DOUGLAS D. DODD UNITED STATES BANKRUPTCY JUDGE

CHAPTER 7

MEMORANDUM OPINION

Two professionals seek payment from a failed chapter 11 debtor whose brief reorganization quickly failed in 2002. Anatole J. Plaisance and Federal Tax Service ("FTS") claim they rendered services to debtor J. Co. Medical Management, Inc. ("J. Co.") more than eleven years ago, both before and after J. Co.'s 2002 chapter 11 filing. Plaisance wants J. Co.'s estate to pay him for legal services he claims to have rendered even before J. Co. was incorporated, as well as fees for defending criminal charges against related non-bankrupt entities after J. Co.'s reorganization was converted to a chapter 7 liquidation. FTS comes into the bankruptcy for the first time to obtain approval of its professional employment and payment for services for a group of entities related to the debtor.

Even had their prepetition and postpetition claims been timely, neither Plaisance nor FTS carried their burden of proving that J. Co. is liable for their fees.

Procedural Background

J. Co.'s 2002 reorganization collapsed soon after its January 11, 2002 filing, when the court converted the case to a chapter 7 liquidation on April 16, 2002. Creditors holding general prepetition claims against J. Co. had until August 28, 2002 to file their claims; more than $905,764 claims are on the register.

After the case converted to a chapter 7 liquidation, Dwayne Murray was appointed trustee ("Trustee") and assumed responsibility for investigating the debtor's financial affairs, collecting property of the estate and examining the proofs of claim. At the end of his tenure, a trustee must submit a report of his administration of the bankruptcy estate, including his proposed payments to legitimate creditors.

More than six years ago the court approved without objection the trustee's initial "final" report, which included a list of distributions the Trustee proposed to make to J. Co.'s creditors. The court approved the distributions and closed the case in 2007, but preserved as part of J. Co.'s bankruptcy estate the company's interest in Medicare and Medicaid receivables, as well as any receivables due from any of its bankrupt affiliates. In 2008, the trustee reopened the case to distribute the recoveries from those sources to creditors. The Trustee filed additional final reports in April 2012 and July 2012. No party in interest objected to any of the additional payments the Trustee proposed to make to creditors and so the court approved the two reports and proposed distributions.

In contrast, the Trustee's fourth final report filed February 20, 2013 triggered this dispute when it drew opposition from FTS and Plaisance, who contended in virtually identical objections that several claims in the report should not be paid. Contemporaneously, Plaisance and FTS for the first time sought payment for professional services they claimed to have rendered to J. Co. more than a decade earlier, both before and after J. Co. filed bankruptcy. Neither had taken any prior action to preserve their prebankruptcy claims or secure payment for work they claim to have performed after the bankruptcy case started. The Trustee objected to all their demands for payment and related relief.

Facts

I. Anatole Plaisance

a. Plaisance Worked for Julian Rish and Affiliated Entities

Julian Rish owned approximately 92% of the stock of The J. Rish Group, Inc. ("Rish Group"). J. Co. was a Rish Group subsidiary and managed financial affairs for other subsidiaries.

Plaisance is no stranger to Julian Rish, his enterprises or their bankruptcies. He was the secretary of and a minority shareholder in Rish Group, as well as the secretary/treasurer of debtor J. Co. He also served as general counsel for Rish's companies before they sought bankruptcy protection; represented Rish in his chapter 7 bankruptcy; was a creditor in Julian Rish's personal bankruptcy; and even defended Rish in a federal health care fraud prosecution for actions relating to another Rish affiliate, Monroe Regional Acute Rehabilitation Hospital, Inc.

b. Plaisance's Proofs of Claim

Plaisance filed a proof of claim on April 15, 2013 that he later amended, seeking $302,500 for prepetition legal services between 1998 and 2001. The description of legal services supporting the claim reflects Plaisance's role as counsel for all Rish Group entities, not just J. Co. Still, Plaisance insists that he really was working for J. Co. during that period and so testified at length about his pre-bankruptcy services to the debtor from 1998 to 2001.

Plaisance filed a second claim for $75,000 for legal services for the period between 1999 and 2001, though at the hearing Plaisance testified that the claim actually was for his postpetition services between 2002 and 2005. Plaisance now contends that his services defending Julian Rish in the federal health care fraud case between 2002 and 2005 benefitted J. Co., and therefore that this bankruptcy estate should pay them as an administrative expense.

The Trustee, who is the representative of the bankruptcy estate, testified that he was not aware of any ongoing criminal investigation of J. Co. in 2002. No evidence supports a finding that the Trustee knew, hired, endorsed or supported Plaisance's efforts on Julian Rish's behalf, or that Plaisance made the Trustee aware of them at the time.

c. Plaisance Knew of J. Co.'s Bankruptcy Filing in Early 2002

The evidence established that Plaisance knew of the J. Co. bankruptcy long before the deadline for filing timely proofs of claims.

Plaisance admitted at trial that he knew of J. Co.'s bankruptcy no later than February 2002, more than 11 years before he filed his first proof of claim in April 2013 and nearly fifteen years after the earliest services for which he now demands payment. Plaisance also admitted on cross examination that he knew J. Co. planned to file bankruptcy; and specifically knew that the debtor had filed a petition in this court because Cheryl Parino, a J. Co. employee, had contacted Plaisance for information for J. Co.'s schedules.

Perhaps more significant to weighing the issue of timeliness, the evidence established that Plaisance actually witnessed the hearing at which the court formally concluded that J. Co.'s reorganization had failed. Specifically, Plaisance admitted on cross examination that he was sitting in bankruptcy court the day the court converted the reorganization case to a chapter 7 liquidation - April 12, 2002.

Finally, Plaisance also knew that the Trustee had made two prior distributions to creditors. On cross-examination he also conceded that he'd known of his claim against J. Co. "for a long time" but was waiting to see if money became available to pay it. Thus he possessed facts that should have prompted action long before his 2013 claim filing.

d. Plaisance was appointed Trustee's Special Counsel in 2010

Plaisance's delay in submitting his claims also is puzzling because of his earlier involvement in this case as a professional to collect the money that made the additional distribution possible. Specifically, J. Co.'s bankruptcy trustee hired Plaisance as special counsel in 2010 on a contingent fee basis to collect outstanding Medicare receivables. Plaisance's verified statement in support of the Trustee's application recited under oath that Plaisance was "a putative creditor of Debtor's estate for unpaid legal expenses," though the statement did not disclose that he was also the debtor's secretary/treasurer or that he represented Julian Rish personally or any of the affiliated Rish companies. Plaisance was paid $126,524.25 for that work. Still, Plaisance took no action to make any claim despite his role in collecting the additional funds that made more payments to creditors possible.

II. Federal Tax Service

a. FTS Began Working for Julian Rish and his Affiliates Before J. Co. Filed Bankruptcy.

Federal Tax Service filed its $52,461.25 proof of claim for "financial consulting, tax and accounting work for Debtor" on April 10, 2013. FTS claims payment for that part of its services to the chapter 11 debtor postpetition as an administrative priority expense under 11 U.S.C. '507(a)(2). FTS also filed an application to be employed retroactively - commonly referred to as nunc pro tunc approval - as a tax consultant for the estate. Bankruptcy court approval of a professional's employment is a prerequisite to payment of professional fees from a bankruptcy estate on these facts.

DeWitt Weaver, Federal Tax Service's general manager, began working with Julian Rish in 1999. Rish retained FTS because Rish Group, J. Co.'s parent and the holding company for Rish's affiliates, had not filed tax returns for several years. In exchange for a $10,000 monthly fee, FTS agreed to prepare and file tax returns for various Rish Group companies for tax years 1997 through 2000. FTS was gathering information for the 2001 returns when J. Co. filed its chapter 11 case. Weaver testified that FTS stopped working for J. Co. in May 2002 because it was not being paid.

b. FTS Failed to Secure Bankruptcy Court Approval to Work for J. Co. During the Chapter 11 Case.

Weaver testified that he learned of J. Co.'s bankruptcy filing in a January 7, 2002 meeting with Julian Rish and Katherine Wheeler, the debtor's putative counsel. FTS does not dispute that it never had a written employment agreement with J. Co.; that it did not obtain bankruptcy court approval of its employment; and that FTS took no other steps to obtain payment between mid-2002 and 2013. Instead, it contends that Wheeler, who failed to obtain court approval to act as J. Co.'s counsel in the chapter 11 case, agreed to pay FTS from her fees. FTS contends that it should not be penalized for Wheeler's failing to obtain bankruptcy court permission for J. Co. to hire FTS.

Weaver testified that he had never before been involved in a bankruptcy case and therefore relied on Wheeler, who did not inform him that the court had to approve FTS's employment. Weaver also claimed that he first learned that J. Co. could only hire FTS with court approval at the end of 2012, ten years after FTS allegedly worked for the J. Co. bankruptcy estate.

c. FTS Worked for Many Different Rish Entities During the Time it Claims J. Co. was Responsible for its Fees.

As with Plaisance, FTS's relationship with Julian Rish and his companies casts doubt on FTS's claim that J. Co. alone is responsible for paying FTS. Weaver admitted on cross-examination that the Rish Group had 25 or 26 affiliates and subsidiaries in three states and conceded that not all of FTS's work was performed for J. Co. The invoices FTS offered in support of its claim do nothing to clarify why J. Co. is responsible for those fees.

Correspondence between Weaver and Wheeler during summer 2002 reflects this and in fact reveals the nature of FTS's tax work and supports a finding and conclusion that Julian Rish, and not J. Co., was the principal intended beneficiary of FTS's work. The letters repeatedly describe the consequences for failing to file federal tax returns, not to J. Co., but to Julian Rish personally and to Rish Group. For example, Weaver's June 3, 2002 letter to Wheeler claimed that Rish and Weaver had a "gentleman's agreement" that Rish would pay FTS $10,000 for work to bring Rish into compliance with federal laws. The same letter explained that Rish Group and its subsidiaries had filed no federal tax returns since their inception and recited that "Mr. Rish became my primary client ... ."

Similarly, Weaver's June 26, 2002 letter to Wheeler explained that Weaver performed services for many different entities that Rish controlled directly or through the Rish Group, and explained that it was not necessary to document his (Weaver's) time because he changed tasks "several times within any given hour ... for over 40 different corporations, some of which were and some not part of the J. Rish Group," and so "time records were never part of [FTS's] arrangement with Julian." In like manner, Weaver's July 25, 2002 letter to Wheeler describes FTS's work by referring to tax returns for "all corporations within the J. Rish Group, Inc." Finally, Weaver's August 14, 2002 letter to Wheeler states: "Mr. Plaisance represents Julian on other legal matters and has knowledge of Julian's activities outside of the J. Rish Group, Inc.," and "I will be unable to guarantee a timely completion of the Federal Form 1120 for the J. Rish Group, Inc. ... "(Emphasis added).

On November 5, 2002, Julian Rish filed a personal chapter 7 bankruptcy case, represented by Plaisance, as debtor's counsel. Weaver admitted that he received notice of the filing of that case. FTS was listed as one of Julian Rish's creditors on the sworn first amended list of creditors and first amended mailing matrix. Julian Rish swore in those documents, which Anatole Plaisance filed on his behalf, that FTS was working for Rish, and by implication not for J. Co.

Law and Analysis

I. Timeliness of Claims

a. Plaisance's Prepetition and Post Petition Claims are Inexcusably Untimely

Bankruptcy Code section 726(a) establishes the priority for payment of allowed claims in a chapter 7 case. Because Plaisance filed his claim nearly eleven years after the August 28, 2002 claims bar date, his prepetition claim is entitled to be treated at best as a late-filed claim under 11 U.S.C. '726(a)(2)(C) or (a)(3), and therefore eligible for distribution only after all timely filed claims are satisfied. This is an issue apart from the validity of the claim, discussed in detail below in section II(b).

Tardy claims falling with section 726(a)(2)(C), so-called "no-notice" late claims, receive a slightly higher distribution priority over other late-filed claims held by creditors who had notice of the bankruptcy filing. Plaisance's claim would only qualify as a tardily filed claim under section 726(a)(2)(C) if he "did not have notice or actual knowledge of the case in time for timely filing" of his claim and his proof of claim was "filed in time to permit payment."

Plaisance offered no credible explanation for his tardiness in filing the prepetition claim. The facts support the finding and conclusion that Plaisance knew about J Co.'s bankruptcy not long after its filing in 2002, knew of the conversion to chapter 7, and deliberately failed to act to preserve his prepetition claim until 2013 in the belief that the bankruptcy estate lacked the funds to pay the claim. Because Plaisance had actual knowledge of the J. Co. bankruptcy his prepetition claim does not fall within §726(a)(2)(C). Thus, even if he has an allowable prepetition claim, it is merely a late claim entitled to distribution under section 726(a)(3).

Plaisance argues for relief from the consequence of his indifference by claiming that his prepetition claim for salary as J. Co.'s general counsel is a priority wage claim under 11 U.S.C. §507(a)(4). To be a valid wage claim under 11 U.S.C. §507(a)(4), Plaisance must have earned the salary within 180 days before the January 11, 2002 bankruptcy petition. Assuming for the sake of argument that Plaisance does have a claim against J. Co., he arguably earned at most only six months of the claim in that period and so the remainder of the claim is not entitled to §507(a)(4) priority status. Additionally, Plaisance did not offer any evidence from which it is possible to determine the specific amount of legal work he performed for J. Co. in the six months before it filed chapter 11. His invoices neither identify the company for which he worked, nor the specific amounts allegedly earned performing those services during the applicable period. In summary, Plaisance did not prove his entitlement to a prepetition priority wage claim.

In any event, even if Plaisance had established a priority wage claim, that claim would not be entitled to distribution because it was not timely filed, or tardily filed as prescribed in 11 U.S.C. §726(a)(1)(A). Bankruptcy Code section 726(a)(1)(A) allows for payment of late-filed section 507 claims in preference to even timely filed unsecured claims only if the section 507 claim was filed on or before "the earlier of" ten days after the mailing of the trustee's final report summary or the date of commencement of final distribution. (Emphasis added.) The trustee mailed the summary of his latest final report on February 25, 2013 and Plaisance filed his claim for salary on April 15, 2013, well beyond the ten-day period set forth in section 726(a)(1).

Finally, Plaisance argues that 11 U.S.C. §503(b)(3)(C) and §503(b)(4) entitle him to a priority administrative expense claim against J. Co. for legal fees for his postpetition defense of Julian Rish in the Medicare fraud case. Assuming for the sake of argument that his fees fell within those Bankruptcy Code provisions (an issue addressed below in section II(a)), he failed to preserve their priority status by only filing the claim on April 15, 2013, well after the ten-day period that §726(a)(1)(A) establishes for tardy filing of priority claims under 11 U.S.C. §507.

b. FTS's Request for Nunc Pro Tunc Employment by J. Co. is Without Merit

FTS initially sought payment for services it claims to have rendered J. Co. both before and after the chapter 11 commenced but more than eleven years before FTS filed its claims. It attempted to avoid a timeliness challenge by waiving the prepetition part of its claim at trial, instead characterizing the entire claim as an administrative expense claim for compensation as a professional employed by the chapter 11 bankruptcy estate.

FTS's failure to obtain prior bankruptcy court approval for its employment as an estate professional during the chapter 11 case under 11 U.S.C. '327(a) is an obstacle to its claim. Bankruptcy court approval of professional employment is a prerequisite for FTS's entitlement for payment as a priority administrative expense under 11 U.S.C. §507(a)(2).

FTS prudently does not argue that it needn't have sought court permission to be employed because professionals may be compensated for work for a chapter 11 debtor-in-possession only if they previously have been hired with bankruptcy court approval. Matter of Triangle Chemicals, Inc., 697 F.2d 1280 (5th Cir. 1983) (generally describing requirements of 11 U.S.C. §327(a)); In re Action Video, Inc., 2003 WL 21350081 (Bankr. M.D.N.C. June 9, 2003) (accountants preparing debtor's tax returns postpetition without prior court approval were not entitled to compensation from the estate); In re Wake, 222 B.R. 35 (Bankr. W.D.N.Y. 1998) (accountant that had prepared tax returns at debtor's request not entitled to compensation absent prior court approval of employment). Instead it blames this omission on Katherine Wheeler, who herself failed to win court approval to work for the chapter 11 debtor in possession. Accordingly, FTS now asks for retroactive - nunc pro tunc - approval of its hiring. A court's "equitable powers may permit nunc pro tunc appointment in rare or exceptional circumstances," but the Fifth Circuit has been cautious not to "encourage any general non-observance of the contemplated preemployment court approval." Matter of Triangle Chemicals, Inc., 697 F.2d at 1289 (emphasis added).

The most significant fact bearing on FTS's request is the extraordinary delay between the time it claims to have rendered services for which it seeks payment, the date it learned that J. Co. had filed bankruptcy, and its eventually moving for approval of employment in 2013. FTS has pointed to no reported opinion approving professional employment eleven years after the services were rendered.

FTS's inaction for more than a decade after it learned that J. Co. had collapsed is inexplicable. FTS knew by mid-2002 that it was not being paid and found itself unable to obtain information from Katherine Wheeler. FTS also undeniably knew by early November 2002 that Julian Rish himself had filed bankruptcy. Those developments should have prompted FTS to act to protect its right to payment for work it did on behalf of Rish and his companies, including this debtor. FTS was ultimately responsible for obtaining approval for its employment by the chapter 11 debtor. Had it applied for approval of employment in 2002, the bankruptcy court would have considered among other things the necessity of its services to J. Co.'s estate and the amount FTS planned to charge J. Co. (in this instance, FTS seeks more than $52,000 for 7 months' work). In the employment process, the court and parties in interest normally would have learned of FTS's divided loyalties, which likely would have disqualified it for employment.

Instead, FTS's motion admits that it did not file a claim against the estate because "there were no assets to pay any fees." It elected not to pursue employment, reconsidering its decision only when it learned that the Trustee had funds to distribute. That delay militates against the effective administration of bankruptcy cases because trustees must know of claims against the estate early in their administration. Decisions such as viability and settlement value of avoiding actions, sales prices for estate assets, and the prudence of incurring professional fees to pursue claims of the estate all require that trustees know of the universe of claims against an estate. Creditors that know of a pending bankruptcy yet delay making formal claims against the estate hamper a trustee's performance of his duties, to the prejudice of diligent creditors.

FTS is not entitled to employment as a professional nunc pro tunc on these facts and consequently is not entitled to an administrative expense claim. "[E]quity aids the vigilant and not those who slumber on their rights." National Assoc. of Government Employees v. City Public Service Board of San Antonio, 40 F.3d 698, 708 (5th Cir. 1994).

II. Neither Plaisance Nor FTS Hold Valid Claims Against J. Co.

Apart from considerations of timeliness of their claims, the evidence supports a finding and conclusion that neither Plaisance nor FTS hold allowable claims against J. Co.

a. Plaisance Did Not Establish his Right to Recover Legal Fees for the Defense of Julian Rish on Medicare Fraud Charges

Bankruptcy Code §§503(b)(3)(C) and (b)(4) confer administrative expense status on claims for compensation for professional services rendered by an attorney for a "creditor in connection with the prosecution of a criminal offense relating to the case or to the business or property of the debtor." (Emphasis added.) These provisions do not give Plaisance a right to any payment.

First, Bankruptcy Code section 503(b)(3)(C) allows only creditors to recover their expenses. Should the creditor's expenses include fees of an attorney for that creditor, those may be recoverable under §503(b)(4). Plaisance contends that he is a creditor and so argues that section 503(b)(4) entitles him to recover fees for acting as his own lawyer in defending Julian Rish, an insider of the debtor, on Medicare fraud charges. That construction conflates sections 503(b)(3)(C) and (b)(4).

Second, even if Plaisance were entitled to recover fees on the theory that he was acting as his own attorney defending Julian Rish, jurisprudence construing section 503(b)(3)(C) establishes that the expenses eligible for payment must be connected to a creditor's efforts to initiate a criminal prosecution that relates to the bankruptcy case or the debtor's business or property. The reported opinions considering application of this subsection of 503 address expenses creditors incurred in their efforts to initiate prosecution of suspected criminal activity by the debtor or the debtor's principals. No reported opinions applying §503(b)(3)(C) have allowed recovery of expenses of criminal defense for the debtor, much less for criminal defense of the debtor's principal. See In re Summit Metals, Inc., 379 B.R. 40, 59 (Bankr. D. Del. 2007) (creditor's expenses incurred in initiating a criminal prosecution against the debtor's principal not allowable under section 503(b)(3)(C)). Moreover, in general the sections of the Bankruptcy Code conferring priority status are strictly construed so that the estate is preserved for the benefit of more creditors. In re Federated Department Stores, Inc., 270 F.3d 994, 1000 (6th Cir. 2001); In re Commercial Financial Services, Inc., 246 F.3d 1291, 1293 (10th Cir. 2001).

Finally, even assuming for the sake of argument that Plaisance correctly construes section 503(b)(3)(C), no credible or corroborated evidence established a direct connection between his defense of Julian Rish in the criminal case and the debtor's reorganization. Plaisance's testimony that his work in connection with the defense of Rish in the Medicare criminal fraud prosecution allowed the trustee to later collect Medicare receivables owed to the debtor J. Co. was self-serving and uncorroborated. In sum, Plaisance has not established a valid claim under Bankruptcy Code sections 503(b)(3)(C) and (b)(4).

Although this outcome may seem harsh, Plaisance has no basis for complaint because he was treated fairly for his work as special counsel for the Trustee during the case. Plaisance received more than $125,000 for his services as special counsel collecting Medicare receivables. Allowance of an administrative expense for Plaisance's criminal defense of Rish would be double dipping because his rationale for demanding that J. Co. pay for his services defending Rish was that it led to J. Co.'s collecting Medicare receivables. The contingent fee payment satisfies his claim for postpetition work for the estate and additional payment would unjustly enrich Plaisance at the expense of unsecured creditors.

b. Plaisance Did Not Prove his Prepetition Claim Against J. Co.

Plaisance's own testimony concerning his prepetition services for J. Co., combined with other evidence in the record, undermined his claim and his credibility. The evidence established that Plaisance had conflicting prepetition allegiances because he simultaneously represented Julian Rish and numerous affiliated entities. Specifically, Plaisance was an insider of Rish Group because he was its secretary; an insider of J. Co., as its secretary/treasurer; and a minority shareholder of the Rish Group. He also acknowledged at trial serving as Julian Rish's personal bankruptcy lawyer and that several Rish affiliates listed him as a creditor in their bankruptcies.

Plaisance testified at length about the services he claims to have rendered to J. Co. between 1998 and 2001 under an oral agreement with Julian Rish or J. Co. His testimony was not corroborated by a representative of the debtor or debtor's putative counsel, Katherine Wheeler; nor did Plaisance offer evidence of his relationship with J. Co. by means of corroborating documents that he himself did not create. Indeed, despite the large amount Plaisance claims J. Co. owed him at the date of bankruptcy, this debtor did not schedule Plaisance as a creditor. The debtor's statement of financial affairs' identifying Plaisance as J. Co.'s secretary/treasurer supports an inference that although J. Co. knew of Plaisance, it did not consider itself liable to him for any amount.

Too, the provenance of the "statements" of services Plaisance offered in support of his pre-petition claim is dubious. The statements were not attached to his original claim but only the amended claim filed a month later. Additionally, no evidence established that the documents were created contemporaneously with the work Plaisance claims to have performed. The absence of evidence supports the inference that Plaisance created the documents from his memory of events that took place from 12 to 15 years ago. They are entitled to no weight in light of his testimony and the other evidence in the record.

Beyond this, the evidence makes plain that Plaisance rendered legal services to Julian Rish, Rish Group and numerous entities Rish controlled, rather than to this debtor alone. The value of Plaisance's services to J. Co. is not obvious from the record and Plaisance has not advanced an explanation of why J. Co. should pay for his services to Julian Rish and other Rish affiliates. Indeed, the statements artfully lack any hint of a direct link to J. Co. such as by identifying litigation involving J. Co., or J. Co. employees, legal matters relating to J. Co., names of medical provider clinics purchased and a statement that J. Co. purchased the clinics.

Plaisance's claim for services allegedly rendered to J. Co. before it was even incorporated also undermines his claims. Plaisance plainly could not have been J. Co.'s lawyer from 1998 through February 11, 2000, when it was incorporated. Instead, the "General Description of Legal Services Performed as General Counsel" admitted as Exhibit Plaisance 2 suggests that Plaisance's role all along was as counsel for Julian Rish and other entities Rish controlled, rather than solely for J. Co. For example, the 1998, 1999, 2000 and 2001 documents that are part of Plaisance 2 all mention review of "available documentation on twenty-seven (27) separate corporations which were financially managed by JCO [sic]...." Plaisance even admitted at trial that his work as legal counsel for J. Co. involved providing legal services for other Rish companies. He also testified that he spent long days - from 12 to 18 hours - performing due diligence while Rish Group was purchasing corporations and preparing documentation for the stock transfers.

In combination, the evidence does not support Anatole Plaisance's right to a claim for legal services against J. Co.

c. FTS Did Not Prove its Right to Payment as an Estate Professional

Even if FTS had made out a case for nunc pro tunc consideration of its request for professional employment, the evidence belies the artful drafting in FTS's pretrial memorandum: nothing in the record supports the finding or conclusion that J. Co. as debtor-in-possession hired FTS to perform services postpetition. Rather, the evidence supports an inference that Julian Rish personally hired FTS to work for him, Rish Group and their affiliates.

Indeed, FTS's prior relationship with the debtor and its affiliates, as well as the likelihood that its services were not exclusively for the benefit of J. Co., militated against court approval of J. Co.'s hiring of FTS had approval been timely sought. A professional seeking employment by a debtor-in-possession pursuant to 11 U.S.C. §327(a) must be a disinterested person. From the distance of 11 years, it is impossible to tell whether FTS was truly disinterested and whether its work benefitted J. Co., as opposed to Julian Rish personally or the Rish Group or other Rish affiliates, and therefore whether J. Co. should be liable for any share of FTS's fees.

Additionally, FTS is not entitled to compensation because it failed to prove that its services were necessary to the estate. 11 U.S.C. §503(b)(2), 330(a). Weaver testified on cross-examination that Rish Group had 25-26 affiliates and subsidiaries in three states, and even conceded that FTS did not perform all of its work for J. Co. FTS offered no credible evidence that its work "was emergent and necessary to the estate because it was necessary to bring the financials of the Debtor and all the companies it financially managed into one cohesive picture for purposes of computing the tax liabilities of the Debtor and of the companies the Debtor financially managed after the filing of the bankruptcy." Weaver's uncorroborated testimony is entitled to no weight.

In contrast, the documentary evidence FTS offered does support a finding that Julian Rish, or Rish Group, is solely responsible for any fees FTS may be owed. Specifically, Weaver's summer 2002 correspondence to Katherine Wheeler repeatedly described the consequences not to J. Co., but to Julian Rish personally and Rish Group, of failing to file federal tax returns. The letters collectively cast doubt that FTS was rendering services for which J. Co. was liable at all. Weaver's correspondence with Wheeler belies his testimony and supports a finding that J. Co. was not FTS's only - or even primary - Rish Group client.

In summary, FTS's relationship with Julian Rish and other corporations that Rish controlled rendered FTS not disinterested and so disqualified it for employment by the debtor in possession under 11 U.S.C. '327(a). Even if FTS were disinterested and could be employed nunc pro tunc, FTS did not prove that any of its fees were actual and necessary to the J. Co. bankruptcy estate. FTS performed services for Julian Rish and many Rish entities, and even the "statement" admitted as FTS Exhibit 2 provides no evidentiary support for any allocation of any part of those fees to J. Co.

Conclusion

The evidence shows that: Anatole Plaisance is not entitled to a wage claim or a claim for administrative expenses under 11 U.S.C §§503(b)(3)(C) and (b)(4); Federal Tax Service is not entitled to nunc pro tunc employment as a tax consultant for the debtor J. Co. Management, Inc. or for the bankruptcy estate, and therefore is not entitled to an administrative expense claim; and neither Plaisance nor FTS has a valid and allowable timely or tardily filed unsecured claim. The court by separate order will disallow claims 26 and 27 filed by Anatole Plaisance, deny FTS's Motion for Employment as Tax Consultant Nunc Pro Tunc and Application for Compensation and disallow FTS's claim 25.

Baton Rouge, Louisiana, November 6, 2013.

s/Douglas D. Dodd

DOUGLAS D. DODD

UNITED STATES BANKRUPTCY JUDGE