FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER AWARDING TO WALDEN INVESTMENT GROUP, PREPETITION RECEIVER FOR DEBTORS, FOR ALLOWANCE OF ADMINISTRATIVE CLAIM AND PAYMENT OF FINAL COMPENSATION AND REIMBURSEMENT OF EXPENSES FOR RECEIVERSHIP SERVICES [DKT. NO. 71]

TIMOTHY A. BARNES, Bankruptcy Judge.

The above total is an allowed claim under 11 U.S.C. § 503(b)(3)(E). The attached time and expense entries have been underlined to reflect disallowance in whole or in part. The basis for each disallowance is reflected by numerical notations that appear on the left of each underlined entry. The numerical notations correspond to the enumerated paragraphs below.

(1) Unreasonable Time — TOTAL of disallowed amounts: $1,630.00

The Court denies the allowance in part of compensation for the indicated task(s) since the professional or paraprofessional expended an unreasonable amount of time on the task(s) in light of the nature of the task(s), the experience and knowledge of the professional performing the task(s), and the amount of time previously expended by the professional or another on the task(s). In re Pettibone, 74 B.R. 293, 306 (Bankr. N.D. Ill. 1987) (Schmetterer, J.) ("The Court will determine what is the reasonable amount of time an attorney should have to spend on a given project . . . An attorney should not be rewarded for inefficiency. Similarly, attorneys will not be fully compensated for spending an unreasonable number of hours on activities of little benefit to the estate."); In re Wildman, 72 B.R. 700, 713 (Bankr. N.D. Ill. 1987) (Schmetterer, J.) (same).

(2) Lumping — TOTAL of disallowed amounts (10% of affected entries): $717.00

The Court may impose a ten percent penalty on entries that appear to be "lumping." The Court will reduce each entry marked as such per the penalty. In re Wildman, 72 B.R. 700, 709 (Bankr. N.D. Ill. 1987) (Schmetterer, J.) ("Applicants may not circumvent the minimum time requirement or any of the requirements of detail by "lumping" a bunch of activities into a single entry. [citation omitted]. Each type of service should be listed with the corresponding specific time allotment.").

(3) Improper Time Increments for Billing — TOTAL of disallowed amounts: $807.50

The court may impose a ten percent penalty for using improper time increments for billing. "Professional persons . . . cannot, in all honesty and reasonableness, charge their clients for increments in excess of one-tenth of an hour." In re Wildman, 72 B.R. 700, 726 (Bankr. N.D. Ill. 1987) (Schmetterer, J.). This penalty will be imposed where time increments larger than one-tenth of an hour are being used. For example, applicants who bill time using quarter-hour increments risk the ten percent penalty.

(4) Overhead Costs are Non-Compensable — TOTAL of disallowed amounts: $661.38

The Court denies reimbursement for fees or expenses that are overhead costs. Expenses which are overhead are not compensable because they are built into the hourly rate. See In re Wildman, 72 B.R. 700, 731 (Bankr. N.D. Ill. 1987) (Schmetterer, J.). Overhead, for bankruptcy purposes, includes "all continuous administrative or general costs or expenses incident to the operation of the firm which cannot be attributed to a particular client or cost." In re Convent Guardian Corp., 103 B.R. 937, 939-40 (Bankr. N.D. Ill. 1989) (Sonderby, J.) (quoting In re Thacker, 48 B.R. 161, 164 (Bankr. N.D. III. 1985) (Toles, J.)).

(5) Outside of the Scope of 11 U.S.C. § 503(b)(3)(e) — TOTAL of disallowed amounts: $705.36

Outside of the scope of 11 U.S.C. § 503(b)(3)(E). The expense of counsel must be sought under section 11 U.S.C. § 503(b)(4).

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