Opinion
Case No. 02 B 13533 (AJG), Jointly Administered.
July 8, 2005
ORDER DENYING THE REQUEST BY AKIN GUMP STRAUSS HAUER FELD LLP FOR POST-PETITION PRE-APPOINTMENT FEES PURSUANT TO 11 U.S.C. SECTION 503(b)
Upon consideration of (i) the Application of Akin Gump Strauss Hauer Feld LLP, Counsel for the Official Committee of Unsecured Creditors (the "Committee") (I) for Final Allowance and Award of Compensation for Services Rendered, Including a Requested Premium, and the Reimbursement of Expenses During the Period July 29, 2002 through April 20, 2004 and (II) for Final Allowance and Award of Compensation and the Reimbursement of Expenses Pursuant to 11 U.S.C. Section 503(B) During the Period July 21, 2002 through July 29, 2002 (the "Application"); (ii) the Reorganized Debtors' Report and Recommendations Regarding Fees and Expenses for the Third Interim Period, the Fourth Interim Period, and the Final Application; (iii) the Objection of the United States Trustee (I) to the Final Fee Applications Under Section 330 for Compensation and Reimbursement of Expenses and (II) to the Request by Akin Gump Strauss Hauer Feld LLP for Pre-Appointment Fees and for a Bonus; (iv) the Reply of Akin Gump Strauss Hauer Feld LLP, Counsel for the Official Committee of Unsecured Creditors, to the Objection of the United States Trustee and the Reorganized Debtors to Akin Gump's Final Fee Application; (v) the Memorandum of the United States Trustee in Further Support of Objection to the Request by Akin Gump Strauss Hauer Feld LLP for Pre-Appointment Fees; and (vi) the Post-Hearing Memorandum of Law of Akin Gump Strauss Hauer Feld LLP with Respect to Akin Gump's Request, Pursuant to 11 U.S.C. Section 503(b), for Reimbursement of Certain Fees Incurred in the Rendition of Services on Behalf of the Informal Committee During the Post-Petition Period Prior to the Committee Formation Date ("Preformation Period", as such term is defined in Exhibit A attached hereto); and upon the hearing held on December 14, 2004; and good and sufficient notice having been given in accordance with the case management order of this Court, dated December 23, 2002, and Federal Rules of Bankruptcy Procedure 2002(a)(6) and (c)(2); and after due consideration and sufficient cause appearing therefore; and the Court having previously ruled on the Application to the extent that it requested final fees and expenses pursuant to section 330 and a premium; and for the reasons set forth by the Court in its ruling on the record on June 14, 2005, as amplified, modified and corrected by the Court (as set forth on Exhibit A attached hereto); it is hereby
ORDERED that, the Application, to the extent that it requests, pursuant to section 503(b), post-petition fees incurred during the Preformation Period, is denied.
EXHIBIT A OPINION OF THE COURT READ INTO THE RECORD ON JUNE 14, 2005 AND THEREAFTER AMPLIFIED, MODIFIED AND CORRECTED
Before the Court is the substantial contribution application, pursuant to section 503(b), of Akin Gump in the original amount of $127,429.50. Akin Gump accrued such fees while it represented an informal committee of WorldCom bondholders ("Informal Committee") during the period between the filing (July 21, 2002) and the formation of the Official Committee of Unsecured Creditors ("Creditors' Committee") on July 29, 2002 ("Preformation Period"). A hearing on the application was held on December 14, 2004 (the "Fee Hearing") as part of the final application filed by Akin Gump with respect to its role as counsel to the Creditors' Committee.
The United States Trustee objected to Akin Gump's application. Among other things, the United States Trustee objected to the Preformation Period fees on the basis that Akin Gump had failed to establish that the fees incurred provided a substantial benefit to the estate. The Creditors' Committee supported Akin Gump's application. The Debtor reached an agreement with Akin Gump regarding Akin Gump's fees which included an overall reduction in the fees. The Debtor did not take a position specifically related to the substantial contribution portion of the application. The Debtor, however, did object to Akin Gump's request for a premium.
The substantial contribution request referenced above was subsequently reduced by $26,695.00 — in that, at the Fee Hearing, Akin Gump consented to the reduction of fees in the amount set forth above, which amount is attributable to Akin Gump's preparation for the organizational meeting that was held on July 29, 2002.
Certain of the fees requested at the Fee Hearing relate to fees incurred at a hearing that was held on July 22, 2002 (the "July 22nd Hearing"). With respect to the fees incurred for the July 22nd Hearing that were attributable to the examiner issue, Akin Gump acknowledged that such amount did not represent a substantial contribution. The Court assumes that Akin Gump still seeks substantial contribution for the time spent in suggesting candidates for the examiner position to the United States Trustee.
An organizational meeting is held at the direction of the United States Trustee's Office for the purpose, among other things, of forming an official creditors' committee.
During questioning by the Court at the Fee Hearing, it became clear that the substantial contribution amount claimed was not paid by the Informal Committee nor was there any obligation incurred by the Informal Committee to pay such amount. In fact, Akin Gump stated that there was an understanding between the Informal Committee and Akin Gump that there would be no obligation on the Informal Committee's part regarding the fees of Akin Gump during the Preformation Period. However, if Akin Gump were to be retained by the Creditors' Committee, the Informal Committee expected that Akin Gump would seek compensation for the Preformation Period fees on the basis of substantial contribution (under section 503(b)), in conjunction with its final fee application (under section 330(a)) as counsel to the Creditors' Committee. Some of the members of the Informal Committee were selected to serve on the Creditors' Committee.
Once the Court realized that the fees at issue were neither paid, nor incurred, by the Informal Committee, it raised the issue of whether Akin Gump was entitled to compensation under section 503(b), as a matter of law. Specifically, the issue was whether a professional has standing to seek compensation under section 503 on its own behalf where the client of the professional has neither paid, nor is obligated to pay, the fees of the professional. A briefing schedule was established and briefs were filed by Akin Gump and the United States Trustee.
For the reasons set forth below, the Court finds that (1) an application under section 503(b) must be filed by, or on behalf of, an entity [ see § 503(a)]; (2) a professional under 503(b)(4) is a representative of an entity (under 503(b)(3)(D)) and is not itself a qualified entity under 503(a); and (3) even if Akin Gump had standing to bring forth an application under section 503(b), Akin Gump has failed to establish that the services rendered were a substantial contribution to the estate.
As referenced above, section 503(a) sets forth who may file a request for an administrative expense and provides as follows:
(a) An entity may timely file a request for payment of an administrative expense, or may tardily file such request, if permitted by the court for cause.
Subsection (b)(1) sets forth the types of ordinary course of business expenses incurred post-petition that would qualify for administrative expense status. Subsection (b)(2) refers to compensation awarded under section 330(a) to retained professionals whether retained by a trustee, chapter 11 debtor-in-possession, a section 1104 committee, etc. Subsection (b)(3)(A) — (F) list various creditors type entities such as creditors, indenture trustee, custodian, etc. that would be entitled to reimbursement. Specifically subsection (b)(3)(D) sets forth that a creditor may seek compensation and reimbursement of expenses if it establishes that the creditor made a "substantial contribution" to the estate under (b)(3)(D) (case law has limited such amounts to those that are specifically related to the "substantial contribution"). Subsection (b)(4) sets forth the criteria to be used in assessing the amount related to efforts of an attorney or accountant regarding an entity under subsection (b)(3)(D). Subsection (b)(5) sets forth the standard for payment of an indenture trustee that provided a substantial contribution. Subsection (b)(6) addresses witness fees and its reference to title 28 chapter 119 sets forth the amount of "witness fees" to be paid. It is important to note that this subsection ((b)(6)) does not stand for the proposition that all witnesses fees are to be compensated by the estate, but simply sets the amount that can be sought from the estate for a witness called by an entity under subsections (b)(1), (b)(2) and (b)(3). This interpretation is consistent with that of subsections (4) and (5) which sets forth how to determine the amount that may be requested under section 503 by an entity that qualifies to make a request under that section. In other words, these subsections do not expand the scope of the entities described in subsection (1), (2), and (3) that can request allowance under section 503(a), but provide the standard under which amounts due are to be determined.
Specifically, subsection 503(b)(3)(D) provides that included as administrative expenses are
(3) the actual, necessary expenses, other than compensation and reimbursement specified in paragraph (4) of this subsection, incurred by
(D) a creditor . . . in making a substantial contribution in a case under chapter 9 or 11. . . .
Section 503(b)(4) provides for the
reasonable compensation for professional services rendered by an attorney or an accountant of an entity whose expense is allowable under paragraph (3) of the subsection, based on the time, the nature, the extent, and the value of such services, and the cost of comparable services other than in a case under this title, and reimbursement for actual, necessary expenses incurred by such attorney or accountant. . . .
The Court finds that subsection (b)(3)(D) establishes the circumstances under which a creditor who makes a substantial contribution may file a request under section 503(a). Section 503(b)(4) sets forth the standard to apply in reviewing an application of an attorney or accountant that represents an entity that qualifies under section 503(b)(3)(D). As discussed above, subsections (5) and (6) similarly reference a standard to be applied in reviewing an entity's application.
A review of the majority of case law, the statute itself, the related commentary and policy considerations do not provide support for the proposition that a representative of an entity can file a request for payment under section 503(b) on its own behalf.
COLLIERS ON BANKRUPTCY provides that
In analyzing a request for compensation, it should be kept [in] mind that the professional has been retained by the entity rather than by the estate. The professional does not need to seek, nor is the professional able to seek, authorization of the professional's employment under section 327. The terms of the professional's retention are a matter between the professional and its client.
The professional is entitled to look only to its client for payment and not to the estate, and it is the responsibility of the client to pay its professionals. While an entity is able to seek reimbursement of its payment obligation from the estate, the granting or denial of an award does not affect the payment relationship between the professional and its client, absent an agreement between them to that effect.
The right to request compensation, therefore, belongs to the client and not to the professional. While the client may request that the professional seek reimbursement on the client's behalf, it should be kept in mind that the professional is not seeking an award of compensation to him or herself. It is seeking reimbursement on behalf of the client, and the award only determines what portion of the client's payment obligation will be compensable from the estate.
4 COLLIER ON BANKRUPTCY p 503.11[4] (Alan N. Resnick Henry J. Sommer eds., 15th ed. rev. 2004) (citations omitted).
The only case law cited by Akin Gump in support of its contention that an attorney or accountant can file a section 503(b) request on its own behalf when there is no obligation on behalf of its client is In re Western Asbestos Co., et al. 318 B.R. 524 (Bankr. N.D. Cal. 2004). In Western Asbestos, one of the law firms representing the asbestos claimants with unliquidated claims filed an application for payment of its co-counsel attorneys' fees and expenses as administrative expenses based upon substantial contribution made to the bankruptcy case by asbestos claimants that co-counsel represented. The co-counsel did not claim any right to payment from the asbestos claimants. The co-counsel filed and prosecuted a successful plan of reorganization and there was no obligation to reimburse such counsel by its client either directly or out of proceeds from any recovery under the plan. In Western Asbestos, the court analogized the request to awards made in civil rights action, etc., in which there was no obligation on behalf of the client to compensate the attorney for its efforts. Furthermore, the court held that a ruling that permitted a professional to file a substantial contribution application on its own behalf, as is the case herein, would be consistent with the natural reading of the statute and congressional intent of the section. This Court respectfully disagrees with the court in Western Asbestos.
As far as the natural reading of the statute, it is this Court's view that such reading begins with subsection (a) in which the requestor of any relief is stated to be an entity. Subsection (b)(4) refers to "an attorney or an accountant of an entity." From that, it follows that if the applicant is the entity, then the attorney or accountant for an entity is not the "entity" under section (a). Rather, the attorney or accountant is merely the representative of an entity. Although generally the section 503(b)(3)(D) entity would file the application seeking payment of compensation and reimbursement of expenses, courts have permitted the professional that represented the entity to file an application on behalf of an entity, it does not follow, however, that the representative itself has standing to bring the application on its own behalf. Subsection (b)(4) seems to advance similar purposes to that of sections (5) and (6), in that each section provides a standard upon which compensation and reimbursement is to be determined. Therefore, this supports the conclusion that section (4) does not create an independent basis upon which a representative of an entity has standing to bring the application on its own behalf.
Regarding the Western Asbestos court's reference to other statutes that it perceived as less susceptible to an interpretation that would allow payment than section 503(b)(4), the Court notes that each of the cited cases involved a far more compelling public interest requiring a mechanism to compensate counsel for clients who would not otherwise have the financial ability to represent their interests. While the section 503(b)(3) substantial contribution standard certainly is intended to encourage creditor participation, it should be viewed in a context of the provision for compensation of creditor participation in the form of an official committee under section 1102. The "substantial contribution" subsection provides a mechanism for creditors to be compensated in many respects for their efforts that are not a duplicate of the efforts of the debtor or a creditors' committee.
Certainly, general creditor participation is encouraged and there are a number of ways creditors may be compensated for their efforts in the reorganization process. However, such general creditor participation, outside the ambit of an official committee, — albeit encouraged — is not to be compensated by the estate unless it rises to the level of substantial contribution. This strikes an important balance between limiting expenses of an estate — already obligated to compensate retained professionals — and recognizing the need to compensate efforts by certain creditors whose participation provided a substantial benefit to the estate. It is not a situation that is directly analogous to civil rights or truth-in-lending actions, in which participation would otherwise be lacking, or such actions would never be brought at all, absent an enabling statute.
Further, the court in Western Asbestos stated that, under section 503(b)(3)(D), an attorney's fees are specifically excluded. While that is accurate, the issue is what is really excluded. One possibility is that attorney's fees are excluded from the actual and necessary standard and, therefore, one is directed to the standard under section 503(b)(4) to determine the appropriate amount to be compensated. (An examination of section 503(b)(4) reveals that once substantial contribution has been established, essentially the section 330 criteria to determine the reasonableness of the expenses incurred is applied). Another possibility is that attorney's fees are excluded entirely and a professional representing a client who has made a substantial contribution has standing (as an entity under section 503(a)) to seek compensation on its own behalf. Or, it may be interpreted to include a combination of both possible interpretations. It is the Court's view that section 503(b)(4) provides the appropriate standard to determine the amount of compensation that should be allowed when substantial contribution has been established and, as stated previously, does not provide for standing on the part of a professional to seek substantial contribution compensation on its own behalf.
Therefore, based upon the aforementioned, the Court finds that a representative of an entity does not have standing, as a section 503(a) entity, to seek allowance of its fees under section 503 and the underlying policy considerations of section 503(b) do not support or compel any expansion of that section to permit a representative of an entity to seek compensation on its own behalf, as such is sought herein. It must be stated that a client's obligation to pay the fees of a professional provides an important control and oversight regarding the efforts of an attorney. The argument may be advanced that the substantial contribution standard sufficiently protects the estate from frivolous applications. That assumes that every application would be litigated which itself would add an unnecessary burden of time and expense to the fee application process. Although creditor participation should always be encouraged and facilitated, the goal of creditor participation is sufficiently encouraged without the need to grant attorneys standing to seek compensation on their own behalf under section 503(b). As stated above, there are other areas of the law where such arrangements advance important public policies, but it is this Court's view that creditor participation in bankruptcy cases is sufficiently encouraged.
Furthermore, even if Akin Gump had standing to bring an application under section 503(b), after reviewing the services provided by Akin Gump during the Preformation Period, the Court concludes that such services do not support a finding of substantial contribution. Although some of the services provided may have directly benefitted the creditors during the Preformation Period and may have indirectly benefitted the creditors by facilitating Akin Gump's preparedness to assume the role of Creditors' Committee counsel, such did not rise to the level of benefit to the estate that warrants a finding of substantial contribution.
As discussed above, Akin Gump represented an Informal Committee prior to the filing of the petition in this case and continued that representation during the Preformation Period, as such period was previously defined. Some of the members of the Informal Committee were selected and served as members of the Creditors' Committee. Akin Gump was selected by the Creditors' Committee as its counsel on July 29, 2002. The application at issue reveals that Akin Gump, as counsel to the Informal Committee, attended and participated in the July 22nd Hearing held during the Preformation Period, attended various meetings with the Debtor, performed certain legal research and analysis in preparation of its appearance at the July 22nd Hearing and its meetings with the Informal Committee, and was in regular communications with the Informal Committee regarding all the issues that arose during the Preformation Period. At the July 22nd Hearing, Akin Gump addressed the Court with respect to a number of issues regarding the first day motions that were heard that day. Specifically, Akin Gump expressed concern regarding the issue of payment of pre-petition taxes. Akin Gump focused on the what it believed would be a request by the Debtor to authorize payment of non-trust fund taxes under the order that was proposed. The United States Attorney's Office took the position that the taxes at issue were trust fund taxes related to section 254 of the Communications Act. The Debtor agreed with the United States Attorney's Office's position as to the 254 taxes and stated that the Debtor's concern was that it did not want to put any licenses in jeopardy by not paying certain amounts and that it would only pay amounts as they came due and had no intentions of accelerating any payments. In addition, Akin Gump addressed the extent to which the Court was authorizing, as a priority claim, pre-petition wage payments that might be over the statutory limit. Also, Akin Gump addressed the DIP-Interim order. Lastly Akin Gump requested a delay in entry of an order directing the appointment of an examiner until an official committee was formed and could be heard. Other than reassuring that rights were being preserved until a final hearing was held and that certain clarifications were put on the record, no further issues were raised.
Akin Gump's participation at the July 22nd Hearing regarding the first day motions that were considered certainly showed a familiarity and an understanding of the issues presented to the Court that day which assisted the process. It added beneficial creditor participation and another voice seeking to delay final adjudication of matters until there was time to review certain issues. However, the request to delay entry of a final order until a final hearing was held was not something that was controverted, nor were any of the other issues controverted at that hearing. Akin Gump's representation provided creditor participation at the earliest stages of the case, but to take the next step and assert that such participation at the July 22nd Hearing and other Akin Gump case-related activities during the Preformation Period provided a substantial contribution would be to apply a section 330 standard to those efforts. However, that is not the applicable standard. The comments of Akin Gump on behalf of the Informal Committee were important but in many respects were the type of reservation of rights articulated by the United States Trustee, creditors and often the Court on its own. It can not be overstated that the issue is not whether Akin Gump's efforts during the Preformation Period was beneficial but the issue is did it meet the standard of "substantial contribution." There is no question that the preparation and tasks performed by Akin Gump during this period were reasonable and laid the foundation for its representation of the Creditors' Committee. But it is not compensable under section 503(b) unless it meets the standard of substantial contribution.
The record does not indicate whether Akin Gump was to be compensated by the Informal Committee for its pre-petition representation of them. However, the record indicates that the Informal Committee had an understanding with Akin Gump that it had no obligation to satisfy Akin Gump's fees and expenses for the Preformation Period. And further the members of the Informal Committee were aware that Akin Gump, if retained as counsel to the Creditors' Committee, would seek such fees from the estate under 503(b) in its final fee application.
As background, the Court notes that (1) members of the Informal Committee were substantial WorldCom senior note holders and these holders did not agree to be obligated for the fees and expenses incurred by Akin Gump during the Preformation Period, and (2) Akin Gump acknowledges that had it not been retained as counsel to the Creditors' Committee it likely would not have been able to satisfy the standard for substantial contribution. Tr. page 264 lns. 9 through 21.
There is no evidence or assertion that the decision of the Informal Committee not to incur the liability for such fees and expenses had anything to do with their ability to pay such amounts.
At the Fee Hearing, Akin Gump asserted the following:
I would suggest to Your Honor that I probably could not sustain the standards, much of the work that was done ultimately benefitted the Official Creditors' Committee. Had we not become Committee counsel, I am not sure that we could sustain that burden. I am not at all sure whether we could have applied under 503(b) for the one-week period. We have never done that in any other case where we did not ultimately become Committee counsel.
As for the specific tasks, Akin Gump asserts on page 33, para. 79 of its application the following:
Akin Gump's representation of the interests of unsecured creditors during the Pre Committee Period satisfies these factors. The unsecured creditors' interests were represented and protected by Akin Gump in connection with the negotiations of hearings on the first day motions. The work performed by Akin Gump directly benefitted the debtors' estates and all unsecured creditors because, among other things, upon the formation of the Committee, Akin Gump was able to immediately advise the Committee concerning the debtors, their history, their pre-petition restructuring activities and the orders entered in these cases at the first day hearing. Such knowledge was the foundation to formulating a strategy to protect the interests of the unsecured creditors throughout these cases.
As discussed previously, certain orders were presented to the Court at the July 22nd Hearing, following the filing of the petitions on the previous day, Sunday July 21, 2002. As indicated by Akin Gump's time records, it reviewed the motions on behalf of the Informal Committee and attended the July 22nd Hearing in which many of the motions were considered. Although it was certainly beneficial for a creditor constituency to review and be heard on the various motions, nevertheless, the motions that were heard that day were either entered only on an interim basis with a final hearing date scheduled some time after the formation of the Creditors' Committee or they were procedural in nature and entered as needed. Also, a number of vendor, customer and wage orders were entered. The final hearings with respect to the more significant motions that ultimately laid the groundwork for the foundation of this case were scheduled and heard long after the formation of the Creditors' Committee. Thus, while the Preformation Period representation may have assisted Akin Gump in its efforts to become counsel to the Creditors' Committee and enhanced creditor participation at the early stages of the case during the Preformation Period, it falls short of evidencing a substantial contribution to the case. The monitoring and participation in a case by a creditor is not, without more, a substantial contribution.
As discussed above, a review of the orders entered prior to the formation of the Creditors' Committee reveals that no final order was entered prior to the formation for which significant input was provided by Akin Gump. That is not to say that Akin Gump's familiarity with these orders did not provide a learning curve that benefitted the Creditors' Committee. However, that does not establish a substantial contribution to the estate under section 503(b). What it did do was provide Akin Gump with the ability to demonstrate that, in addition to its skills and reputation as an experienced creditors' committee counsel in other cases, it was up to speed in this case and ready to act quickly on the issues that were coming before the Court. The Court has no doubt that these considerations may have influenced the Creditors' Committee's choice of counsel. But to equate those efforts with that of substantial contribution — when no one particular act during this period, as counsel acknowledges, would likely have supported a claim for substantial contribution had Akin Gump not been retained — would severely lessen the threshold under the case law for substantial contribution.
The Court notes that other section 503(b) substantial contribution applications were granted by the Court in this case. However, in each such application, in addition to establishing the underlying basis for relief requested, each application was made on behalf of the creditor entity, there was a settlement for substantially less than for the amount sought, and each professional represented that it had been paid by its client for the services that formed the basis of the substantial contribution request.
As indicated previously, while Akin Gump maintains that it arguably could meet the substantial-contribution standard for the $26,695.00 of the $127,429.50 that was attributed to preparation for the meeting to form the Official Committee of Unsecured Creditors, it would withdraw its request for that amount. Included in the $26,695.00 amount is an entry as follows dated 07/25/02 "Telephone call with . . . and others regarding preparation work for WorldCom Creditors' Committee marketing pitch. (.5). That one half hour entry in many respects provides one possible business reason, from each sides' point of view, for the "understanding," referenced above, concerning compensation during Preformation Period. Akin Gump took the risk of not being compensated if it was not retained as Creditors' Committee counsel but if it performed the work, it would make a better presentation when seeking to be retained as creditors' committee counsel. If it was retained, it would seek the Preformation Period fees under section 503(b) as it had successfully done in the past. The members of the Informal Committee presumably knew their need for counsel would be addressed without incurring any obligation on the Informal Committee's part for such fees because Akin Gump would provide the Preformation Period representation to enhance its chances to be retained by the Creditors' Committee.
In sum, Akin Gump represented a sophisticated constituency pre-petition and preformation of the creditors' committee. Although the members of the Informal Committee may have seen the need to have counsel represent their interests prior to the formation of the official committee B in which they would seek membership and were in fact selected to serve B they nonetheless did not agree to compensate their counsel for such representation. And their counsel, a law firm with certain restructuring expertise and experence in representing creditors' committees, engaged in such representation knowing that its recourse for compensation would be section 503(b) if it were selected as counsel to the creditors' committee and it satisfied the standards of substantial contribution.
Presumably, Akin Gump's skills, reputation and preparation served it well because it was retained as counsel to the Creditors' Committee and was ultimately awarded in excess of $14,000,000.00 for its efforts — and likely such representation enhanced its reputation as a creditors' committee counsel in large, complex bankruptcy cases. But its Preformation Period efforts did not confer a substantial contribution on these estates. While such efforts during the Preformation Period enhanced creditor participation and provided Akin Gump with a learning curve regarding the issues that would be presented to the Creditors' Committee, such effords did not establish the basis of a substantial contribution supported by the record of these cases. Akin Gump's description of its contribution as "[t]he foundation to formulating a strategy to protect the interests of the unsecured creditors throughout these cases," does not provide a specific contribution that warrants a substantial contribution award under section 503(b). Akin Gump's efforts were simply section 330-type services that would have been compensable if incurred by an estate professional but do not rise to the level of section 503(b) substantial contribution. Therefore, Akin Gump's request for compensation during the Preformation Period under section 503(b) is denied in all respects.
Akin Gump directs the Court's attention to a number of orders in other cases in which it received substantial contribution awards for tasks performed on behalf of informal committees or creditors in a similar preformation period. These appear to be orders entered in cases without objection or any discussion by the court. Akin Gump specifically directs this Court to the Dairy Mart case in which this Court awarded substantial contribution for the preformation period. In the Dairy Mart case, no objection was raised. In examining the fee application in that case, the Court was not aware that the informal committee did not have an obligation to reimburse Akin Gump with respect to the compensation for professional services it sought in its application. Upon re-examination of the application, the Court realizes that it failed to perform as thorough of a review as it should have to determine whether Akin Gump had established its substantial contribution as alleged. As it is now apparent to the Court that in the Dairy Mart case there was no obligation on the part of the pre-petition creditors to satisfy Akin Gump's post-petition, preformation fees, this Court was simply wrong, as a matter of law, in granting the section 503(b) award in that case. Further, the Court has not reviewed the Dairy Mart application, under the analysis set forth herein, to determine if the entries support a substantial contribution. However, it appears that had the Court conducted a thorough review of the substantial contribution portion of Akin Gump's fee application, it is likely that the Court would have found that the preformation efforts of Akin Gump provided preparation work, similar to that presented in the instant case, which would not have met the applicable substantial contribution standard of section 503.