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Full title: Application/Motion to Employ/Retain Fallace & Larkin, L.C. as Florida Counsel Filed by Klausner Lumber Two LLC. Hearing scheduled for 7/15/2021 at 02:00 PM at US Bankruptcy Court, 824 Market St., 5th Fl., Courtroom #5, Wilmington, Delaware. Objections due by 7/2/2021. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B # 4 Exhibit C) (Amer, Nader) (Entered: 06/10/2021)
Document posted on Jun 9, 2021 in the bankruptcy, 10 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
By this application (the “Application”), the Debtor respectfully requests entry of an order, substantially in the form attached hereto as Exhibit C, authorizing the employment and retention of Fallace & Larkin, L.C. (“Fallace Larkin”) as Florida counsel (“Florida Counsel”) to the Debtor nunc pro tunc to May 28, 2021, to assist with litigation currently pending in Florida, including, but not limited to, the civil action Johnnie Raymond vs. Klausner Lumber One LLC, et al.,The Debtor seeks to retain Fallace Larkin with regard to the Raymond Action and any other litigation matters that may arise in Florida.Nor does Fallace Larkin have an interest materially adverse to the interests of the Debtor’s estate or any class of creditors or equity security holders by reason of any direct or indirect relationship to, connection with, or interest in the Debtor or any parties in interest, or for any other reason.Pursuant to Bankruptcy Rule 2014(a), except as otherwise disclosed in the Larkin Declaration, Fallace Larkin does not have any connections with the Debtor, its creditors, any other party in interest, its respective attorneys or accountants, the U.S. Trustee, or any person employed in the Office of the U.S. Trustee.From the results of this inquiry, Fallace Larkin compiled a list (“Client Match List”) of Potential Parties in Interest that are current or former Fallace Larkin clients.
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Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Chapter 11 KLAUSNER LUMBER TWO LLC, Case No. 20-11518 (KBO) Debtor.1 Objection Deadline: July 2, 2021 at 4:00 p.m. Hearing Date: July 15, 2021 at 2:00 p.m. APPLICATION OF THE DEBTOR FOR ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF FALLACE & LARKIN, L.C. AS FLORIDA COUNSEL NUNC PRO TUNC TO MAY 28, 2021 Klausner Lumber Two LLC, the debtor and debtor-in-possession in the above-captioned Chapter 11 case (the “Debtor”), hereby applies to the Court as follows: RELIEF REQUESTED 1. By this application (the “Application”), the Debtor respectfully requests entry of an order, substantially in the form attached hereto as Exhibit C, authorizing the employment and retention of Fallace & Larkin, L.C. (“Fallace Larkin”) as Florida counsel (“Florida Counsel”) to the Debtor nunc pro tunc to May 28, 2021, to assist with litigation currently pending in Florida, including, but not limited to, the civil action Johnnie Raymond vs. Klausner Lumber One LLC, et al., Case No. 3:20-cv-01380 (BJD-MCR) (M.D. Fla. 2020) (the “Raymond Action”), and to assist with any other litigation-related matters that may arise in Florida. 2. In support of this Application, the Debtor relies upon and incorporates by reference (a) the Declaration of Robert Prusak in Support of Debtor’s Bankruptcy Filing (D.I. 6) (the “First Day Declaration”); (b) the Declaration of David G. Larkin in Support of the Application of the Debtor for an Order Authorizing the Employment and Retention of Fallace & 1 The last four digits of the Debtor’s EIN is 4897. The Debtor’s mailing address is P.O. Box C, Redding Ridge CT, 06876.
1Larkin, L.C. as Florida Counsel Nunc Pro Tunc to May 28, 2021 (the “Larkin Declaration”), attached as Exhibit B; and (c) the Declaration of Robert Prusak, Chief Restructuring Officer of the Debtor, in Support of the Application of the Debtor for an Order Authorizing the Employment and Retention of Fallace & Larkin, L.C. as Florida Counsel Nunc Pro Tunc to May 28, 2021 (the “Prusak Declaration”), attached as Exhibit C. In further support of this Application, the Debtor respectfully represents as follows: BACKGROUND 3. On June 10, 2020 (the “Petition Date”), the Debtor filed a voluntary petition with this Court under Chapter 11 of Title 11 (the “Case”) of the United States Code (the “Bankruptcy Code”). On April 30, 2020, the Debtor’s affiliate, Klausner Lumber One LLC (“KL1”), filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, which is being administered separate and apart from the Debtor’s Case. See In re Klausner Lumber One LLC, Case No. 20-11033-KBO (Bankr. D. Del. 2020). 4. The Debtor continues to operate its businesses and manage its properties as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 5. No trustee or examiner has been appointed in this Case. On June 25, 2020, the U.S. Trustee for the District of Delaware appointed an official committee of unsecured creditors (the “Committee”). See D.I. 27. 6. The Debtor was the owner of a substantially complete timber sawmill in Enfield, Halifax County, North Carolina. Additional detail regarding the Debtor, its business, the events leading to the commencement of this case and the facts and circumstances supporting the relief requested herein is set forth in the First Day Declaration.
2JURISDICTION, VENUE, AND STATUTORY PREDICATES 7. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated as of February 29, 2012. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. 8. Pursuant to Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), the Debtor consents to the Court’s entry of a final judgment or order with respect to the Application if it is determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. 9. The statutory predicates for the relief requested in this Application are Sections 105(a) and 327(a) of the Bankruptcy Code, Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Local Rule 2014-1. FACTS RELEVANT TO THIS APPLICATION A. Fallace Larkin’s Qualifications. 10. Fallace Larkin is a firm well known in Central Florida that provides individualized client attention in a boutique setting in all aspects of business and commercial entity formation, contracts, transactions, commercial real estate, and litigation. The professionals of Fallace Larkin possess extensive experience and expertise in their respective areas of practice and the Debtor believes that Fallace Larkin is well qualified to provide the services for which the Debtor files this Application. Further, Fallace Larkin attorneys have become familiar with the Debtor and its business and financial affairs through its retention by the Debtor’s affiliate, KL1, which dealt with issues substantially similar to those the Debtor has faced and will likely face
3going forward. For these reasons, Fallace Larkin is uniquely qualified to serve as Florida Counsel to the Debtor. B. Services to be Provided. 11. The Debtor seeks to retain Fallace Larkin with regard to the Raymond Action and any other litigation matters that may arise in Florida. The Debtor expects this to be limited in scope, with particular attention paid to representing the Debtor in the Raymond Action. As to any other litigation-related matters arising in Florida, the Debtor expects that Fallace Larkin’s services will be utilized to the extent the Debtor’s bankruptcy counsel need such Florida-specific assistance. C. Professional Compensation. 12. The hourly rates of the Fallace Larkin professionals and paraprofessionals expected to perform services for the Debtor are as follows: James Fallace $400.00 David G. Larkin $400.00 Jesse Kabaservice $300.00 Drew Williams $200.00 Paralegals $150.00 13. Fallace Larkin has stated its desire to render the necessary professional services as Florida Counsel to the Debtor. Pursuant to Section 327(a) of the Bankruptcy Code, the Court may approve Fallace Larkin’s retention on any reasonable terms. The Debtor submits that Fallace Larkin be compensated on an hourly basis, on terms which are substantially similar to those entered into between Fallace Larkin and other clients (both those in bankruptcy and in non-bankruptcy matters).
414. The Debtor has agreed Fallace Larkin shall be reimbursed, subject to the Court’s approval and the Local Rules of this Court, for all actual out-of-pocket expenses incurred by Fallace Larkin on their behalf, such as filing fees, document reproduction, telecopier charges, mail and express mail charges, overnight courier expenses, computer research, transcription costs, travel costs and expenses, and other disbursements. Fallace Larkin will charge for these expenses in a manner and at rates consistent with charges made generally to Fallace Larkin’s other clients; none of these expenses will provide a profit to Fallace Larkin. Fallace Larkin will make every effort to minimize expenses in this Case. 15. Fallace Larkin will maintain detailed, contemporaneous records of time spent in connection with rendering the legal services described above. These time entries shall be organized by category according to the nature of the services rendered. Fallace Larkin shall also maintain detailed records of any actual and necessary expenses incurred. 16. Fallace Larkin intends to apply to the Court for the allowance of compensation for professional services rendered and reimbursement of expenses incurred in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules. D. Payments to Fallace Larkin. 17. Fallace Larkin did not provide the Debtor with any pre-petition services, has not received any compensation from the Debtor within 90 days before the Petition Date, and the Debtor did not owe Fallace Larkin any amounts as of the Petition Date. The payment of Fallace Larkin’s fees and expenses incurred during its engagement shall be subject to the interim compensation procedures established in this Case. For the avoidance of doubt, Fallace Larkin waives any prepetition fees upon the approval of this Application.
5E. Fallace Larkin’s Disinterestedness. 18. Fallace Larkin is a “disinterested person” pursuant to Sections 327(a) and 101(14) of the Bankruptcy Code because it was not a creditor, equity security holder, or insider as of the Petition Date. Nor does Fallace Larkin have an interest materially adverse to the interests of the Debtor’s estate or any class of creditors or equity security holders by reason of any direct or indirect relationship to, connection with, or interest in the Debtor or any parties in interest, or for any other reason. 19. Pursuant to Bankruptcy Rule 2014(a), except as otherwise disclosed in the Larkin Declaration, Fallace Larkin does not have any connections with the Debtor, its creditors, any other party in interest, its respective attorneys or accountants, the U.S. Trustee, or any person employed in the Office of the U.S. Trustee. Further, Fallace Larkin’s retention will not be adverse to the Debtor’s estate. 20. As set forth in the Larkin Declaration, Fallace Larkin has conducted, and continues to conduct, research into its connections to the Debtor, their substantial creditors and equity security holders, and other parties interested in this Case. As part of this inquiry, Fallace Larkin obtained the names of individuals or entities that may be parties in interest in this Case (the “Potential Parties in Interest”), attached to the Larkin Declaration as Schedule 1. Fallace Larkin then entered the names of Potential Parties in Interest into a computer database containing the names of all clients and conflict information concerning the clients of Fallace Larkin. 21. From the results of this inquiry, Fallace Larkin compiled a list (“Client Match List”) of Potential Parties in Interest that are current or former Fallace Larkin clients. The Client Match List is divided into two schedules of current and former clients, respectively. Current clients are listed on Schedule 2 attached to the Larkin Declaration and former clients are listed
6on Schedule 3 attached to the Larkin Declaration. Through additional inquiry, Fallace Larkin has determined its representations of clients on the Client Match List concern matters unrelated to the Debtor and this Case, except to the extent otherwise indicated in the Larkin Declaration. None of the entities listed on the Client Match List represent a significant portion of the firm’s annual revenue. 22. Although Fallace Larkin has undertaken, and continues to undertake, efforts to identify connections with the Debtor and other parties in interest, it is possible that connections with some parties in interest have not yet been identified. Should Fallace Larkin discover additional connections of the nature described above, Fallace Larkin will promptly supplement the disclosures in the Larkin Declaration. BASIS FOR RELIEF 23. Section 327 of the Bankruptcy Code provides that a debtor, subject to Court approval: [M]ay employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under this title. 24. This Application appropriately reflects: (i) the nature and scope of services to be provided by Fallace Larkin; (ii) Fallace Larkin’s substantial experience with respect to its services; and (iii) the fee and expense structures typically utilized by Fallace Larkin and other law firms. 25. The Debtor seeks to retain and employ Fallace Larkin because the firm’s attorneys have extensive experience in litigation before Florida courts. Further, Fallace Larkin attorneys have become familiar with the Debtor and its business and financial affairs in connection with their engagement by the Debtor and its affiliate, KL1. For these reasons, Fallace
7Larkin is uniquely qualified to represent the Debtor in the Raymond Action and in other litigation-related matters that may arise in Florida. 26. The Debtor requests approval of the employment of Fallace Larkin nunc pro tunc to May 28, 2021. Nunc pro tunc relief is warranted in this Case. The Third Circuit has identified “time pressure to begin service” and absence of prejudice as factors favoring nunc pro tunc retention. See Matter of Arkansas Co., 798 F.2d 645, 650 (3d Cir. 1986); see also In re Indian River Homes, Inc., 108 B.R. 46, 52 (D. Del. 1989). Given recent developments in the Raymond Action (notwithstanding the automatic stay) which required immediate attention, the Debtor was not able to seek approval of Fallace Larkin’s retention before Fallace Larkin began work. Nonetheless, the Debtor and Fallace Larkin have filed this Application within three weeks of their engagement. Under these circumstances, no party will be prejudiced and nunc pro tunc retention should be approved. 27. Based upon the foregoing, the Debtor believes that Fallace Larkin’s retention on the terms and conditions proposed herein is appropriate. STATEMENT REGARDING U.S. TRUSTEE GUIDELINES 28. Fallace Larkin intends to use its reasonable best efforts to comply with the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. § 330 by Attorneys in Larger Chapter 11 Cases, effective as of November 1, 2013 (the “U.S. Trustee Guidelines”). To that end, Fallace Larkin provides the following statements in response to the request for additional information set forth in Part D.1. of the U.S. Trustee Guidelines: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: No.
8Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed postpetition, explain the difference and the reasons for the difference. Response: N/A Question: Has your client approved your prospective budget and staffing plan, and, if so, for what budget period? Response: Yes, for the period beginning May 1, 2021, ending September 1, 2021. NO PRIOR REQUEST 29. No previous request for the relief sought herein has been made by the Debtor to this or any other court. NOTICE 30. The Debtor will serve notice of this Application on the following parties: (a) the Office of the U.S. Trustee for the District of Delaware; (b) counsel to the Committee; (c) the Debtor’s pre-petition lender; and (d) any other party that has requested notice pursuant to Local Rule 2002-1(b). The Debtor submits that in light of the nature of the relief requested no other or further notice need be given. [signature page follows]
9CONCLUSION WHEREFORE, the Debtor respectfully requests that the Court enter an order substantially in the form attached hereto, granting the relief requested herein and granting the Debtor such other relief as the Court deems appropriate. Dated: June 10, 2021 Klausner Lumber Two LLC /s/ Robert Prusak Robert Prusak Chief Restructuring Officer