Case No. 02-802474 (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division.
January 25, 2002
ADMINISTRATIVE ORDER PURSUANT TO 11 U.S.C. § 105(a) AND 331 ESTABLISHING PROCEDURES FOR INTERIM COMPENSATION AND REIMBURSEMENT OF EXPENSES OF PROFESSIONALS
SUSAN PIERSON SONDERBY, Chief United States Bankruptcy Judge
Upon the motion dated January 22, 2002 (the “Motion”), wherein Kmart Corporation (“Kmart”) and 37 of its domestic subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”), moved this Court for entry of an order, pursuant to sections 105(a) and 331 of the Bankruptcy Code, establishing procedures for interim compensation and reimbursement of expenses of professionals specifically retained by order of this Court; it appearing to the Court that (i) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. § 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (iii) the relief requested in the Motion is in the best interests of the Debtors, their estates and their creditors; (iv) proper and adequate notice of the Motion and the hearing thereon has been given and that no other or further notice is necessary; (v) upon the record herein after due deliberation thereon, that the relief should be granted as set forth below,
1. Except as may otherwise be provided in Court orders authorizing the retention of specific professionals, all professionals in these cases may seek interim compensation in accordance with the following procedure:
a. On or before the last day of each month following the month for which compensation is sought (the “Monthly Statement Date”), each professional will submit a monthly statement to: (i) the Debtors at Kmart Corporation, 3100 West Big Beaver Road, Troy, MI 48084-3163 (Attn: Janet Kelley, Senior Vice President General Counsel); (ii) counsel to the Debtors, Skadden, Arps, Slate, Meagher Horn (Illinois), 333 West Wacker Drive, Suite 2100, Chicago, Illinois 60606 (Attn; John Win. Butler, Jr.); (iii) counsel to the administrative agents for Debtors’ postpetition lenders, Morgan Lewis Bockius, 101 Park Avenue, New York, New York 10178 (Attn: Robert II. Scheibe and Jay Teitelbaum) and Katten Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661 (Attn: Jeff Marwil and Brian Swett); (iv) counsel to any official committee appointed in these cases (who shall serve a notice of appearance on the Master Service List promptly after its retention); and (v) the United States Trustee, U.S. Trustee, Region 11, Northern District of Illinois, 227 West Monroe Street, Suite 3350, Chicago, IL 60606. Each such person receiving such a statement will have twenty (20) days after the Monthly Statement Date to review the statement.
b. At the expiration of the twenty (20) day period, the Debtors shall promptly pay ninety percent (90%) of the fees and one hundred percent (100%) of the disbursements identified in each monthly statement, except such fees or disbursements as to which an objection has been served as provided in paragraph (c) below. Any professional who fails to submit a monthly statement shall be ineligible to receive further payment of fees and expenses as provided herein until such time as the monthly statement is submitted. The first statements shall be submitted and served by each of the professionals by March 29, 2002 and shall cover the period from the commencement of this case through February 28, 2002;
c. In the event that any of the Debtors, the United States Trustee, the Debtors’ postpetition lenders or the Committee has an objection to the compensation or reimbursement sought in a particular statement, such party shall, within twenty (20) days of the Monthly Statement Date, serve upon the respective professional and the other persons designated to receive monthly statements, a written “Notice of Objection to Fee Statement” setting forth the precise nature of the objection and the amount at issue. Thereafter, the objecting party and the Professional whose statement is objected to shall attempt to reach an agreement regarding the correct payment to be made. If the parties are unable to reach an agreement on the objection within twenty (20) days after receipt of such objection, the objecting party may file its objection with the Court and serve such objection on the respective professional and the other parties designated to receive monthly statements parties listed above and the Court shall consider and dispose of the objection at the next interim fee application hearing. The Debtors will be required to pay promptly those fees and disbursements that are not the subject of a Notice of Objection to Fee Statement.
d. Approximately every four (4) months, each of the Professionals shall file with the Court and serve on the parties designated to receive monthly statements, on or before the 45th day following the last day of the compensation period for which compensation is sought, an application for interim Court approval and allowance, pursuant to section 331 of the Bankruptcy Code, of the compensation and reimbursement of expenses requested for the prior four (4) months. The first such application shall be filed on or before June 17, 2002 and shall cover the period from the commencement of these cases trough April 30, 2002. Any professional who rails to file an application when due shall be ineligible to receive further interim payments of fees or expenses as provided herein until such time as the application is submitted,
e. The pendency of an application or a court order for payment of compensation or reimbursement of expenses, and the pendency of any Notice of Objection to Fee Statement or other objection, shall not disqualify a Professional from the future payment or compensation or reimbursement of expenses as set forth above. Neither the payment of; nor the failure to pay, in whole or in part, monthly interim compensation and reimbursement as provided herein shall bind any party-in-interest or this Court with respect to the allowance of applications for compensation and reimbursement of Professionals.
f. Each member of the Committee in this case shall be permitted to submit statements of expenses and supporting vouchers to counsel for the Committee who shall collect and submit such requests for reimbursement in accordance with the foregoing procedure for monthly and interim compensation and reimbursement of Professionals.