecured creditor is not going to be
significant.
(A) the time spent on such services; The Trustee if of the opinion that
Thirty (30%) percent of the legal work done in this case truly benefitted the
Debtor but has agreed to the compromise as it balances total claim for fees
and costs with what would be considered as normal and customary for such
time and taking into consideration the complexity of this Debtor and its
related entities. The Trustee is also cognizant that the principals may have
provided false or skewed information that created additional time
expenditures.
(B) the rates charged for such services; The Trustee does not believe the
rates charged by the Applicant are excessive.
(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 compromise represents a negotiated agreement that puts the
total fees and costs requested within the range of normal and customary fees
charged in such cases.

Wherefore, the Trustee prays this Court grants this Motion to Compromise
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 Motion to Compromise Objections of
Trustee
and
Panthera
Training,
LLC
to
Application
for
Final
Compensation And Reimbursement of Expenses By Bernstein-Burkley,
P.C, Counsel for the Chapter 11 Debtor Panthera Enterprises, LLC   was served
upon the following individuals at the addresses listed below, via CM/ECF and/or
email on this 3rd day of March 2021 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,
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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
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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