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2024-08-21 Interim Comp & Reimbursment (Doc 50)Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 1 of 9 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SilverRock Development, LLC et al.,1 Debtors. Chapter 11 Case No. 24-1647 (MFW) (Jointly Administered) Hearing Date: September 11, 2024 Obj. Deadline: September 4, 2024 DEBTORS' MOTION FOR ENTRY OF AN ORDER (I) ESTABLISHING PROCEDURES FOR INTERIM COMPENSATION AND REIMBURSEMENT OF PROFESSIONALS; AND (II) GRANTING RELATED RELIEF The Debtors in the above -captioned chapter 11 cases, by and through their undersigned proposed counsel, hereby submit this motion (the "Motion") for the entry of an order, substantially in the form attached hereto as Exhibit A (the "Proposed Order"), pursuant to sections 105(a) and 331 of title 11 of the United States Code, as amended (the "Bankruptcy Code"), rule 2016(a) of th e Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and rule 2016-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the "Local Rules"), establishing procedures for interim compensation and reimbursement of expenses of professionals in these chapter 11 cases. In support of this Motion, the Debtors respectfully represent as follows: I. JURISDICTION AND VENUE 1. The Court has jurisdiction to consider this Motion under 28 U.S.C. §§ 157 and 1334(b), and the Amended Standing Order of Reference from the United States District Court for The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 1 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 2 of 9 the District of Delaware, dated February 29, 2012. Venue of these chapter 11 cases and this Motion in this district is proper under 28 U.S.C. §§ 1408 and 1409. This Motion is a core proceeding pursuant to 28 U.S.C. § 157(b). 2. Pursuant to Local Rule 9013-1(f), the Debtors consent to the entry of a final order or judgment by the Court in connection with this Motion if it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. 3. The statutory bases for the relief requested herein are sections 105(a) and 331 of the Bankruptcy Code, Bankruptcy Rule 2016(a), and Local Rule 2016-2. II. RELIEF REQUESTED 4. By this Motion, the Debtors request entry of the Proposed Order, substantially in the form attached hereto as Exhibit A, authorizing and establishing procedures for the compensation and reimbursement of the Professionals (as defined below) on a monthly basis, comparable to those procedures established in other chapter 11 cases filed in the District of Delaware. The Debtors submit that entry of such an order would, among other things, enable the Court, the Office of the United States Trustee for the District of Delaware (the "U.S. Trustee"), and all other interested parties to monitor the fees and expenses incurred by the Professionals in connection with the rendering of services in these chapter 11 cases. III. BACKGROUND A. General 5. On August 5, 2024 (the "Petition Date"), each Debtors filed voluntary petitions for relief pursuant to chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. These chapter 11 cases are being jointly administered for procedural 2 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 3 of 9 purposes only pursuant to Bankruptcy Rule 1015(b). No request for the appointment of a trustee or examiner has been made in these chapter 11 cases, and no official committee of unsecured creditors has been appointed in these chapter 11 cases. 6. Additional factual background regarding the Debtors, including their business operations, their corporate and capital structure, and the events leading to the filing of these chapter 11 cases, is set forth in detail in the Declaration of Robert S. Green, Chief Executive Officer of the Debtors' Manager, in Support of the Debtors' Chapter 11 Petitions and First Day Motions (the "First Day Declaration") [Docket No. 13].2 B. Retention of Professionals 7. The Debtors have filed or will file applications to retain, pursuant to section 327 of the Bankruptcy Code, the following professionals: (a) Law Offices of Benjamin M. Carson, P.C. ("Carson") as bankruptcy c o - counsel, and; (b) Armstrong Teasdale ("Armstrong") as Bankruptcy Co - Counsel. The Debtors may need to retain other professionals in these chapter 11 cases under section 327 of the Bankruptcy Code. Such professionals would likewise be subject to the compensation and reimbursement procedures set forth in this Motion. If a statutory committee is ultimately appointed in these chapter 11 cases, such committee will likely need to retain professionals in connection with the provision of its duties (such committee professionals, Carson, Armstrong, together, and any other professionals retained by the Debtors after the Petition Date shall be referred to herein as the "Professionals"). 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the First Day Declaration. 3 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 4 of 9 IV. THE PROPOSED COMPENSATION PROCEDURES 8. The Debtors propose that the monthly payment of compensation and reimbursement of expenses of the Professionals (the "Compensation Procedures") be structured as follows: (a) On or after the fourteenth (14th) day of each calendar month following the month for which compensation is sought, each Professional seeking interim allowance of its fees and expenses may file an application (including the relevant time entry and description and expense detail) with the Court pursuant to section 331 of the Bankruptcy Code for interim allowance of compensation for services rendered and reimbursement of expenses incurred during the preceding month (a "Monthly Fee Application"), and serve a copy of such Monthly Fee Application by first class mail on the following parties (collectively, the "Notice Parties" and each, a "Notice Party"): proposed co -counsel to the Debtors, Law Offices of Benjamin M. Carson, P.C., 5965 Village Way, STE E105, San Diego CA 92130 (Attn: Benjamin M. Carson and Victor A. Vilaplana (email: ben(caenjamincarsonlaw.com and vavilaplana(d/gmail.com)), ii. proposed co -counsel to the Debtors, Armstrong Teasdale LLP, 1007 North Market Street, Third Floor, Wilmington DE 19801 (Attn: Jonathan M. Stemerman (email: jsttemennan(c4atllp.com)) iii. the Office of the United States Trustee for the District of Delaware, 844 N. King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801 (Attn.: Malcolm M. Bates (email: malcolm.m.bates64@usd9j.gov)) and iv. counsel to any statutory committee that has been appointed in these chapter 11 cases. Any Professional that fails to file a Monthly Fee Application for a particular month or months may subsequently submit a consolidated Monthly Fee Application that includes a request for compensation earned or expenses incurred during previous months. All Monthly Fee Applications shall comply with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable orders of the Court. The first Monthly Fee Application submitted by each Professional shall cover the period from the Petition Date through and including June 30, 2024. (b) Each Notice Party will have fourteen (14) days after service of a Monthly Fee Application (the "Objection Deadline") to object to the requested fees and expenses in accordance with the procedures described in subparagraph (c) below. Upon the expiration of the Objection Deadline, each Professional may file with the Court a certificate of no objection (a "CNO") with respect to the unopposed portion of the fees and expenses requested in its Monthly Fee Application. After a CNO is filed, the Debtors are authorized to pay the applicable Professional an amount (the "Actual Monthly Payment") equal to the lesser of 4 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 5 of 9 i. 80% of the fees and 100% of the expenses requested in the Monthly Fee Application (the "Maximum Monthly Payment") or ii. 80% of the fees and 100% of the expenses not subject to an objection pursuant to subparagraph © below. (c) If any Notice Party objects to a Professional's Monthly Fee Application, it must, on or before the expiration of the Objection Deadline, file with the Court and serve on such Professional and each other Notice Party a written objection (an "Objection") so as to be received on or before the Objection Deadline. Any such Objection shall identify with specificity the objectionable fees and/or expenses, including the amount of such objected to fees and/or expenses, and the basis for such Objection. Thereafter, the objecting party and the affected Professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution within fourteen (14) days after service of the Objection, the affected Professional may either: i. file a response to the Objection with the Court, together with a request for payment of the difference, if any, between the Maximum Monthly Payment and the Actual Monthly Payment made to such Professional (the "Incremental Amount") or ii. forego payment of the Incremental Amount until the next interim or final fee application hearing, at which time the Court will consider and rule on the Objection if requested by the parties. (d) With respect to the first three-month period after the Petition Date and each subsequent three-month period thereafter, each Professional shall file with the Court and serve on the Notice Parties an application (an "Interim Fee Application") for interim allowance of compensation and reimbursement of expenses sought in the Monthly Fee Applications filed during each such three-month period (the "Interim Fee Period") pursuant to section 331 of the Bankruptcy Code. The Interim Fee Application must identify the covered Monthly Fee Applications and include any other information requested by the Court or required by the applicable Local Rules. Interim Fee Applications shall be filed with the Court and served on the Notice Parties within forty-five (45) days after the end of the applicable Interim Fee Period. Each Professional shall file its first Interim Fee Application on or before December 16, 2024, and the first Interim Fee Application shall cover the Interim Fee Period from the Petition Date through and including October 31, 2024. Objections, if any, to the Interim Fee Applications shall be filed and served upon the affected Professional and the Notice Parties so as to be received on or before the fourteenth (14th) day (or the next business day if such day is not a business day) following service of the Interim Fee Application. (e) The Debtors shall request that the Court schedule a hearing on Interim Fee Applications at least once every three (3) months or at such other intervals as the Court deems appropriate. The Court, in its discretion, may approve an uncontested Interim Fee Application without the need for a hearing, upon the Professional's 5 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 6 of 9 (f) (g) filing of a CNO. Upon allowance by the Court of a Professional's Interim Fee Application, the Debtors shall be authorized to pay such Professional all requested fees (including the 20% holdback) and expenses not previously paid. The pendency of an Objection to payment of compensation or reimbursement of expenses shall not disqualify a Professional from the future payment of compensation or reimbursement of expenses pursuant to the Compensation Procedures. Neither (i) the payment of or the failure to pay, in whole or in part, compensation for services and reimbursement of expenses under the Compensation Procedures nor (ii) the filing of or the failure to file an Objection to any Monthly Fee Application or Interim Fee Application will bind any party in interest or the Court with respect to the allowance of interim or final applications for compensation for services and reimbursement of expenses of Professionals. All fees and expenses paid to Professionals in accordance with the Compensation Procedures are subject to disgorgement until final allowance by the Court. (h) Any Professional that fails to file a Monthly Fee Application or an Interim Fee Application when due shall be ineligible to receive further monthly or interim payments of fees or expenses with respect to any subsequent period until such time as a Monthly Fee Application or an Interim Fee Application covering the prior period is filed and served by the Professional. There shall be no other penalties for failing to file a Monthly Fee Application or an Interim Fee Application in a timely manner. (i) Professionals shall file final applications for compensation and reimbursement (collectively, the "Final Fee Applications") by such deadline as may be established in a confirmed chapter 11 plan or in an order of the Court. All Final Fee Applications shall comply with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable orders of the Court. 9. The Debtors also request that each member of any statutory committee appointed in these chapter 11 cases be permitted to submit statements of expenses (excluding third -party legal fees and expenses of individual committee members) and supporting vouchers to the committee's counsel, which counsel will collect and submit the committee members' requests for reimbursement in accordance with the Compensation Procedures. Approval of these Compensation Procedures, however, will not authorize payment of such expenses to the extent that such authorization does not exist under the Bankruptcy Code, applicable Third Circuit law, the Bankruptcy Rules, the Local Rules, or the practices of the Court. 10. In addition, the Debtors further request that the Court limit service of the Monthly 6 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 7 of 9 Fee Applications, Interim Fee Applications, Final Fee Applications (collectively, the "Applications") to the Notice Parties. All other parties in interest that have requested notice pursuant to Bankruptcy Rule 2002 shall be entitled to receive only notices of hearings on the Applications (collectively, the "Hearing Notices"). Providing notice of Applications and Hearing Notices in this manner will permit the parties most active in these chapter 11 cases to monitor the fees and expenses incurred by Professionals and will avoid unnecessary duplication and mailing expenses. V. BASIS FOR RELIEF REQUESTED 11. Section 331 of the Bankruptcy Code provides, in relevant part, as follows: A trustee, an examiner, a debtor's attorney, or any professional person employed under section 327 or 1103 of this title may apply to the court not more than once every 120 days after an order for relief in a case under this title, or more often if the court permits, for such compensation for services rendered before the date of such an application or reimbursement for expenses incurred before such date as is provided under section 330 of this title. After notice and a hearing, the court may allow and disburse to such applicant such compensation or reimbursement. 11 U.S.C. § 331. 12. Absent an order of the Court, section 331 of the Bankruptcy Code limits the Professionals rendering services in these chapter 11 cases to payment of fees and expenses to only three (3) times per year. 13. Congress's intent in enacting section 331 is expressed unequivocally in the House and Senate Reports accompanying enactment of the Bankruptcy Code: The court may permit more frequent applications if the circumstances warrant, such as in very large cases where the legal work is extensive and merits more frequent payments. The court is authorized to allow and order disbursement to the applicant of compensation and reimbursement that is otherwise allowable under section 330. H.R. Rep. No. 595, 95th Cong., 1st Sess. 330 (1977); S. Rep. No. 989, 95th Cong., 2d Sess. 41-42 (1978). 7 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 8 of 9 14. Section 105(a) of the Bankruptcy Code provides, in relevant part, that "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. § 105(a). Thus, the Court has the authority to enter an order establishing procedures for interim compensation and reimbursement of expenses. 15. The implementation of the proposed Compensation Procedures is justified in these proceedings. These chapter 11 cases will add further complexities to the day-to-day administrative burden already being shouldered by the Debtors' personnel. The Debtors anticipate that the Professionals will provide integral advice and services to the Debtors in administering these chapter 11 cases. Absent streamlined compensation procedures, the professional fee application and review process could be burdensome for the Debtors, the Professionals, the Court, and other parties in interest. By contrast, the proposed Compensation Procedures will enable the Debtors to monitor closely the costs of administration of these chapter 11 cases, maintain level and predictable cash flows, and implement efficient cash management procedures. The Compensation Procedures will also allow the Court and key parties in interest to verify the reasonableness and necessity of the compensation and reimbursement sought pursuant to such Compensation Procedures before the Debtors make any payment thereon. 16. Accordingly, the relief requested is in the best interests of the Debtors, their estates, and their creditors. VI. NOTICE 17. Notice of this Motion will be given to: (i) the Office of the United States Trustee for the District of Delaware; (ii) the parties included on the Debtors' list of the twenty (20) largest unsecured creditors; (iii) all secured creditors; and (iv) any party that has requested notice pursuant to Bankruptcy Rule 2002. The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be given. 8 Case 24-11647-MFW Doc 50 Filed 08/21/24 Page 9 of 9 VII. CONCLUSION WHEREFORE, the Debtors respectfully request that the Court enter the Proposed Order, substantially in the form attached hereto as Exhibit A, granting the relief requested in this Motion and such other and further relief as may be just and proper. Dated: August 21, 2024 ARMSTRONG TEASEDALE, LLP Wilmington, Delaware /s/Jonathan M. Stemerman Jonathan M. Stemerman (No. 4510) Eric M. Sutty (No. 4007) Denissee Gueavara (No. 7206) 1007 North Market Street, Third Floor Wilmington, Delaware 19801 Telephone: (302) 416-9670 jsttemerman@atlIp.com esutty(a?atllp.com dguevara@.attlp.com - and — Victor A. Vilaplana (admitted pro hac vice) P.O. Box 9038 La Jolla, CA 92037 Telephone: (619) 840-4130 vavilaplana@,gmail.com -and- Benjamin M. Carson (admitted pro hac vice) 5965 Village Way STE E105 San Diego, CA 92130 Telephone: (858) 255-4529 ben@benjamincarsonlaw.com Proposed Counsel to the Debtors and Debtors in Possession 9 Case 24-11647-MFW Doc 50-1 Filed 08/21/24 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SilverRock Development Company, LLC, et al.,l Debtors. Chapter 11 Case No. 24-11647 (MFW) (Jointly Administered) Hearing Date: September 11, 2024 Obj. Deadline: September 4, 2024 NOTICE OF MOTION TO: THE OFFICE OF THE UNITED STATES TRUSTEE FOR THE DISTRICT OF DELAWARE; (II) THE PARTIES INCLUDED ON THE DEBTORS' LIST OF THIRTY (20) LARGEST UNSECURED CREDITORS; (III) ALL SECURED CREDITORS; AND (IV) ALL PARTIES THAT, AS OF THE FILING OF THIS NOTICE, HAVE REQUESTED NOTICE IN THESE CHAPTER 11 CASES PURSUANT TO BANKRUPTCY RULE 2002. PLEASE TAKE NOTICE that Debtors, as debtors and debtors in possession in the above - captioned chapter 11 cases (each, a "Debtor" and collectively, the "Debtors"), have filed the attached Debtors' Motion for Entry of an Order (I) Establishing Procedures for Interim Compensation and Reimbursement of Professionals; and (II) Granting Related Relief (the "Motion"). PLEASE TAKE FURTHER NOTICE that any objections to the Motion must be filed on or before September 4, 2024 at 4:00 p.m. (ET) (the "Objection Deadline") with the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801. At the same time, you must serve a copy of the objection upon the undersigned proposed counsel to the Debtors so as to be received on or before the Objection Deadline. PLEASE TAKE FURTHER NOTICE THAT A HEARING (THE "HEARING") TO CONSIDER THE RELIEF REQUESTED IN THE MOTION WILL BE HELD ON SEPTEMBER 11, 2024 at 2:00 P.M. (ET) BEFORE THE HONORABLE MARY F. WALRATH, UNITED STATES BANKRUPTCY JUDGE FOR THE DISTRICT OF DELAWARE, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 NORTH MARKET STREET, 5TH FLOOR, COURTROOM NO. 4, WILMINGTON, DELAWARE 19801. ADDITIONAL INFORMATION REGARDING THE HEARING WILL BE SET FORTH IN THE HEARING AGENDA. 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 10 Case 24-11647-MFW Doc 50-1 Filed 08/21/24 Page 2 of 2 PLEASE TAKE FURTHER NOTICE THAT, IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR A HEARING. Dated: August 21, 2024 ARMSTRONG TEASEDALE, LLP Wilmington, Delaware /s/Jonathan M. Stemerman Jonathan M. Stemerman (No. 4510) Eric M. Sutty (No. 4007) Denissee Gueavara (No. 7206) 1007 North Market Street, Third Floor Wilmington, Delaware 19801 Telephone: (302) 416-9670 j sttemerman@.atl 1p. corn e utty u aatllp.com dguevara@attlp.com - and — Victor A. Vilaplana (admitted pro hac vice) P.O. Box 9038 La Jolla, CA 92037 Telephone: (619) 840-4130 vavilaplana@gmail.com -and- Benjamin M. Carson (admitted pro hac vice) 5965 Village Way STE E105 San Diego, CA 92130 Telephone: (858) 255-4529 ben@benjamincarsonlaw.com Proposed Counsel to the Debtors and Debtors in Possession 11 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 1 of 7 EXHIBIT A Proposed Order 12 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 2 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SilverRock Development Company, LLC et al.,' Debtors. Chapter 11 Case No. 24-11647 (MFW) (Jointly Administered) Docket Ref. No. _ ORDER, PURSUANT TO SECTIONS 105(a) AND 331 OF THE BANKRUPTCY CODE, BANKRUPTCY RULE 2016(a), AND LOCAL RULE 2016-2, ESTABLISHING PROCEDURES FOR INTERIM COMPENSATION AND REIMBURSEMENT OF PROFESSIONALS Upon consideration of the motion (the "Motion")2 of the above -captioned debtors and debtors in possession (the "Debtors") for entry of an order (this "Order"), pursuant to sections 105(a) and 331 of the Bankruptcy Code, Bankruptcy Rule 2016(a), and Local Rule 2016-2, establishing procedures for the interim compensation and reimbursement of professionals; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. § § 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated as of February 29, 2012; and it appearing that this is a core proceeding pursuant to 28 U.S.C. § 157(b); and this Court having determined that it may enter a final order consistent with Article III of the United States Constitution; and proper and adequate notice of the Motion and the hearing thereon having been given; and it appearing that no other or further notice is necessary; and it appearing that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and it appearing that venue of this proceeding and the Motion is proper pursuant The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. 13 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 3 of 7 to 28 U.S.C. §§ 1408 and 1409; and this Court having determined that the relief sought in the Motion is in the best interests of the Debtors, their estates, their creditors, and other parties in interest; and after due deliberation and sufficient cause appearing therefor, IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED as set forth herein. 2. Except as may otherwise be provided in orders of this Court authorizing the retention of specific Professionals, all Professionals in these chapter 11 cases may seek compensation for professional services rendered and reimbursement of expenses incurred in accordance with the following Compensation Procedures: (a) On or after the fourteenth (14th) day of each calendar month following the month for which compensation is sought, each Professional seeking interim allowance of its fees and expenses may file an application (including the relevant time entry and description and expense detail) with the Court pursuant to section 331 of the Bankruptcy Code for interim allowance of compensation for services rendered and reimbursement of expenses incurred during the preceding month (a "Monthly Fee Application"), and serve a copy of such Monthly Fee Application by first class mail on the following parties (collectively, the "Notice Parties" and each, a "Notice Party"): i. proposed co -counsel to the Debtors, Law Offices of Benjamin M. Carson, P.C., 5965 Village Way, STE E105, San Diego CA 92130 (Attn: Benjamin M. Carson and Victor A. Vilaplana (email: ben(a,,benjamincarsonlaw.com and vavilaplana( gmail.com)), ii. propose co -counsel to the Debtors, Armstrong Teasdale LLP, 1007 North Market Street, Third Floor, Wilmington DE 19801 (Attn: Jonathan M. Stemerman (email: jsttemerman(a atllp.com)) iii. the Office of the United States Trustee for the District of Delaware, 844 N. King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801 (Attn.: Malcolm M. Bates (email: malcolm.m.bates(ds( usdoj.gov)) and iv. counsel to any statutory committee that has been appointed in these chapter 11 cases.. Any Professional that fails to file a Monthly Fee Application for a particular month or months may subsequently submit a consolidated Monthly Fee Application that includes a request for compensation earned or expenses incurred during previous months. All Monthly Fee Applications shall comply with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable orders of the Court. The first Monthly Fee Application submitted by each Professional shall cover the period from the Petition Date through and including October 31, 2024. 14 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 4 of 7 (b) Each Notice Party will have fourteen (14) days after service of a Monthly Fee Application (the "Objection Deadline") to object to the requested fees and expenses in accordance with the procedures described in subparagraph (c) below. Upon the expiration of the Objection Deadline, each Professional may file with the Court a certificate of no objection (a "CNO") with respect to the unopposed portion of the fees and expenses requested in its Monthly Fee Application. After a CNO is filed, the Debtors are authorized to pay the applicable Professional an amount (the "Actual Monthly Payment") equal to the lesser of i. 80% of the fees and 100% of the expenses requested in the Monthly Fee Application (the "Maximum Monthly Payment") or ii. 80% of the fees and 100% of the expenses not subject to an objection pursuant to subparagraph (c) below. (c) If any Notice Party objects to a Professional's Monthly Fee Application, it must, on or before the expiration of the Objection Deadline, file with the Court and serve on such Professional and each other Notice Party a written objection (an "Objection") so as to be received on or before the Objection Deadline. Any such Objection shall identify with specificity the objectionable fees and/or expenses, including the amount of such objected to fees and/or expenses, and the basis for such Objection. Thereafter, the objecting party and the affected Professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution within fourteen (14) days after service of the Objection, the affected Professional may either: i. file a response to the Objection with the Court, together with a request for payment of the difference, if any, between the Maximum Monthly Payment and the Actual Monthly Payment made to such Professional (the "Incremental Amount") or ii. forego payment of the Incremental Amount until the next interim or final fee application hearing, at which time the Court will consider and rule on the Objection if requested by the parties. (d) With respect to the first three-month period after the Petition Date and each subsequent three-month period thereafter, each Professional shall file with the Court and serve on the Notice Parties an application (an "Interim Fee Application") for interim allowance of compensation and reimbursement of expenses sought in the Monthly Fee Applications filed during each such three-month period (the "Interim Fee Period") pursuant to section 331 of the Bankruptcy Code. The Interim Fee Application must identify the covered Monthly Fee Applications and include any other information requested by the Court or required by the applicable Local Rules. Interim Fee Applications shall be filed with the Court and served on the Notice Parties within forty-five (45) days after the end of the applicable Interim Fee Period. Each Professional shall file its first Interim Fee Application on or before December 16, 2024, and the first Interim Fee Application shall cover the Interim Fee Period from the Petition Date through and including October 31, 2024. Objections, if any, to the Interim Fee Applications shall be filed and served upon 15 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 5 of 7 (f) (g) the affected Professional and the Notice Parties so as to be received on or before the fourteenth (14th) day (or the next business day if such day is not a business day) following service of the Interim Fee Application. (e) The Debtors shall request that the Court schedule a hearing on Interim Fee Applications at least once every three (3) months or at such other intervals as the Court deems appropriate. The Court, in its discretion, may approve an uncontested Interim Fee Application without the need for a hearing, upon the Professional's filing of a CNO. Upon allowance by the Court of a Professional's Interim Fee Application, the Debtors shall be authorized to pay such Professional all requested fees (including the 20% holdback) and expenses not previously paid. The pendency of an Objection to payment of compensation or reimbursement of expenses shall not disqualify a Professional from the future payment of compensation or reimbursement of expenses pursuant to the Compensation Procedures. Neither (i) the payment of or the failure to pay, in whole or in part, compensation for services and reimbursement of expenses under the Compensation Procedures nor (ii) the filing of or the failure to file an Objection to any Monthly Fee Application or Interim Fee Application will bind any party in interest or the Court with respect to the allowance of interim or final applications for compensation for services and reimbursement of expenses of Professionals. All fees and expenses paid to Professionals in accordance with the Compensation Procedures are subject to disgorgement until final allowance by the Court. (h) Any Professional that fails to file a Monthly Fee Application or an Interim Fee Application when due shall be ineligible to receive further monthly or interim payments of fees or expenses with respect to any subsequent period until such time as a Monthly Fee Application or an Interim Fee Application covering the prior period is filed and served by the Professional. There shall be no other penalties for failing to file a Monthly Fee Application or an Interim Fee Application in a timely manner. (i) Professionals shall file final applications for compensation and reimbursement (collectively, the "Final Fee Applications") by such deadline as may be established in a confirmed chapter 11 plan or in an order of the Court. All Final Fee Applications shall comply with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and applicable orders of the Court. 3. In each Interim Fee Application and Final Fee Application, all attorneys who have been or are hereafter retained pursuant to sections 327 or 1103 of the Bankruptcy Code shall apply for compensation for professional services rendered and for reimbursement of expenses incurred in connection with these chapter 11 cases in compliance with sections 330 and 331 of the Bankruptcy Code and applicable provisions of the Bankruptcy Rules, the Local Rules, and any 16 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 6 of 7 other applicable procedures and orders of this Court. 4. If a statutory committee is appointed in these chapter 11 cases, each member of any such committee shall be permitted to submit statements of expenses (excluding third -party legal fees and expenses of individual committee members) and supporting vouchers to the committee's counsel, which counsel will collect and submit the committee members' requests for reimbursement in accordance with the Compensation Procedures; provided, however, that committee members' requests for reimbursement of attorneys' fees and expenses must be made by separate application and scheduled for hearing upon proper notice. 5. Service of the Monthly Fee Applications, Interim Fee Applications, Final Fee Applications, and Hearing Notices is approved as follows: (a) the Notice Parties shall be entitled to receive the Monthly Fee Applications, Interim Fee Applications, Final Fee Applications, and Hearing Notices and (b) all the parties in interest that have requested notice pursuant to Bankruptcy Rule 2002 shall be entitled to receive only Hearing Notices. 6. The Debtors will include all payments made to Professionals in accordance with the Compensation Procedures in their monthly operating reports identifying the amounts paid to each Professional. 7. Nothing in this Order shall alter the fee application requirements outlined in sections 330 and 331 of the Bankruptcy Code. 8. All of the time periods set forth in this Order shall be calculated in accordance with Bankruptcy Rule 9006(a). 9. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion. 17 Case 24-11647-MFW Doc 50-2 Filed 08/21/24 Page 7 of 7 10. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, of this Order. 18