The assigned Trustee for the Northern Berkshire Health Care Bankruptcy case seeks to recover over $1 Million in attorney fees for the liquidation of assets of the estate. Although over $10 Million was collected in this case, there were over $35 million in secured debts. It begs the question of what parties are ultimately benefiting from a liquidation of the estate. Most Chapter 7 cases result in a report of no asset distribution by the Trustee. Which means there is no benefit to the estate in pursuing any liquidation. The adversarial process give the trustee power to recover attorney fees for cases in which it would be a benefit to the estate to liquidate assets.
In certain cases, it may be argued that the Trustee simply runs up their attorney fees in the hopes of assets being present in the case. In many case, unnecessary document requests and further examinations are done by the Trustee for no other reason than to run up Trustee fees in the hopes of possible recovery. This results in less money going to the creditors, more money in the Trustee’s pocket and hardship for the Debtor.
” NORTH ADAMS >> The trustee overseeing the bankruptcy of Northern Berkshire Healthcare so far has recovered roughly $10 million against more than $35 million in secured debt, according to filings at the U.S. Bankruptcy Court.
The collections were included in documents filed by bankruptcy trustee Harold Murphy, and his company, Murphy & King, who are seeking compensation for their work on administering the bankruptcy process on behalf of the court.
The trustee is seeking, including expenses, fees and commission, more than $1 million for the work completed since the March 28 closing of the North Adams Regional Hospital and the subsequent filing for Chapter 7 bankruptcy by its parent company, Northern Berkshire Healthcare.
The hospital closed with three days notice March 28, giving 530 employees little time to prepare for the loss of their jobs, and patients little time to seek medical services elsewhere. In August, the former NARH facility and assets were sold for $4 million to Berkshire Medical Center with the approval of the bankruptcy court.
In secured debt, the filing shows that NBH owed Wells Fargo Bank $33.9 million, Adams Community Bank $430,000, and the Pension Benefit Guarantee Corp. $593,000. The city of North Adams also is owed $147,000 for property taxes, water and sewer fees and other charges.
The trustee was able to secure $10 million to put up against the debt through the sale of the hospital and other assets, as well as through the collection of monies owed to the hospital by health insurance providers and others.
AdvertisementOf the $1 million sought by the trustee, $689,747 is sought for fees, $46,469 for expenses, and $300,000 in commission. The commission amount is set by federal law, and it is normal procedure for the bankruptcy court to review payments sought for a bankruptcy trustee’s services.
The trustee also is seeking $108,510 in fees and more than $5,000 in expenses for accounting services provided by Verdolino & Lowey.
The court has set a hearing for the motion at 11:30 a.m. Dec. 18 at the federal court in Worcester.
The hourly charges for attorneys and paralegals working on the case, the filings show, range from $225 per hour to $635 per hour. In all, 13 attorneys and paralegals working on behalf of the bankruptcy trustee logged more than 1,590 hours between April and October.
In the more than 100 pages of filings, the trustee catalogs every expense incurred as well as meetings and phone calls — and their duration — conducted on behalf of the case by attorneys and paralegals.
Work done by the trustee and those working on his behalf from April through October falls into several categories, including Cash Collateral and Financing; Lease and Use of Debtors’ Premises; Sale of Debtors’ Assets; Litigation and Asset Recovery; Employee Matters; Disposition of Debtors’ Books and Records and Medical Records Issues; National Labor Relations Board and Attorney General Actions; Retention Issues and Fee Applications; Claims Objections; and Reconciliation and Distribution.
According to the filings, two unions representing some of the former NARH employees filed claims as a result of the sudden hospital closure, and the National Labor Relations Board filed an action alleging violations of law due to the failure of the company to negotiate with the unions prior to closure.
In June, the pleadings show that the bankruptcy trustee received a civil investigative demand from Attorney General Martha Coakley’s office seeking documents relating to NBH’s compliance with regulations, financial condition, contemplation of bankruptcy and communications between board members, management and third-parties. Murphy & King presented the attorney general a 17,400-page report in early August.
