Case No. 02-B02474, Jointly AdministeredUnited States Bankruptcy Court, N.D. Illinois, Eastern Division
February 12, 2002
ORDER PURSUANT TO 11 U.S.C. § 105(a), 327(a) AND 331 AUTHORIZING RETENTION OF PROFESSIONALS UTILIZED BY DEBTORS IN THE ORDINARY COURSE OF BUSINESS
SUSAN PIERSON SONDERBY, Chief United States Bankruptcy Judge
Upon the motion dated January 22, 2002 (the “Motion”), wherein Kmart Corporation (“Kmart”) and certain of its domestic subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors” or the “Company”), moved this Court for entry of an order, pursuant to sections 105(a), 327(a) and 331 authorizing (i) the retention of professionals utilized by the Debtors in the ordinary course of business and (ii) payment of interim compensation and reimbursement of expenses in the manner customarily made to such ordinary course professionals by the Debtors upon submission to the Debtors of detailed invoices in the ordinary course of business; and upon the Affidavit of Charles C. Conaway in Support of Chapter 11 Petitions and First Day Orders; and it appearing that the employment of such ordinary course professionals is in the best interests of the Debtors’ respective estates, creditors, and other parties-in-interest; and it further appearing that proper and adequate notice having been given and that no other or further notice is necessary; and upon the record herein; and after due deliberation thereon, and it appearing to the Court that the relief should be granted as set forth below,
1, The Debtors be, and each of them hereby is, authorized and empowered to employ and retain, pursuant to 11 U.S.C. § 105(a) and 327, all attorneys, accountants, and other professionals to represent them in matters arising in the ordinary course of business (the “Ordinary Course Professionals”), the current list of which appears on Exhibit 1 attached hereto, which list may be supplemented by filing a supplement with the Court and serving such supplement on the parties listed in this paragraph, without the need for any further hearing or notice to any other party, and without the need to file individual retention applications. Any and all supplements to Exhibit 1 shall be served on (a) the Office of the United States Trustee, 227 West Monroe Street, Suite 3350, Chicago, Illinois 60606 (Attn: Kathryn M. Gleason), (b) counsel to the administrative agents for the Debtors’ postpetition lenders, Morgan Lewis Bockius, 101 Park Avenue, New York, New York 10178 (Attn: Robert H. Scheibe and Jay Teitelbaum), and Katten Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661 (Attn: Jeff Marwil and Brian Swett), (c) counsel to the Debtors’ prepetition lenders, Simpson Thatcher Bartlett, 425 Lexington Avenue, New York, New York 10017 (Ann: Peter V. Pantaleo), (d) counsel for the Official Unsecured Creditors’ Committee, Otterbourg, Steindler, Houston Rosen PC, 230 Park Avenue, 29th Floor, New York N.Y. 10169 (Attn: Glenn B. Rice and Scott Hazan), and Winston Strawn, 35 West Wacker Drive, 40th Floor, Chicago IL 60601 (Attn: Matthew J. Botica), and (e) counsel for the Official Financial Institutions’ Committee, Jones Day Reavis
Pogue, North Point 901 Lakeside Avenue, Cleveland OH 44114 (Attn: Richard Cieri and Ray C. Schrock), and Jones Day Reavis Pogue, 77 West Wacker Drive, Chicago IL 60601 (Attn: Paul E. Homer and Ray C. Schrock).
2. The Debtors be, and each of them hereby is, authorized and empowered to make monthly payments of up to $25,000 for compensation and reimbursement of expenses to each of the Ordinary Course Professionals in the manner customarily made by the Debtors in the full amount billed by any such Professional, upon receipt therefrom of reasonably detailed invoices indicating the nature of the services rendered and calculated in accordance with such Professional’s standard billing practices.(without prejudice to the Debtors’ normal right to dispute any such invoices),provided, however that compensation paid to an Ordinary Course Professional shall not be final until the retention of such Professional is authorized as a final matter pursuant to the provisions below; andprovided further that the aggregate compensation paid to Ordinary Course Professionals shall not exceed $100,000,000 annually without prejudice to the Debtors’ right to request an increase in such amount.
3. Except as provided in paragraphs 5 and 6, payments to an Ordinary Course Professional shall be subject to the approval of the Court in accordance with 11 U.S.C. § 330 and 331 if payments to such Professional exceed $25,000 in any one month,
4. The following Ordinary Course Professionals are designated key Ordinary Course Professionals: Foley Lardner, Howard Howard, Dickinson Wright, and PricewaterhouseCoopers, LLC (“Key Ordinary Course Professionals”). To the extent that a Key Ordinary Course Professional exceeds the $25,000 monthly limit, it shall, on or before the 30th day of the month following the month for which compensation is sought (the “Monthly Statement Date”), submit a monthly statement for the additional compensation to: (a) the Debtors at Kmart Corporation, Kmart Resource Center, 3100 West Big Beaver Road, Troy, Michigan 48084-3163 (Attn: Janet Kelley); (b) the Office of the United States Trustee, 227 West Monroe Street, Suite 3350, Chicago, Illinois 60606 (Attn: Kathryn M. Gleason); (c) counsel to the Debtors, Skadden, Arps, Slate, Meagher Flom (Illinois), 333 West Wacker Drive, Suite 2100, Chicago, Illinois 60606 (Attn: John Wm. Butler, Jr.); (d) counsel to the administrative agents for the Debtor’s postpetition lenders, Morgan Lewis Bockius, 101 Park Avenue, New York, New York 10178 (Attn: Robert H. Scheibe and Jay Teitelbaum) and Katten Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661 (Attn: Jeff Marwil and Brian Sweet); (e) counsel to the Debtors’ prepetition lenders, Simpson Thatcher
Bartlett, 425 Lexington Avenue, New York, New York 10017 (Attn: Peter v. Pantaleo); (f) counsel for the Official Unsecured Creditors’ Committee, Otterbourg, Steindler, Houston Rosen PC, 230 Park Avenue, 29th Floor, New York N.Y. 10169 (Attn: Glenn B. Rice and Scott Hazan), and Winston Strawn, 35 West Wacker Drive, 40th Floor, Chicago IL 60601 (Attn: Matthew J. Botica); and (g) counsel for the Official Financial Institutions’ Committee, Jones Day Reavis Pogue, North Point, 901 Lakeside Avenue, Cleveland OH 44114 (Attn: Richard Cieri and Ray C. Sobrock), and Jones Day Reavis Pogue, 77 West Wacker Drive, Chicago IL 60601 (Attn: Paul E. Harner and Ray C. Schrock) (collectively, the “Interested Parties”).
5. The Interested Parties will have twenty (20) days after the Monthly Statement Date to review the statement for the additional compensation and object to the fees requested by a Key Ordinary Course Professional. If any of the Interested Parties objects to the payment of fees to a Key Ordinary Course Professional, then that Key Ordinary Course Professional will be required to submit a formal application to the Court for the additional compensation.
6. Approximately every 120 days, the Debtors shall file a statement with the Court and serve such statement on the interested Parties that includes the following information for each Ordinary Course Professional: (a) the name of such Ordinary Course Professional; (b) the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by such Ordinary Course Professional during the previous 120 days; and (c) a general description of the services rendered by each Ordinary Course Professional.
7. No later than 20 days after the entry of this Order, each Ordinary Course Professional that is an attorney shall file with the Court, and serve on the Interested Parties a verified statement pursuant to Bankruptcy Rule 2014, substantially in the form of the statement attached as Exhibit 2 hereto (the “Disclosure Statement”), including an explanation of prepetition services rendered, and postpetition services to be provided, to the Debtors.
8. The Debtors are authorized to employ and retain additional Ordinary Course Professionals needed by the Debtors in the ordinary course of their business (“Additional Ordinary Course Professionals”) (a) without the need to file individual retention applications and (b) without the need for any further hearing or notice to any other party, by filing with the Court a supplement (the “Supplement”) to Exhibit 1 listing the name and estimated monthly fee of the Additional Ordinary Course Professional, along with a brief description of the services to be rendered and by otherwise complying with the terms of this Order. For the purposes of complying with the Disclosure Statement requirement above, the 20-day requirement for the Additional Ordinary Course Professionals who are attorneys will run from the Debtors’ filing of the Supplement with the Court.
9. The Interested Parties shall have 20 days after receipt of each Ordinary Course Professional’s Affidavit (the “Objection Deadline”) to object to the retention of such Ordinary Course Professional. Such objections shall be served upon the Ordinary Course Professional and the other Interested Parties on or before the Objection Deadline. If any such objection cannot be resolved within 20 days, the matter shall be scheduled for hearing before the Court at the next regularly-scheduled omnibus hearing or date otherwise agreeable to the Ordinary Course Professional and the Interested Party that objected to the retention of the Ordinary Course Professional. If no objection is submitted on or before the Objection Deadline, or if any objection submitted is timely resolved as set forth above, the Debtors shall be authorized, without further order of the Court, to retain such Professional as a final matter.
Exhibit 1
Exhibit 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
In re: ) Case No, 02-__________) (Jointly Administered) KMART CORPORATION et al, ) Chapter 11) Hon. _____________ )
Debtors. )
AFFIDAVIT OF ORDINARY COURSE PROFESSIONAL
STATE OF ___________ )) ss: COUNTY OF __________ )
__________ being duly sworn, deposes and says:
1. I am a principal of _________ (“_”). which firm maintains offices at ____________.
2. Neither I, “__”, nor any partner, auditor or other member thereof, insofar as I have been able to ascertain, has any connection with the above-captioned debtors and debtors-in-possession (the “Debtors”), their creditors, or any other party in interest, or their attorneys, except as set forth in this affidavit.
3. “___” has represented and advised the Debtors in _____________ with respect to a broad range of aspects of the Debtors’ businesses.
4. The Debtors have requested, and “__” has agreed, to continue to represent and advise the Debtors pursuant to section 327(e) of the title 11 of the United States Code, 11 U.S.C. § 101, et seq. (the “Bankruptcy Code”) with respect to such matters. Additionally, the Debtors have requested, and “___” proposes, to render the following services to the Debtors: [INSERT SERVICES]
5. “___”s current fees arrangement is _______________
6. As of the Debtors’ Petition Date, the Debtors owe”_____” $_____ for prepetition services.
7. As of the Petition Date,”___”[was/was not] party to an agreement that provides for indemnification. [A copy of such agreement, if any, is attached as an exhibit to this Affidavit].
8. “___” has no agreement with any entity to share with such entity any compensation received by”___”.
9. “___” and its partners, auditors and other members may have in the past represented, currently represent, and may in the future represent entities that are claimants of the Debtors in matters totally unrelated to these pending chapter 11 cases. “__” does not and will not represent any such entity in connection with these pending chapter 11 cases and does not have any relationship with any such entity, attorneys, or accountants that would be adverse to the Debtors or their estates.
10. Neither I, “___”, nor any partner, auditor or other member thereof, insofar as I have been able to ascertain, holds or represents any interest adverse to the Debtors, or their estates in the matters upon which “___” is to be engaged.
11. The foregoing constitutes the statement of “___” pursuant to sections 329 and 504 of the Bankruptcy Code and Bankruptcy Rules 2014 and 2016(b).
FURTHER AFFIANT SAYETH NOT __________________________
Subscribed and sworn before me this __th day of [ ], 2002
__________________________ Notary Public