[Code of Federal Regulations]
[Title 28, Volume 2]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 28CFR58.6]

[Page 137-141]
 
                    TITLE 28--JUDICIAL ADMINISTRATION
 
              CHAPTER I--DEPARTMENT OF JUSTICE (Continued)
 
PART 58--REGULATIONS RELATING TO THE BANKRUPTCY REFORM ACTS OF 1978 AND 1994--Table of Contents
 
Sec. 58.6  Procedures for suspension and removal of panel trustees and standing trustees.

    (a) A United States Trustee shall notify a panel trustee or a 
standing trustee in writing of any decision to suspend or terminate the 
assignment of cases to the trustee including, where applicable, any 
decision not to renew the trustee's term appointment. The notice shall 
state the reason(s) for the decision and should refer to, or be 
accompanied by copies of, pertinent materials upon which the United 
States Trustee has relied and any prior communications in which the 
United States Trustee has advised the trustee of the potential action. 
The notice shall be sent to the office of the trustee by overnight 
courier, for delivery the next business day. The reasons may include, 
but are in no way limited to:
    (1) Failure to safeguard or to account for estate funds and assets;
    (2) Failure to perform duties in a timely and consistently 
satisfactory manner;
    (3) Failure to comply with the provisions of the Code, the 
Bankruptcy Rules, and local rules of court;
    (4) Failure to cooperate and to comply with orders, instructions and 
policies of the court, the bankruptcy clerk or the United States 
Trustee;
    (5) Substandard performance of general duties and case management in 
comparison to other members of the chapter 7 panel or other standing 
trustees;
    (6) Failure to display proper temperament in dealing with judges, 
clerks, attorneys, creditors, debtors, the United States Trustee and the 
general public;
    (7) Failure to adequately monitor the work of professionals or 
others employed by the trustee to assist in the administration of cases;
    (8) Failure to file timely, accurate reports, including interim 
reports, final reports, and final accounts;
    (9) Failure to meet the eligibility requirements of 11 U.S.C. 321 or 
the qualifications set forth in 28 CFR 58.3 and 58.4 and in 11 U.S.C. 
322;
    (10) Failure to attend in person or appropriately conduct the 11 
U.S.C. 341(a) meeting of creditors;
    (11) Action by or pending before a court or state licensing agency 
which calls the trustee's competence, financial responsibility or 
trustworthiness into question;
    (12) Routine inability to accept assigned cases due to conflicts of 
interest or to the trustee's unwillingness or incapacity to serve;
    (13) Change in the composition of the chapter 7 panel pursuant to a 
system established by the United States Trustee under 28 CFR 58.1;
    (14) A determination by the United States Trustee that the interests 
of efficient case administration or a decline in the number of cases 
warrant a reduction in the number of panel trustees or standing 
trustees.
    (b) The notice shall advise the trustee that the decision is final 
and unreviewable unless the trustee requests in writing a review by the 
Director, Executive Office for United States Trustees, no later than 20 
calendar days from the date of issuance of the United States Trustee's 
notice (``request for review''). In order to be timely, a request for 
review must be received by the Office of the Director no later than 20 
calendar days from the date of the United States Trustee's notice to the 
trustee.
    (c) A decision by a United States Trustee to suspend or terminate 
the assignment of cases to a trustee shall take effect upon the 
expiration of a trustee's time to seek review from the Director or, if 
the trustee timely seeks such review, upon the issuance of a final 
written decision by the Director.
    (d) Notwithstanding paragraph (c) of this section, a United States 
Trustee's decision to suspend or terminate the assignment of cases to a 
trustee may include, or may later by supplemented by an interim 
directive, by which the United States trustee may immediately 
discontinue assigning cases to a trustee during the review period. A 
United States Trustee may issue such an interim directive if the United 
States Trustee specifically finds that:
    (1) A continued assignment of cases to the trustee places the safety 
of estate assets at risk ;
    (2) The trustee appears to be ineligible to serve under applicable 
law, rule, or regulation;

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    (3) The trustee has engaged in conduct that appears to be dishonest, 
deceitful, fraudulent, or criminal in nature; or
    (4) The trustee appears to have engaged in other gross misconduct 
that is unbefitting his or her position as trustee or violates the 
trustee's duties.
    (e) If the United States Trustee issues an interim directive, the 
trustee may seek a stay of the interim directive from the Director if 
the trustee has timely filed a request for review under paragraph (b) of 
this section.
    (f) The trustee's written request for review shall fully describe 
why the trustee disagrees with the United States Trustee's decision, and 
shall be accompanied by all documents and materials that the trustee 
wants the Director to consider in reviewing the decision. The trustee 
shall send a copy of the request for review, and the accompanying 
documents and materials, to the United States Trustee by overnight 
courier, for delivery the next business day. The trustee may request 
that specific documents in the possession of the United States Trustee 
be transmitted to the Director for inclusion in the record.
    (g) The United States Trustee shall have 15 calendar days from the 
date of the trustee's request for review to submit to the Director a 
written response regarding the matters raised in the trustee's request 
for review. The United States Trustee shall provide a copy of this 
response to the trustee. Both copes shall be sent by overnight courier, 
for delivery the next business day.
    (h) The Director may seek additional information from any party in 
the manner and to the extent the Director deems appropriate.
    (i) Unless the trustee and the United States Trustee agree to a 
longer period of time, the Director shall issue a written decision no 
later than 30 calendar days from the receipt of the United States 
Trustee's response to the trustee's request for review. That decision 
shall determine whether the United States Trustee's decision is 
supported by the record and the action is an appropriate exercise of the 
United States Trustee's discretion, and shall adopt, modify or reject 
the United States Trustee's decision to suspend or terminate the 
assignment of future cases to the trustee. The Director's decision shall 
constitute final agency action.
    (j) In reaching a determination, the Director may specify a person 
to act as a reviewing official. The reviewing official shall not be a 
person who was involved in the United States Trustee's decision or a 
Program employee who is located within the region of the United States 
Trustee who made the decision. The reviewing official's duties shall be 
specified by the Director on a case by case basis, and may include 
reviewing the record, obtaining additional information from the 
participants, providing the Director with written recommendations, or 
such other duties as the Director shall prescribe in a particular case.
    (k) This rule does not authorize a trustee to seek review of any 
decision to increase the size of the chapter 7 panel or to appoint 
additional standing trustees in the district or region.
    (l) A trustee who files a request for review shall bear his or her 
own costs and expenses, including counsel fees.

[62 FR 51750, Oct. 2, 1997]

    Appendix A to Part 58--Guidelines for Reviewing Applications for 
  Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330

    (a) General Information. (1) The Bankruptcy Reform Act of 1994 
amended the responsibilities of the United States Trustees under 28 
U.S.C. 586(a)(3)(A) to provide that, whenever they deem appropriate, 
United States Trustees will review applications for compensation and 
reimbursement of expenses under section 330 of the Bankruptcy Code, 11 
U.S.C. 101, et seq. (``Code''), in accordance with procedural guidelines 
(``Guidelines'') adopted by the Executive Office for United States 
Trustees (``Executive Office''). The following Guidelines have been 
adopted by the Executive Office and are to be uniformly applied by the 
United States Trustees except when circumstances warrant different 
treatment.
    (2) The United States Trustees shall use these Guidelines in all 
cases commenced on or after October 22, 1994.
    (3) The Guidelines are not intended to supersede local rules of 
court, but should be read as complementing the procedures set forth in 
local rules.
    (4) Nothing in the Guidelines should be construed:

[[Page 139]]

    (i) To limit the United States Trustee's discretion to request 
additional information necessary for the review of a particular 
application or type of application or to refer any information provided 
to the United States Trustee to any investigatory or prosecutorial 
authority of the United States or a state;
    (ii) To limit the United States Trustee's discretion to determine 
whether to file comments or objections to applications; or
    (iii) To create any private right of action on the part of any 
person enforceable in litigation with the United States Trustee or the 
United States.
    (5) Recognizing that the final authority to award compensation and 
reimbursement under section 330 of the Code is vested in the Court, the 
Guidelines focus on the disclosure of information relevant to a proper 
award under the law. In evaluating fees for professional services, it is 
relevant to consider various factors including the following: the time 
spent; the rates charged; whether the services were necessary to the 
administration of, or beneficial towards the completion of, the case at 
the time they were rendered; whether services were performed within a 
reasonable time commensurate with the complexity, importance, and nature 
of the problem, issue, or task addressed; and whether compensation is 
reasonable based on the customary compensation charged by comparably 
skilled practitioners in non-bankruptcy cases. The Guidelines thus 
reflect standards and procedures articulated in section 330 of the Code 
and Rule 2016 of the Federal Rules of Bankruptcy Procedure for awarding 
compensation to trustees and to professionals employed under section 327 
or 1103. Applications that contain the information requested in these 
Guidelines will facilitate review by the Court, the parties, and the 
United States Trustee.
    (6) Fee applications submitted by trustees are subject to the same 
standard of review as are applications of other professionals and will 
be evaluated according to the principles articulated in these 
Guidelines. Each United States Trustee should establish whether and to 
what extent trustees can deviate from the format specified in these 
Guidelines without substantially affecting the ability of the United 
States Trustee to review and comment on their fee applications in a 
manner consistent with the requirements of the law.
    (b) Contents of Applications for Compensation and Reimbursement of 
Expenses. All applications should include sufficient detail to 
demonstrate compliance with the standards set forth in 11 U.S.C. 
Sec. 330. The fee application should also contain sufficient information 
about the case and the applicant so that the Court, the creditors, and 
the United States Trustee can review it without searching for relevant 
information in other documents. The following will facilitate review of 
the application.
    (1) Information about the Applicant and the Application. The 
following information should be provided in every fee application:
    (i) Date the bankruptcy petition was filed, date of the order 
approving employment, identity of the party represented, date services 
commenced, and whether the applicant is seeking compensation under a 
provision of the Bankruptcy Code other than section 330.
    (ii) Terms and conditions of employment and compensation, source of 
compensation, existence and terms controlling use of a retainer, and any 
budgetary or other limitations on fees.
    (iii) Names and hourly rates of all applicant's professionals and 
paraprofessionals who billed time, explanation of any changes in hourly 
rates from those previously charged, and statement of whether the 
compensation is based on the customary compensation charged by 
comparably skilled practitioners in cases other than cases under title 
11.
    (iv) Whether the application is interim or final, and the dates of 
previous orders on interim compensation or reimbursement of expenses 
along with the amounts requested and the amounts allowed or disallowed, 
amounts of all previous payments, and amount of any allowed fees and 
expenses remaining unpaid.
    (v) Whether the person on whose behalf the applicant is employed has 
been given the opportunity to review the application and whether that 
person has approved the requested amount.
    (vi) When an application is filed less than 120 days after the order 
for relief or after a prior application to the Court, the date and terms 
of the order allowing leave to file at shortened intervals.
    (vii) Time period of the services or expenses covered by the 
application.
    (2) Case Status. The following information should be provided to the 
extent that it is known to or can be reasonably ascertained by the 
applicant:
    (i) In a chapter 7 case, a summary of the administration of the case 
including all moneys received and disbursed in the case, when the case 
is expected to close, and, if applicant is seeking an interim award, 
whether it is feasible to make an interim distribution to creditors 
without prejudicing the rights of any creditor holding a claim of equal 
or higher priority.
    (ii) In a chapter 11 case, whether a plan and disclosure statement 
have been filed and, if not yet filed, when the plan and disclosure 
statement are expected to be filed; whether all quarterly fees have been 
paid to the United States Trustee; and whether all monthly operating 
reports have been filed.
    (iii) In every case, the amount of cash on hand or on deposit, the 
amount and nature of accrued unpaid administrative expenses, and

[[Page 140]]

the amount of unencumbered funds in the estate.
    (iv) Any material changes in the status of the case that occur after 
the filing of the fee application should be raised, orally or in 
writing, at the hearing on the application or, if a hearing is not 
required, prior to the expiration of the time period for objection.
    (3) Summary Sheet. All applications should contain a summary or 
cover sheet that provides a synopsis of the following information:
    (i) Total compensation and expenses requested and any amount(s) 
previously requested;
    (ii) Total compensation and expenses previously awarded by the 
court;
    (iii) Name and applicable billing rate for each person who billed 
time during the period, and date of bar admission for each attorney;
    (iv) Total hours billed and total amount of billing for each person 
who billed time during billing period; and
    (v) Computation of blended hourly rate for persons who billed time 
during period, excluding paralegal or other paraprofessional time.
    (4) Project Billing Format. (i) To facilitate effective review of 
the application, all time and service entries should be arranged by 
project categories. The project categories set forth in exhibit A should 
be used to the extent applicable. A separate project category should be 
used for administrative matters and, if payment is requested, for fee 
application preparation.
    (ii) The United States Trustee has discretion to determine that the 
project billing format is not necessary in a particular case or in a 
particular class of cases. Applicants should be encouraged to consult 
with the United States Trustee if there is a question as to the need for 
project billing in any particular case.
    (iii) Each project category should contain a narrative summary of 
the following information:
    (A) a description of the project, its necessity and benefit to the 
estate, and the status of the project including all pending litigation 
for which compensation and reimbursement are requested;
    (B) identification of each person providing services on the project; 
and
    (C) a statement of the number of hours spent and the amount of 
compensation requested for each professional and paraprofessional on the 
project.
    (iv) Time and service entries are to be reported in chronological 
order under the appropriate project category.
    (v) Time entries should be kept contemporaneously with the services 
rendered in time periods of tenths of an hour. Services should be noted 
in detail and not combined or ``lumped'' together, with each service 
showing a separate time entry; however, tasks performed in a project 
which total a de minimis amount of time can be combined or lumped 
together if they do not exceed .5 hours on a daily aggregate. Time 
entries for telephone calls, letters, and other communications should 
give sufficient detail to identify the parties to and the nature of the 
communication. Time entries for court hearings and conferences should 
identify the subject of the hearing or conference. If more than one 
professional from the applicant firm attends a hearing or conference, 
the applicant should explain the need for multiple attendees.
    (5) Reimbursement for Actual, Necessary Expenses. Any expense for 
which reimbursement is sought must be actual and necessary and supported 
by documentation as appropriate. Factors relevant to a determination 
that the expense is proper include the following:
    (i) Whether the expense is reasonable and economical. For example, 
first class and other luxurious travel mode or accommodations will 
normally be objectionable.
    (ii) Whether the requested expenses are customarily charged to non-
bankruptcy clients of the applicant.
    (iii) Whether applicant has provided a detailed itemization of all 
expenses including the date incurred, description of expense (e.g., type 
of travel, type of fare, rate, destination), method of computation, and, 
where relevant, name of the person incurring the expense and purpose of 
the expense. Itemized expenses should be identified by their nature 
(e.g., long distance telephone, copy costs, messengers, computer 
research, airline travel, etc,) and by the month incurred. Unusual items 
require more detailed explanations and should be allocated, where 
practicable, to specific projects.
    (iv) Whether applicant has prorated expenses where appropriate 
between the estate and other cases (e.g., travel expenses applicable to 
more than one case) and has adequately explained the basis for any such 
proration.
    (v) Whether expenses incurred by the applicant to third parties are 
limited to the actual amounts billed to, or paid by, the applicant on 
behalf of the estate.
    (vi) Whether applicant can demonstrate that the amount requested for 
expenses incurred in-house reflect the actual cost of such expenses to 
the applicant. The United States Trustee may establish an objection 
ceiling for any in-house expenses that are routinely incurred and for 
which the actual cost cannot easily be determined by most professionals 
(e.g., photocopies, facsimile charges, and mileage).

[[Page 141]]

    (vii) Whether the expenses appear to be in the nature 
nonreimbursable overhead. Overhead consists of all continuous 
administrative or general costs incident to the operation of the 
applicant's office and not particularly attributable to an individual 
client or case. Overhead includes, but is not limited to, word 
processing, proofreading, secretarial and other clerical services, rent, 
utilities, office equipment and furnishings, insurance, taxes, local 
telephones and monthly car phone charges, lighting, heating and cooling, 
and library and publication charges.
    (viii) Whether applicant has adhered to allowable rates for expenses 
as fixed by local rule or order of the Court.

                      Exhibit A--Project Categories

    Here is a list of suggested project categories for use in most 
bankruptcy cases. Only one category should be used for a given activity. 
Professionals should make their best effort to be consistent in their 
use of categories, whether within a particular firm or by different 
firms working on the same case. It would be appropriate for all 
professionals to discuss the categories in advance and agree generally 
on how activities will be categorized. This list is not exclusive. The 
application may contain additional categories as the case requires. They 
are generally more applicable to attorneys in chapter 7 and chapter 11, 
but may be used by all professionals as appropriate.
    Asset Analysis and Recovery: Identification and review of potential 
assets including causes of action and non-litigation recoveries.
    Asset Disposition: Sales, leases (Sec. 365 matters), abandonment and 
related transaction work.
    Business Operations: Issues related to debtor-in-possession 
operating in chapter 11 such as employee, vendor, tenant issues and 
other similar problems.
    Case Administration: Coordination and compliance activities, 
including preparation of statement of financial affairs; schedules; list 
of contracts; United States Trustee interim statements and operating 
reports; contacts with the United States Trustee; general creditor 
inquiries.
    Claims Administration and Objections: Specific claim inquiries; bar 
date motions; analyses, objections and allowances of claims.
    Employee Benefits/Pensions: Review issues such as severance, 
retention, 401K coverage and continuance of pension plan.
    Fee/Employment Applicants: Preparation of employment and fee 
applications for self or others; motions to establish interim 
procedures.
    Fee/Employment Objections: Review of and objections to the 
employment and fee applications of others.
    Financing: Matters under Secs. 361, 363 and 364 including cash 
collateral and secured claims; loan document analysis.
    Litigation: There should be a separate category established for each 
matter (e.g., XYZ Litigation).
    Meetings of Creditors: Preparing for and attending the conference of 
creditors, the Sec. 341(a) meeting and other creditors' committee 
meetings.
    Plan and Disclosure Statement: Formulation, presentation and 
confirmation; compliance with the plan confirmation order, related 
orders and rules; disbursement and case closing activities, except those 
related to the allowance and objections to allowance of claims.
    Relief From Stay Proceedings: Matters relating to termination or 
continuation of automatic stay under Sec. 362.
    The following categories are generally more applicable to 
accountants and financial advisors, but may be used by all professionals 
as appropriate.
    Accounting/Auditing: Activities related to maintaining and auditing 
books of account, preparation of financial statements and account 
analysis.
    Business Analysis: Preparation and review of company business plan; 
development and review of strategies; preparation and review of cash 
flow forecasts and feasibility studies.
    Corporate Finance: Review financial aspects of potential mergers, 
acquisitions and disposition of company or subsidiaries.
    Data Analysis: Management information systems review, installation 
and analysis, construction, maintenance and reporting of significant 
case financial data, lease rejection, claims, etc.
    Litigation Consulting: Providing consulting and expert witness 
services relating to various bankruptcy matters such as insolvency, 
feasibility, avoiding actions, forensic accounting, etc.
    Reconstruction Accounting: Reconstructing books and records from 
past transactions and bringing accounting current.
    Tax Issues: Analysis of tax issues and preparation of state and 
federal tax returns.
    Valuation: Appraise or review appraisals of assets.

[61 FR 24890, May 17, 1996]