IN MATTER OF KLOIAN (Bankr.E.D.Mich. 4-25-2008)

IN THE MATTER OF: JOSEPH EDWARD KLOIAN, Chapter 7, Debtor.

Case No: 99-51514-WS.United States Bankruptcy Court, E.D. Michigan, Southern Division.
April 25, 2008

CASE MANAGEMENT ORDER ARISING OUT OF THE HEARING ON THE RENEWED APPLICATION OF TRUSTEE TO ABANDON ESTATE’S INTEREST IN FINANCIAL ASSOCIATES OF AMERICA, LTD., AND RELATED HEARINGS
WALTER SHAPERO, Bankruptcy Judge

The Court having held a hearing on January 24, 2008, relative to the Renewed Application Of Trustee To Abandon Estate’s Interest In Financial Associates of America, Ltd.; it appearing to the Court that prior to approving any abandonment of estate property, a determination must be made regarding the character and amounts of all claims in this matter; to accomplish this, the Court has determined that a Case Management Order relative to the administration of the remaining issues and claims in this matter is appropriate; and, the Court having held hearings relative to the form and substance of this Order; the Court being advised by the Trustee and other parties as follows:

The identity, character and amount of the remaining claims are substantially as
follows:[1]
a. Van Fossen

Principal Interest Claimed Per Diem Estimated Total

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$1,678,415.65 $608,927.76 as of 01/24/08 $621.19
$2,290,449.20
(pre-petition claim)
(subject to possible adjustment in respect to the Weber set-off)

b. IRS

Principal Interest Estimated Total

$24,628.00 102 months @ 5.01% $35,115.00
$10,487.00
(pre-petition claim)

c. Peter Kelley (Claim Disputed)

Principal Interest Estimated Total

$52,040.00 (pre- $23,464.00 $75,504.00
petition claim)

$58,624.80 (post- N/A[2] $58,624.80
petition fee claim)

d. Fees claimed by Plunkett Cooney in defense of malpractice claim (claim
disputed)

Principal Interest Estimated Total

$107,019.24 N/A[2] $107,019.24
(post-petition claim)

e. Estimated remaining administrative fees and expenses (depending on course
of ongoing administration)

$200,000.00

[1] For the pre-petition claims of the IRS and Peter
Kelley, the Court is informed that interest cannot be calculated with
any certainty at this time as the guidelines of the Office of the U.S.
Trustee provide for the calculation of interest on claims which are paid
100% as of the date of payment of same. As it is unclear when payment
will actually occur, interest can be estimated only generally and without
compounding same. However, the rate assigned for cases filed as of the
date of the Debtor’s bankruptcy is 5.01%.

[2] It has not been determined whether interest
is to be allowed on the post-petition fee claims and thus is not included
here.

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The Court operating and proceeding on the likely premise (given the foregoing) that the assets of the bankruptcy estate currently held by the Trustee may well be in excess of what is necessary to make payment in full of the remaining prepetition and post petition claims and expenses of administration, thus making inappropriate, at least at this point and as long as said premise appears substantially correct, the pursuing of efforts to obtain additional assets for the estate;

(A.) IT IS ORDERED that on or before May 9, 2008, the Trustee shall prepare and file with the Court, a statement of all claims which are not disputed or are otherwise liquidated sufficient to allow payment thereon. Any party in interest may object to the Trustee’s designation within ten (10) days of the date of the filing of such designation by the Trustee. A hearing on such objection shall be held on June 11, 2008, at 1:30 p.m. At such hearing, the objecting party shall submit its proofs in support of its objections to the Trustee’s designation.

(B.) IT IS FURTHER ORDERED that with respect to the claims for post-petition fees for Peter Kelley and Plunkett Cooney incurred in defense of the malpractice claim, briefs having been submitted and the matter appearing ripe for an evidentiary hearing and decision, an evidentiary hearing shall be held on June 24, 2008, at 9:30 a.m., to consider the allowance of such claims and the source of payment of same. No discovery is allowed prior to said hearing, (unless voluntarily agreed to by the directly affected parties), though the Court reserves the right to permit same thereafter if it deems it appropriate to proper disposition.

(C.) IT IS FURTHER ORDERED an evidentiary hearing shall be held on July 23, 2008, at 9:30 a.m., relative to Peter Kelley’s pre-petition claim. The said hearing will be conducted in accordance with the terms, conditions and limitations set forth in this Court’s April 16, 2007, opinion and as otherwise hereinafter set forth; and no discovery is permitted, unless voluntarily agreed to by the directly affected parties; with reference to said hearing, the proofs to be offered by Kelley as to his claim for fees and matters related thereto, shall be considered by the Court as being described in, and shall be limited to, what is set forth in the submitted Joint Final Pretrial Order filed by Kelley on May 4, 2005, in the case captioned Peter J. Kelley vs. Basil T. Simon, Trustee for JosephEdward Kloian, Adversary Proceeding Number 00-4746, the same being docket #79; including, the Issues of

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Fact to be litigated, Witness/Exhibits for Peter J. Kelley; Expert Witnesses, List of Kelley’s Exhibits and Potential Exhibits; Statement of Damages; and attached Cases Work Performed exhibit thereto, including time sheets, etc.

(D.) IT IS FURTHER ORDERED that all proceedings relating to Financial Associates of America, Ltd. are hereby suspended until further order of the Court.

(E.) IT IS FURTHER ORDERED that all final applications for payment of administrative fees and expenses shall be filed within 30 days after the later of (i) the entry of a final order by this Court disposing of the claims of Peter Kelley and Plunkett Cooney, or (ii) the entry of a final order of any Court to which an appeal of this Court’s decision relative to the allowance or disallowance of the claims is taken.

(F.) IT IS FURTHER ORDERED, and the parties are advised, that the Court is declining, at least at this time, to enter its circulated proposed order granting Debtor permission for limited participation in selected matters; primarily because the Court has accelerated its schedule for disposition of the Debtor’s competency issue.

(G.) IT IS FURTHER ORDERED, that consistent with the foregoing, the Trustee shall continue proceeding with the administration of the estate with a view to completing it as soon as possible.

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