DANA L. RASURE, UNITED STATES BANKRUPTCY JUDGE.

TABLE OF CONTENTS

I. JURISDICTION...800

II. FINDINGS OF FACT...800

A. Background Leading to the Appointment of Trustee...801

B. Initial Trustee Period...804

C. Challenge to the Legitimacy of Trustee...807

D. The Global Agreement Period...812

E. Trustee's Sales of SPEs and Real Property...815

F. Abandonment of Properties...820

G. Trustee's Operation of Properties and Entities...821

H. Price's Proposed Plan and Disclosure Statement...828

I. Renewed Attempt to Disband the Committee...832

J. Adversary Proceedings...833

K. The UST's Motion to Convert vs. Price's Motion to Dismiss...835

L. The Conversion Agreement...836

M. Contested Chapter 11 Issues After Conversion...838

N. Trustee's First Application for Interim Compensation...841

III. CONCLUSIONS OF LAW...844

A. Application of Chapter 11 Trustee...844

B. Application of MED PLLC...860

C. Application of Counsel...864

D. Effect of the ASARCO Decision...876

E. Price's Claims...879

F. Relief is Precluded by the Equitable Doctrine of "Unclean Hands"...887

IV. SUMMARY AND CONCLUSION...890

MEMORANDUM OPINION

The following three contested matters are before the Court for decision after a full trial on the merits conducted on November 3, 2014 through November 7, 2014; January 20, 2015 through January 22, 2015; and January 26, 2015 through January 27, 2015 (the "Fee Hearings"):1

Michael E. Deeba was appointed Chapter 11 Trustee ("Trustee") in the Macco Properties, Inc. ("MACCO") case on May 31, 2011. Janice Loyd and James Bellingham, and the firm of Bellingham & Loyd, P.C., served as counsel for Trustee ("Counsel"). Trustee's firm, MED PLLC, was retained as Trustee's accountant and financial advisor.

Counsel requests approval and payment of final compensation in the amount of $200,803.63, and final approval of five interim fee and expense awards in the total amount of $723,169.18. Jennifer Price ("Price") and Lew McGinnis ("McGinnis") object to allowance of Counsel's fees on various grounds. Price also asserts setoff claims against Counsel for alleged breach of fiduciary duty, mismanagement, gross mismanagement, and gross negligence.5

Trustee requests allowance and payment of final compensation in the amount of $748,295.27, and final approval of three interim compensation awards in the total amount of $739,522.36. Price and McGinnis object to compensating Trustee on various grounds. Price also claims damages from alleged breaches of fiduciary duty, gross negligence, and willful misconduct on the part of Trustee, and seeks to offset her damage claim against any compensation awarded to Trustee.6

The MED PLLC Final Application requests payment of $20,327.97 and final approval of three interim awards totaling $308,047.20. Price and McGinnis assert the same objections and defensive claims against MED PLLC as they lodge against Trustee.

Upon consideration of the entire record, the evidence presented and admitted at the Fee Hearings, the briefs and closing arguments of counsel, and the applicable law, the Court finds and concludes as follows:

I. JURISDICTION

This is a core proceeding as described by 28 U.S.C. § 157(b)(2)(A), (b)(2)(B), and (b)(2)(O). The Court has jurisdiction of this proceeding by virtue of 28 U.S.C. §§ 157, 1334, and Local Civil Rule 81.4(a) of the United States District Court for the Western District of Oklahoma.

II. FINDINGS OF FACT

The MACCO Chapter 11 case, filed in 2010, was originally assigned to Bankruptcy Judge Niles Jackson. In November 2014, Judge Jackson recused himself from hearing these fee applications, and the matters were assigned to the undersigned judge. The Court has reviewed in detail all pleadings in this case and in the Chapter 11 cases of affiliated entities, and pleadings in related adversary proceedings, as well as all transcripts, exhibits and other matters of record, in order to fully understand the course of the proceedings over the past four years. From this record, as well as the testimony and exhibits admitted at the Fee Hearings, it is apparent that the magnitude of the fee requests are directly related to the level of disruption and obstruction to the orderly administration of the estate perpetrated by the very parties who are objecting to the allowance of the fees. Allowance and payment of fair compensation to Trustee and his professionals for their service in this most difficult case will likely result in little or no final distribution to Price, as equity holder, or McGinnis, as an unsecured creditor — a result Price blames on Trustee's alleged mismanagement. But the record demonstrates that every aspect of the administration of the estate was presented to and blessed by the Court and creditors, and the fact that fees may consume any remaining equity is attributable to Price's and McGinnis's own conduct. Their loss was self-inflicted and avoidable. To provide context for evaluating the necessity and reasonableness of the services provided by Trustee and his professionals, a full recapitulation of the history of this case is required.

A. Background Leading to the Appointment of Trustee7

On November 2, 2010, McGinnis, as president, filed a voluntary petition on behalf of MACCO seeking relief under Chapter 11 of the Bankruptcy Code, and assumed the responsibility of performing the fiduciary duties of a debtor in possession. MACCO was a property acquisition and management company that was the sole or controlling member and/or manager of approximately thirty limited liability companies that MACCO created as "single-purpose entities" at the request of lenders (the "SPEs"), each of which owned a multi-family apartment complex or commercial real estate (i.e., income-producing properties).8 MACCO also owned a real estate portfolio in its own name, which consisted of several single-family residences and vacant land in Oklahoma, Kansas and Texas (i.e., non-income producing properties). Price owns 100% of MACCO's stock and also participated in management of MACCO. MACCO owned 100% of the interests in most of the SPEs and a 99% interest in the remaining SPEs, with the other one percent held by a corporation wholly owned by McGinnis. As a result, Price and McGinnis controlled all the SPEs and real property owned by MACCO. Prepetition and during the first seven months of the Chapter 11 case, McGinnis and Price personally, or through employees of McGinnis's wholly-owned personnel leasing company, managed and operated all the properties held by MACCO and its subsidiary SPEs. No third parties served as officers, directors or managers of MACCO or the SPEs.

Historically, MACCO and its subsidiary SPEs acquired properties that were described by appraiser James Hoyt, MAI, as class D properties. McGinnis and Price would rehabilitate them, raising their status to class C or C+ properties (and in some cases, class B properties),9 manage them for a period, and then sell them for a profit.10

The SPEs executed notes and mortgages against the apartment complexes or commercial buildings. Each property was encumbered by a mortgage in favor of at least one lending institution. Most were also burdened with ad valorem tax liens. On the petition date, the notes were at least technically in default due to the non-payment of taxes and other breaches of the loan agreements, and several properties were facing foreclosure. MACCO had guaranteed repayment of the notes secured by the SPEs' real property. As of the petition date, MACCO's guarantee liability exceeded $60 million.11

The non-operating properties were owned directly by MACCO and were also encumbered by mortgage notes totaling at least $11 million, plus unpaid taxes and condo fees, and again, some were on the brink of foreclosure or sheriff's sale.12 Price and/or McGinnis personally guaranteed payment of all debt owed by MACCO and the SPEs.

Although the $60 million in guarantees represented the majority of MACCO's unsecured debt, MACCO also identified vendors, service providers, and utilities as unsecured creditors. In addition, as of the petition date, several contract and/or tort claims against MACCO were in various stages of litigation, and thus constituted disputed and unliquidated unsecured claims.

On February 17, 2011, the United States Trustee (for convenience, counsel and staff serving the Office of the United States Trustee in the Western District of Oklahoma will be referred to herein as "UST") appointed a committee of unsecured creditors (the "Committee"). In their preliminary investigations, the UST and the Committee discovered that (1) the schedules filed by McGinnis were inaccurate and incomplete; (2) monthly operating reports filed by McGinnis were inaccurate and incomplete; (3) McGinnis withheld financial information, books and records, tax returns, and other documentation to which the UST, the Committee, and parties in interest were entitled; (4) McGinnis had commingled funds of MACCO and its subsidiaries (some of which were themselves debtors in possession) and used funds of one SPE (that is, cash collateral of that entity's lender) to pay operating expenses and secured debts of other SPEs; and (5) McGinnis had secretly settled, without Court authority, a fraud judgment entered against MACCO and some of its indirect subsidiaries that arose from the sale by MACCO and/or the subsidiaries of certain apartment complexes.13 No notice of the proposed settlement was given to creditors, nor was Court approval sought as required.

The record indicates that prior to the settlement, the plaintiffs in that lawsuit — purchasers of the apartment complexes — had filed a proof of claim against the MACCO estate in the amount of the judgment, i.e., $382,699.00. These plaintiffs still owed the selling SPEs approximately $1.8 million pursuant to a note and mortgage. In settling the $382,699.00 claim, McGinnis discounted the note to $1.375 million. The plaintiffs paid the discounted amount to McGinnis, and McGinnis caused the note to be canceled and the mortgage to be released. Although McGinnis and Price contended that MACCO had no interest in the note or the settlement proceeds, they refused to provide documentation to that effect. The UST and the Committee took the position that MACCO had an interest in some or all of the $1.375 million settlement proceeds.

Consequently, the Committee commenced an adversary proceeding14 through which it obtained a temporary restraining order freezing the settlement proceeds and requiring McGinnis to produce documents relating to the lawsuit and settlement. Immediately prior to the restraining order hearing — of which McGinnis had notice — McGinnis distributed the proceeds (1) to several SPEs, (2) to a litigant in Utah to settle a claim against himself, and (3) to professionals whose employment and fees had not been approved by the Court. The Court ordered McGinnis to recover those transfers, and enjoined the transfer or expenditure of any of the proceeds pending a determination of ownership, or until further order of the Court. McGinnis appealed the Court's order enjoining use of the funds and continued to withhold documents he was ordered to produce to the Committee.

The Committee's scrutiny of McGinnis's conduct as a fiduciary led McGinnis to attempt to disband the Committee by paying off the debts of its three members.15 Nonetheless, the Committee continued to seek vital information by virtue of Rule 2004 examinations and depositions of Price and McGinnis, and additional document requests, which were met with sustained opposition.

On May 6, 2011, the UST filed a motion for appointment of a Chapter 11 trustee, citing as grounds: (1) McGinnis's unauthorized postpetition transfers of MACCO assets to insiders, including Price and himself, their wholly-owned companies, and the SPEs; (2) unauthorized banking and cash management practices, including the continued use of prepetition accounts; (3) chronic negative cash flow and bounced checks, including checks for UST fees; (4) the failure to timely file a plan and disclosure statement; (5) the failure to file required tax returns; (6) non-disclosure of prepetition transfers to insiders; (7) unauthorized payments to professionals; and (8) the unauthorized settlement of the judgment against MACCO.16 The Committee joined the motion.17

Price and McGinnis moved to dismiss the Chapter 11 case, claiming that the crisis that led to its filing had been resolved, and that the Committee was unjustly interfering in McGinnis's ordinary course of operating MACCO and its subsidiaries.18 Price and McGinnis also again attempted to dissolve the Committee by seeking an order to allow them to pay off selected unsecured claims from their own personal funds.19 At that point, some of the lenders supported McGinnis's dismissal motion because dismissal would have resulted in the release of the settlement funds that McGinnis had planned to use to pay the debts secured by non-income producing properties or underperforming SPEs.20

At the hearing on the UST's motion to appoint a Chapter 11 trustee, Price and McGinnis consented to the appointment of Michael E. Deeba as Chapter 11 Trustee.21 One factor that motivated Price and McGinnis to agree to the appointment was the Committee's agreement to "stand down" — that is, cease its investigation into the assets, liabilities, and operations of MACCO. On May 31, 2011, the Court entered an Agreed Order Directing the Appointment of a Trustee and the Order Approving Appointment of Chapter 11 Trustee.22 Soon thereafter, Trustee obtained authority to employ Janice Loyd and James Bellingham and the firm Bellingham & Loyd, P.C. as counsel, and MED PLLC as financial advisor and accountant.23 An order granting the application to employ Christopher Stein, of counsel to Bellingham & Loyd, P.C., was entered on July 28, 2011.

B. Initial Trustee Period

In the first weeks after his appointment, Trustee engaged in crisis management.24 MACCO managed and/or operated 41 properties or entities,25 and in his initial investigation, Trustee discovered financial chaos and a complete dereliction of duties imposed upon debtors in possession during the seven months McGinnis served as MACCO's responsible person. Trustee's Initial Report26 revealed:

Although Trustee made efforts to work with Price and McGinnis, they were uncooperative and actively interfered in Trustee's performance of his duties, to-wit:

On June 16, 2011, Trustee sought authority to spend up to $300,000.00 of the impounded settlement proceeds to avoid immediate harm to the estate's assets, employees, and tenants. Insurance policies and utility services were about to be terminated, and no funds were available to pay employees to protect and maintain the properties. McGinnis agreed that the funds could be used, but argued that Trustee should also be required to pay other bills, installments, and claims selected by McGinnis (including a prepetition, unsecured claim in the amount of $300,000.00). Trustee was, of course, prohibited from preferentially paying $300,000.00 to a prepetition unsecured claimant.31 Trustee's motion to use the settlement proceeds was granted, and Trustee meticulously accounted for the use of such proceeds in a report filed on September 1, 2011.32

While attending to the initial financial turbulence, Trustee was also faced with the task of evaluating the physical properties, assessing the state of the rent rolls and collections, and obtaining competent assistance in operating a dozen multi-family apartment complexes in Oklahoma and Kansas. Trustee's initial evaluation revealed:

C. Challenge to the Legitimacy of Trustee

Approximately one month after Trustee was appointed, Price, in her capacity as sole shareholder of MACCO, began a multi-faceted assault on Trustee's legitimacy, integrity, and management. On July 6, 2011, Price filed:

Each of these actions was predicated upon allegations that (1) Price and McGinnis's consent to the appointment of a trustee was based on their belief that the trustee's authority would be limited, by agreement with the UST, to simply identifying the pool of unsecured creditors, and that Trustee had exceeded that limited scope of authority; (2) there was no evidence of fraud, dishonesty, incompetence, or mismanagement to warrant the appointment of a trustee; and (3) in ignoring McGinnis's directives to commingle funds and pay certain bills and expenses, Trustee had committed gross mismanagement and diminished the value of the estate.

In her motion to dismiss the case, Price represented that MACCO's creditors supported dismissal of the case or the termination of Trustee and reinstatement of prior management, which was false. Quail Creek Bank ("QCB"), Sooner State Bank, All America Bank ("AAB"), and FAA Credit Union ("FAA"), after gaining access to previously undisclosed information about McGinnis's treatment of their collateral, both prepetition and during the Chapter 11 case, objected to dismissal.37 The Committee, representing the unsecured creditors, also objected to dismissal.

Five days after filing the adversary proceeding against Trustee and her motion to dismiss the case, Price moved for another emergency hearing to compel Trustee to cause MACCO to make "adequate protection payments" on fifteen loans owed by various SPEs in the total amount of $442,850.0038 using funds of other entities. Price's counsel explained: "What we are asking ... is for the Trustee to operate Macco in the ordinary course of business, which was for Macco to draw from bank accounts of any of its LLCs where there were excess funds and to in turn pass those funds over to the LLC that was in need of funds.... We're seeking merely operation in the ordinary course, which was disrupted when [Trustee] was appointed. We've had the defaults that are alleged, $6 million of default, plus another $300,000, and he has not performed in the ordinary course."39

Trustee was negotiating peace with these lenders on behalf of MACCO and its subsidiary SPEs, obtaining forbearance pending his investigation of condition, value, cash flow, and performance of each property, and was appropriately segregating their cash collateral in separate SPE accounts.40 Price and McGinnis, on the other hand, argued for payment of unsecured debt so they would not be called upon to honor their guarantees. The Court rejected the argument that Trustee had an obligation to continue McGinnis's ordinary course of business, and pointed out the obvious — that McGinnis's disregard of the entities' separate assets and debts violated the Bankruptcy Code, and had prompted the UST and the Committee to seek the appointment of a trustee in the first place.

In the meantime, on July 16, 2011, Trustee obtained approval to retain two professional property management companies. Price Edwards and Company ("Price Edwards") was retained to manage the Oklahoma properties, which included five apartment complexes (approximately 750 units), and four parcels of commercial real estate. Receivership Services Corporation, an affiliate of The Martens Company ("RSC"), was employed to manage seven apartment complexes (1,952 units) in Wichita, Kansas. Price moved to vacate the retention orders, contending that the retention of outside managers would result in a "complete dismantling of the Debtor's business."41 She characterized the move as "a greedy money grab by the Trustee," and an attempt by Trustee to "illegally abscond the Debtor's highly profitable business from its rightful owner, Price, solely for the purpose of selfishly obtaining large, unnecessary administrative expenses."42

MACCO was not a "highly profitable business." Five of its affiliates were in bankruptcy, several properties faced foreclosure, and property taxes and utility services were persistently delinquent. Management was crisis-driven. MACCO faced multiple lawsuits premised on McGinnis's alleged false or deceptive representations concerning the profitability of the properties. Price's motion to vacate the order approving Price Edwards and RSC was opposed by creditors whose cash collateral had been misappropriated, and whose tangible collateral was at risk due to tax liens, code violations, lack of maintenance and repair, and dubious insurance coverage. In light of the number, location, and condition of the properties requiring oversight and competent management, Trustee was well within his business judgment in retaining two well-regarded firms with expertise in operating troubled multifamily properties. Professional management was imperative to any hope of reorganizing the profitable parts of MACCO's enterprise.

On July 22, 25, 27, 28, and 29, 2011, a full evidentiary hearing was held to consider Price's motion to dismiss the Chapter 11 case and/or to remove Trustee, as well as her motion for preliminary injunction.43 On September 7, 2011, the Court issued its 52-Page Order, concluding that (1) there was no agreement to limit the powers of Trustee or to allow Price and McGinnis to continue managing MACCO; (2) dismissal was not in the best interests of MACCO, its creditors, or the estate; (3) ample cause existed to appoint a trustee; and (4) no cause existed to remove Trustee. Judge Jackson found that "Price and McGinnis should not be restored to management under any interpretation of the evidence."44 The order was not appealed and these findings are binding herein.45

1. Findings Supporting Denial of Motion to Dismiss

Judge Jackson found that although Price and McGinnis voluntarily caused MACCO to seek protection under Chapter 11, "once in bankruptcy, they flagrantly failed to comply with the rules and guidelines for debtors-in-possession and now ask to invoke a `Kings X' so they can operate without judicial supervision."46 Price and McGinnis's pre-petition and post-petition conduct deceived and harmed the interests of creditors. Dismissal would have prevented all interested parties from further investigating the conduct of prior management and seeking redress as necessary, by recovering preferential or fraudulent transfers, for instance.47 Indeed, according to testimony of a representative of the largest creditor, if the case were dismissed, "revenues and cash would again be subjected to the whims of prior management which would probably result in the necessity of obtaining receivers and multiple state foreclosure proceedings in as many as four states, with no coordinated oversight."48

2. Finding of No Agreement to Limit Trustee's Powers

Price and McGinnis argued that they conditioned their agreement to the appointment of a trustee upon (1) remaining in operational control of MACCO and (2) limiting the trustee's power to determining allowable unsecured claims, paying such creditors in full, and dismissing the case. Judge Jackson found, however, that "the credible evidence ... supports a finding that there was no agreement to limit the trustee's powers solely to the determination of unsecured claims."49 "[T]he record is clear that the trustee was to have unfettered statutory powers."50 Judge Jackson also concluded that while Trustee initially intended to enter into a management contract with Price and McGinnis, he quickly realized that McGinnis's management left MACCO's affairs in "chaos,"51 and that Trustee's fiduciary obligations precluded allowing McGinnis to continue in that role.

3. Finding Cause to Appoint Trustee

Although he found that Price and McGinnis consented to the appointment of a trustee, Judge Jackson also determined that "[a]fter hearing the evidence adduced at this hearing ... the Court is of the opinion the UST would have been able to establish the truth of all its allegations had an evidentiary hearing been conducted" on the UST's motion to appoint a trustee.52

4. Findings Supporting Denial of Motion to Terminate Trustee and Reinstate Prior Management

Judge Jackson was not persuaded that Price and McGinnis would operate MACCO within the parameters set by the Bankruptcy Code or comply with contractual obligations to creditors if they were reinstated as management of MACCO.53 In addition, he found no credible evidence to suggest any grounds to oust Trustee. Even taken in the light most favorable to Price and McGinnis, the evidence did "not indicate neglect, incompetence, malfeasance, or other impropriety by Trustee sufficient to support the claim that Trustee should be removed."54 Judge Jackson observed that MACCO's creditors "will have a better chance of being paid whether by operation of the properties by Trustee or through the sale of properties as part of a plan of reorganization" and that "sale by Trustee will generate better prices because prospective buyers will have more reliable information on the performance of each property than could be obtained from prior management."55

Thereafter, a hearing on Price's motion to withdraw the reference was held, and Judge Jackson recommended that the District Court decline to withdraw the reference of the Chapter 11 case.56 The District Court then concluded that because the bankruptcy court had already invested considerable time and resources managing the case, and Price had no jury trial right with respect to any relief she was seeking, the motion should be denied.57

Even after Trustee's appointment was vindicated by the 52-Page Order, Price and McGinnis continued to refuse Trustee unfettered access to electronically stored books and records of MACCO and its affiliates, forcing Counsel to file a turnover motion.58 Meanwhile, Trustee methodically and diligently took steps to protect the vast portfolio of operating and non-operating properties, and to mitigate losses. In August and September 2011, Trustee accomplished the following:

On September 19, 2011, Trustee filed his first application to compensate Counsel, who had invested in excess of 750 hours representing Trustee during the first three months of his tenure. The application was unopposed, and an order allowing Counsel fees of $178,926.50 and expenses of $8,957.83 was entered on October 24, 2011.65

Trustee also filed his first application for compensation, seeking an interim award of $179,753.75 for providing 659 hours of services through August 31, 2011,66 to which Price objected.67 Trustee withdrew his application and did not file another application until June 13, 2012, more than one year after he was appointed.

D. The Global Agreement Period

In late September 2011, Trustee and Counsel, and Price and her Michigan counsel, Mr. Lieberman, negotiated what the parties termed the "Global Agreement." Price and an affiliated entity (who, for convenience, will collectively be referred to only as Price), agreed to purchase, for the sum of $5 million, MACCO's membership interests in thirty-three SPEs and all real and personal property owned by MACCO, subject to all claims, debts, mortgages and liens against the SPEs and the properties (including tax claims and liens) (the "Purchase Agreement").68 Key to Trustee's willingness to sell virtually all the estate's property was Price's promise to obtain and deliver written releases from every lender holding a secured or guarantee claim against MACCO.69 Paragraph 1.3(d) of the Purchase Agreement provided:

On October 3, 2011, Trustee filed a Section 36371 motion seeking authority to sell the assets pursuant to the Purchase Agreement.72 The motion reiterated that "under the terms of the Purchase Agreement if secured creditors do not release the Trustee and the Bankruptcy Estate of any claim, the Purchase Agreement will be null and void and the earnest money will be returned to the Purchasers."73 With a closing anticipated on October 31, 2011, the Court set an expedited hearing date of October 27, 2011.74

The Section 363 sale motion and the Purchase Agreement drew objections from several creditors. AAB indicated it had "no intention of releasing its claims against MACCO" unless it was paid in full, fearing that its collateral would again be at risk if it were returned to prior management.75 AAB also objected to releasing Price and McGinnis from claims the estate had against them.76 FAA echoed AAB's concerns.77 NBC Bank urged the Court to deny the motion until Price and McGinnis complied with the terms of the releases proposed by the bank.78

The Purchase Agreement was approved after a hearing, and the closing date was extended to November 7, 2011.79 At Price's request, the closing date was moved to November 9, 2011. Thereafter, again at Price's request, Trustee agreed to delay the closing date until November 17, 2011, conditioned upon Price's deposit of additional earnest money. Instead, Price sought to delay the closing to December 12, 2011. After an emergency hearing, the closing date was continued to November 17, 2011. The Committee, skeptical that Price could ever perform under the Purchase Agreement and alarmed by the magnitude of administrative expenses accruing during the contract period, objected to any further delay and requested Trustee to begin selling the properties piecemeal.80 Secured lenders represented that Price was unwilling to agree to the terms they required for a release (i.e., full payment). They, too, argued that the delay prejudiced opportunities to market and sell the properties to unaffiliated third parties.81

After another highly contested emergency hearing, closing was continued to December 12, 2011, conditioned upon payment of additional non-refundable earnest money in the amount of $100,000.00. The parties agreed, and the Court ordered, that "there will be no further extensions of the closing date for the Purchase Agreement."82

On December 8, 2011, in an effort to close the transaction, Trustee obtained an order on an emergency basis to accommodate one lender's request to modify the terms of its release.83 On December 10, 2011, Price filed an emergency application to extend the closing date to December 14, 2011, ostensibly because one of the lenders wanted to meet personally with Price's investor.84 Trustee and the Committee agreed to the extension on the condition that additional non-refundable earnest money be deposited to offset the costs incurred by the estate on account of the multiple extensions, and that strict deadlines for closing be imposed.85 At that point, however, Price and her affiliates had "failed, and refused, to execute the agreement" that contained the conditions AAB set for its release of MACCO's unsecured guarantees,"86 and had not delivered to the closing agent other documents that FAA and other lenders required, so the transaction could not close on December 12th in any event.87 The Court held another emergency hearing on December 12, 2011, and an agreed order extending the closing to December 14, 2011, was entered. In exchange for the final extension, Price, McGinnis, and entities within their control were required to waive their claims to the $1.375 million settlement proceeds, and those funds were forfeited to the MACCO estate. Again, the order further provided that "there will be no further extensions of the closing date for the Purchase Agreement."88 The closing did not occur for various reasons, but primarily because Price did not obtain Frontier State Bank's release of MACCO's guarantee.

Efforts to consummate the Global Agreement spanned ten weeks, during which Trustee and his Counsel attempted to expedite matters to placate creditors, while accommodating Price's requests for more time to negotiate releases with secured creditors. Unsecured creditors, the UST, and undersecured creditors rebelled against delaying what they believed was inevitable — i.e., the inability of Price to perform as promised under the Purchase Agreement. The Global Agreement effort — which generated approximately 65 docket entries and seven hearings — consumed substantial resources that proved unproductive in the end. Had the transaction closed in December 2011 and all creditors been paid from the $5 million purchase price, Counsel's attorney fees might have been limited to approximately $200,000.00, leaving millions of dollars to return to equity.

In arguing against Counsel's final fee application, Price and McGinnis blame Counsel for "killing" the deal that would have concluded the Chapter 11 proceeding in 2011. They insist that Loyd should have filed a motion to modify the Global Agreement to except Frontier State Bank's claim from the release requirement. The preponderance of credible evidence establishes that the Global Agreement failed because, after two months of delay and excuse, Price simply could not and did not provide what the lenders demanded in exchange for waiving their claims against the MACCO estate.

No credible evidence suggests that Loyd undermined the closing in any way. Trustee simply was not authorized to close without releases of deficiencies and guarantees. It is undisputed that no creditor would execute a release unless all creditors did.89 Price claims that her investor, Ed Snyder, offered to indemnify the estate for any deficiencies. Trustee credibly testified, however, that no documents were ever provided to establish Mr. Snyder's willingness or ability to indemnify, nor did Mr. Snyder contact Trustee in connection with the transaction: "I wasn't allowed to talk to Mr. Snyder, the title company was not allowed to talk to Mr. Snyder, nobody was allowed to talk to Mr. Snyder but Mr. Lieberman and Mr. McGinnis, period. That was made abundantly clear."90

The Court specifically finds that the extent of Trustee and Counsel's efforts to close the Global Agreement were reasonable and prudent in light of the time invested, the restlessness and skepticism of the active constituencies of the estate, Price's ultimate inability to fully perform the Purchase Agreement, and the lack of transparency of the proposed investor. Moreover, the Court finds that Trustee and Counsel more than accommodated Price's requests for additional time to perform, and finds no credible evidence of bad faith, gross negligence, or intentional misconduct.

E. Trustee's Sales of SPEs and Real Property91

After the Global Agreement failed to close on December 14, 2011, Trustee immediately sought authorization to sell estate assets to Price and McGinnis or their affiliates on a piecemeal basis. In the last two weeks of December 2011, Trustee and Counsel negotiated and filed motions to sell sixteen properties or entities. In contrast to the expeditious manner in which Trustee and Counsel drafted and filed the appropriate paperwork to set the sales in motion, Price and McGinnis again required numerous extensions of time to close; each delay resulted in wasted time and effort on the part of Trustee and Counsel, and increased the amount of fees incurred by all affected parties.

On December 16, 2011, the Court approved the sale of the Charter Office Park, LLC, to Price and 250 West, LLC, an affiliate of Price and McGinnis.92 The sale closed on December 19, 2011, extinguishing MACCO's guarantee of a loan in the amount of approximately $225,000.00 and generating net sale proceeds of $264,348.68.93 Trustee assigned the membership interest to Price.94 Also on December 16, 2011, Trustee filed a motion to sell MACCO's membership interest in Division Properties, LLC, which owned two large apartment complexes in Oklahoma City — Remington and Winslow — subject to all liens and claims.95 This sale closed on January 11, 2012, generating gross proceeds of $367,500.00.96 Trustee assigned the membership interest to Price.97

On December 27, 2011, Trustee moved to sell the estate's membership interests in six SPEs to 250 West, LLC.98 Four lenders and various tax entities had liens against the real property owned by these SPEs. After four extensions,99 the sale closed on March 30, 2012, resulting in proceeds of $400,000.00 cash to the estate, and claims in the amount of $5,788,185.08 released.100 The membership interests were assigned to Consolidated Capital Investments, LLC, or Crescent Capital Investments, LLC.101

On December 22, 2011, Trustee filed a motion to sell Northgate Office Park, LLC. On March 30, 2012, again after several extensions, the property was sold to Price, resulting in cash proceeds of $9,050.00 and a release by Frontier State Bank of debt in the amount of $724,278.03.102

On December 22, 2011, Trustee filed a motion to sell to 250 West, LLC, the estate's membership interest in J & M Investors, LLC (which owned the "Dorchester Drive" residential property), as well as two single family residences owned directly by MACCO, one in Nichols Hills, Oklahoma ("Avondale"), and one in Dallas, Texas ("Turtle Creek 18D"), again subject to all liens and claims, and subject to obtaining releases from NBC Bank.103 After five extensions,104 the sale closed on March 9, 2012, for $3,158,074.50, which after paying closing costs, taxes, delinquent homeowner association dues, mechanics and materialmens' liens, and mortgages, resulted in net proceeds to the estate in the amount of $100,000.00 and a release by the NBC Bank of deficiencies against MACCO, as well as a release of MACCO's guarantee of J & M Investors' liability in the amount of $1,530,167.56.105 Trustee assigned the membership interest of J & M Investors, LLC to Price.106

On December 23, 2011, Trustee filed a motion to sell to 250 West, LLC, three non-income producing properties owned by MACCO ("Sara Road," "Overholser Drive,"107 and "Gatewood") and a membership interest in FEB Red Fox Apartments, LLC.108 FAA held mortgages on all these properties. After seven emergency Court-approved extensions,109 closing occurred on June 29, 2012, resulting in $300,000.00 cash paid to the estate and the release of secured claims in the amount of $4,042,408.10.110

On January 6, 2012, Trustee moved to sell the estate's interest in thirty-three vehicles to Price, subject to liens and the provision of releases. This sale closed on February 10, 2012, resulting in gross proceeds of $50,000.00.111

On January 20, 2012, Trustee sold two lots in Northside Business Park in Oklahoma City to a third party purchaser (i.e., unaffiliated with Price and McGinnis) free and clear of liens. The sale generated proceeds in the amount of $165,620.00, all of which was distributed to taxing entities and the mortgage holder.112

On January 26, 2012, Trustee moved to sell the estate's interest in another three SPEs, subject to liens and claims, and on conditions similar to the prior purchase agreements with Price and her affiliates. On February 3, 2012, Trustee moved to sell the estate's interest in Vendamatic, LLC, to Price and 250 West, LLC, subject to liens and claims and the provision of releases. Both of these motions were conditioned upon the closing of earlier-approved purchase agreements. Price's inability to close the earlier sales resulted in denial of these motions, and earnest money in the amount of $10,000.00 was forfeited to the estate.

During the first three months of 2012, Trustee had disposed of all but one of MACCO's non-income producing properties and resolved all claims against those properties and the estate. The Court finds Trustee acted wisely and expeditiously in relieving the estate of properties that could not support their own debt service or pay their own accruing maintenance, utility, and insurance expenses.

In August 2012, the Court entered an order authorizing Trustee to jointly administer the SPEs that were debtors in possession in their own Chapter 11 cases, namely MA Cedar Lake Apartments, LLC (Case No. 10-16563); NV Brooks Apartments, LLC (Case No. 10-16503); JU Villa Del Mar Apartments, LLC (Case No. 10-16842); and SEP Riverpark Plaza, LLC (Case No. 10-16832), within the MACCO case.113 As trustee of their parent company, MACCO, Trustee acted as responsible person on behalf of these debtors in possession, overseeing operations, maintaining the books and records, and preparing monthly operating reports in their separate cases. From a practical standpoint, joint administration would streamline filing and noticing in connection with future sales of these entities.114

In August 2012, Trustee located a "stalking-horse" bidder, Living Investments, LLC, for the Brooks Apartment complex in Norman, Oklahoma, which was owned by NV Brooks Apartments, LLC. Trustee filed all the appropriate motions and notices in an attempt to obtain the highest and best bid, and ultimately sold the property to Living Investments for $4,500,000.00.115 Notwithstanding an objection by Price,116 the Court approved the sale, and the transaction closed in December 2012, resulting in the release of MACCO's guarantee of over $4 million to AAB, payment of over $285,000.00 in property taxes, and net proceeds of $85,941.19 to the estate. As part of the transaction, Trustee assigned to the purchaser the right to receive certain insurance proceeds due from First Specialty Insurance Corporation for pre and post-petition hail, tornado, and fire damage. To accomplish the assignment and comply with the terms of the agreement, Trustee filed an emergency motion and obtained an order requiring the insurer to issue proceeds to the Trustee, specific contractors, or the purchaser as directed.117

In 2012 and 2013, Trustee consummated sales of the Vendamatic laundry contracts to Price and an affiliated entity, netting approximately $35,000.00 to the estate.118

In November 2012, Trustee sold MACCO's membership interests in MA Cedar Lake Apartments, LLC, and 59th Street Business Park, LLC to Price and 250 West, LLC,119 subject to all liens and claims, and subject to obtaining releases from the lienholders and everyone affiliated with Price and/or McGinnis.120 This transaction resulted in proceeds of $300,000.00 to the estate, and a release of liability in the amount of $2,882,575.40 and the release of tax claims.121

In a separate transaction, Trustee also sold MACCO's interest in JU Madison Park Apartments, LLC and LP Chalet Apartments, LLC, to the same entity under the same conditions.122 This sale resulted in proceeds of $400,000.00 to the estate and the release of claims of four lenders in the total amount of $7,178,603.12 and the release of tax claims.123 Trustee assigned the membership interests to Price and 250 West, LLC.124 McGinnis once again assumed management of the Cedar Lake entity and was its designated fiduciary. After reviewing the first monthly operating report McGinnis filed after the sale, the UST objected to McGinnis's questionable transfers of Cedar Lake's funds, and his failure to pay creditors that Price promised to pay as a condition of the sale (i.e., taxing authorities), which prompted Judge Jackson to appoint an examiner in the Cedar Lake case.125

In November 2012, Trustee obtained authority to sell the estate's interests in the Holbrook Shopping Plaza entities, which owned a shopping center in Arizona. Holbrook, like Cedar Lake, was also a Chapter 11 debtor in possession. After four extensions, the sale closed on February 28, 2013, and MACCO's interest in the entities were assigned to Price.126 MACCO's estate benefitted from net proceeds in the amount of $10,000.00 and a release of FAA's claim in the amount of $1,443,907.88.127 Trustee ensured that all of Holbrook's creditors were paid through the closing process, and Holbrook's Chapter 11 case was ultimately dismissed.128

On August 28, 2013, after seven extensions,129 Trustee sold the estate's membership interests in Chapter 11 Debtors JU Villa Del Mar Apartments, LLC and SEP Riverpark Plaza, LLC, generating $900,000.00 cash for the estate and the release by FAA and AAB of approximately $18 million in guarantee claims.130 Trustee assigned the interests to 550 West, LLC and 400 West, LLC, respectively, entities for which McGinnis was manager. In addition, Trustee caused all creditors of these two debtors in possession to be paid in full from proceeds of the sale, including $2,136,073.00 in property tax claims, and their Chapter 11 cases were dismissed.

By August 28, 2013, Trustee had liquidated all real property and operating assets of MACCO. As a result of Trustee insisting on releases of potential deficiencies and guarantees in connection with the sales, claims against the estate in excess of $72 million were eliminated.131

Negotiations of these sales — and assuaging concerns of secured and unsecured creditors and the UST about returning the properties to prior management — required Trustee and Counsel to communicate and collaborate extensively with these constituencies. From Price and McGinnis's viewpoint, the cooperation among Trustee, Counsel, the Committee, the UST, and secured creditors amounted to a conspiracy among a close-knit bankruptcy community to deprive them of their life's work. It was Price and McGinnis who invoked the complex machinery of Chapter 11 of the Bankruptcy Code, however, which both guided and constrained the conduct of Trustee, Counsel and all professionals and parties involved. The Court finds that Trustee and Counsel meticulously abided by the law and rules, and exercised sound business judgment in the face of tremendous adversity. The direction of the case was preordained by the dire circumstances of the debtor and its subsidiaries, and the muddling of their identities — and not by bad faith or improper motives of Trustee, Counsel, or their colleagues.

F. Abandonment of Properties

Early in the case, FAA obtained, with Trustee's consent, an order authorizing Trustee to abandon the estate's interest in one of the Turtle Creek condominiums.132 The property was non-income producing and encumbered by two mortgages, tax liens, and home owner association liens. After abandonment, but before FAA could exercise its state law remedies against the property, Price conveyed the condo to a newly-formed entity and filed bankruptcy on behalf of that entity.133 FAA's experience was a cautionary tale to all secured creditors.134 Instead of seeking stay relief and abandonment, secured creditors preferred to leave their collateral under the safe umbrella of the MACCO Chapter 11 case in the hands of Trustee.135

Also in the first month of Trustee's appointment, Trustee caused a MACCO subsidiary, Sovereign Office Park, LLC, to file its own Chapter 11 case136 in order to halt Kirkpatrick Bank's mortgage foreclosure action so Trustee could investigate the value of the office park. After obtaining appraisals, Trustee determined the value of the property was less than the two mortgages and unpaid tax liens encumbering it. Trustee conceded to stay relief and abandonment, and dismissed the LLC's Chapter 11 case.137

On March 19, 2012, Trustee sought to abandon the Swan Lake Road property, citing its burden to the estate and the lack of equity. The motion was not opposed, and an order of abandonment was entered on April 10, 2012.138 Although MACCO owned the property, the property was pledged as collateral on a note on which MACCO was not liable. Since MACCO had no liability to any lender directly or as guarantor, no releases were needed.139

On April 2, 2012, Trustee filed a motion to abandon MACCO's interest in four SPEs that owned apartment complexes mortgaged to Frontier State Bank.140 Although Trustee again attempted to negotiate a sale of these properties to Price and McGinnis or their affiliates, Frontier still would not agree to release MACCO's guarantee. Frontier also refused to allow Trustee to use cash collateral to repair the dangerously rotted stairwells and landings.141 An order authorizing abandonment was entered on April 16, 2012.142 Although Trustee did not obtain a release of the estate's guarantee from Frontier State Bank upon abandonment, the bank later withdrew its $6,143,528.56 proof of claim.143

In the exercise of sound business judgment, Trustee appropriately abandoned assets that were burdensome to the estate and that exposed the estate to actual and potential liabilities.

G. Trustee's Operation of Properties and Entities

Fundamental to Price and McGinnis's objections to compensating Trustee and his professionals is their belief that Trustee ignored his duty to maintain and protect the income-producing properties (i.e., the apartment complexes, office buildings, and shopping center), and failed to operate them in a manner that maximized occupancy and revenues. In this regard, they claim that when Trustee was appointed, the properties were well maintained and flourishing, that occupancy was high, and the properties were cash flowing. They complain that Trustee intentionally "starved" the properties, ignoring their pleas to use other entities' funds for maintenance and repairs, so that when Price reacquired the properties during the period spanning late 2012 to September 2013, they had deteriorated significantly, and income and occupancy had diminished. They attribute these conditions to gross negligence or willful mismanagement by Trustee in (1) not providing sufficient oversight or security to prevent vandalism in some cases, and the theft of furnishings, copper, appliances, and equipment in others (and in one case, theft of rent checks); (2) not promptly repairing damage caused by storms and tornados, leading to water damage and the growth of mold; (3) not filing insurance claims; and (4) not diligently courting tenants and potential buyers. With respect to MACCO's single-family residences, they claim Trustee failed to maintain or lease them.

At trial, Price introduced photographs that she testified were taken at the time she reacquired the properties — i.e., from April 2012 through September 2013 — as evidence of purported mismanagement and neglect by Trustee.144 As demonstrated by Trustee's credible testimony145 and supported by his contemporaneous time records, however, Price had submitted these exact photographs to Trustee on January 8, 2012, long before she reacquired the properties.146 These photographs actually represent the dilapidated condition of the properties Trustee inherited upon accepting his office.

As an example, photographs taken by one of the professional property managers employed by Trustee during her initial walk-through of an apartment complex in July 2011 depicted the same crumbling concrete stairs, and wood rot afflicting landings and catwalks, that appeared in photographs taken by Price as examples of Trustee's alleged mismanagement.147 The manager immediately barricaded the stairwell for the safety of the tenants, moved them to other units, and solicited several bids to renovate the stairwell.148 Trustee, however, could not hire anyone for the project because the lender that controlled the entity's cash decided to retain and pay McGinnis to make the repairs.149 While Price accuses Trustee of willfully neglecting this property, it turns out that Trustee and his professionals acted quickly and responsibly in insuring tenant safety and planning to repair the structural damage, but were undermined when McGinnis convinced the lender that he would make the repairs.

Frankly, none of Price's testimony blaming Trustee and his professionals for "running down" the properties can be trusted, and the Court finds that Price's testimony concerning the photographs was a blatant attempt to mislead the Court into believing that deterioration of the properties occurred during Trustee's watch. The preponderance of the evidence indicates that these properties required structural, mechanical and/or cosmetic rehabilitation prior to Trustee's appointment, and the photographs Price took and delivered to Trustee before he sold any of the properties to Price reflect that existing deferred maintenance.150

Moreover, Price's claim that Trustee's actions caused diminished occupancy presupposes that the initial occupancy rates claimed by McGinnis were accurate. Credible evidence established that those rent rolls were inflated, and therefore any decline in occupancy was not as pronounced as represented by Price. In fact, the evidence established that after delinquent and phantom tenants were evicted or removed from the rent rolls, occupancy in most of the complexes gradually and steadily increased during Trustee's tenure.151 Moreover, health and safety concerns — as well as the lack of unencumbered funds to rehabilitate or refurbish — contributed to the number of unoccupied units Price complained of.

Price and McGinnis contend that the properties quickly depreciated within the first 45 days of Trustee's tenure, i.e., before his professional property managers were in place. McGinnis testified that the properties "deteriorated in physical condition immediately because ... there was no money being put back into those properties. In fact, [in] the first two weeks ... there was absolutely no dollars spent to keep those properties maintained, and there were air condition[ers] going out. And I was paying for those on my own credit card ... to preserve the asset and preserve the tenants."152 However, this testimony only bolsters Trustee's position that the apartment complexes were already in a state of disrepair and economic chaos when he was appointed and that no unencumbered funds were available to maintain them.

Price derides Trustee's decision to exclude her and McGinnis from managing the properties and views Trustee's employment of professional property management firms as unnecessary, expensive, wasteful, and ineffective. In light of Judge Jackson's finding in the 52-Page Order that "Price and McGinnis should not be restored to management under any interpretation of the evidence,"153 it is irrefutable that Trustee exercised sound business judgment in declining to employ Price and McGinnis, and in retaining professional property management firms with extensive experience in operating multi-family residential properties.

With the Court's approval, Trustee brought in Price Edwards to manage five multifamily complexes located in Oklahoma, which the parties identify colloquially as Remington, Winslow, Newport/Granada, and Brooks. Trustee retained Wichita-based RSC to manage properties located in Wichita, Kansas, identified as Cedar Lake, Madison Park, Villa Del Mar, Riverpark, Battin, Parkwood, and Southeast.154 Managers were on site within 45 days of Trustee's appointment, and they observed and recorded both the condition of the properties and the state of the books and records. Testimony of the managers unambiguously established that the conditions they encountered were the result of long-term neglect that commenced long before Trustee was appointed.155 Many of the properties were located in high crime areas and were subject to frequent vandalism. Safety issues requiring immediate attention included missing smoke alarms and GFI receptacles, pools that did not comply with federal laws, and pools that had broken equipment or gates.156 Some properties were full of trash, or infested with roaches or contaminated by mold. Unwanted furniture and trash littered the dumpster areas. The mechanical components of some units, i.e., hot water tanks, refrigerators, air conditioners, and other appliances, had been cannibalized in order to fix or furnish other units. Exterior issues included dead trees, old and leaky roofs, missing soffits and siding, broken windows, termite damage, deteriorated fencing, unstable wrought iron railings and supports on catwalks and stairwells, drainage issues, broken pool gates, and wood rot. Existing on-site personnel lacked appropriate written policies and procedures for screening potential tenants or complying with federal and state housing laws. Rent rolls provided by Price and McGinnis were inaccurate, and did not account for vacancies occurring several months prior to Trustee's appointment, and the rolls were also exaggerated by listing non-paying tenants.157

Although occupancy — and revenues — dropped initially after Price Edwards and RSC took over, after a transition period, they rebounded.158 The initial decrease was in part a function of the inaccurate rent rolls and in part because Price Edwards and RSC employed more stringent application policies and background checks — policies to screen out unreliable tenants.159 Moreover, in the first months of Trustee's control, McGinnis had diverted in excess of $88,000.00 in rents from the Remington and Winslow complexes,160 which also contributed to the lower initial revenues that Price attributes to Trustee's mismanagement.161

Price cites, as an example of neglect, an incident in which an on-site manager misappropriated $35,000.00 in rent checks from two Oklahoma complexes. However, the evidence supports finding that (1) the manager was originally a McGinnis hire, and Price Edwards kept her on the payroll after a background check; (2) the manager first claimed she was robbed of the checks at gunpoint, and was terminated by Price Edwards for failing to deposit checks daily according to policy; (3) the face amount of checks stolen was not $35,000.00, but approximately $8,000.00; (4) Price Edwards immediately mitigated the damage by alerting tenants and helping them stop payment on the stolen checks and issue new rent checks; (5) when Price Edwards learned that the manager perpetrated the theft, it pressed criminal charges against her; and (6) the manager ultimately paid $1,700.00 in restitution.162 The Court finds that this incident does not reflect any neglect or mismanagement by Price Edwards or Trustee.

The Brooks apartment complex in Norman, Oklahoma, was a special case. Price and McGinnis testified that their investor had no interest in purchasing this complex because, they allege, Trustee failed to mitigate storm damage, necessitating remedial "environmental" work that the investor deemed too expensive. The evidence established, however, that when Price Edwards took over management in July 2011, they encountered units with signs posted by the City of Norman that warned: "Uninhabitable by Humans."163 The Fire Marshal had condemned one of the eight-unit buildings in which a fire occurred in October 2010 (nine months prior to the appointment of Trustee). Two children perished in the fire.164 Concerned for the safety of residents in other buildings, the City and the Fire Marshal planned to condemn the entire property due to McGinnis's failure to timely make electrical, plumbing and HVAC repairs to meet health and safety codes. Prior to Trustee's appointment, only two buildings in the complex had been brought up to Code.165 Trustee and his management professionals met with City inspectors and the City Attorney to determine what needed to be done to remediate the violations. Over time, Trustee and Price Edwards obtained a clearance for occupancy from the City on several more buildings.

The Brooks complex had also suffered hail damage from two separate storms before Trustee took over, one in 2009 and one in 2011. Then, in April 2012, Brooks sustained extensive tornado damage, prompting Trustee and Counsel to react on an emergency basis to preserve property, ensure safety of residents, and determine insurance coverage.166 Trustee retained a public adjuster to establish the estate's claims against the insurers167 and began working on repairing the property to ready it for sale. That included asbestos removal and mold remediation. These multiple catastrophic events resulted in additional uninhabitable units and a continued decrease in rental revenue.168 Notwithstanding these obstacles, Trustee succeeded in obtaining a buyer for the complex which resulted in the payment of all mortgages and other liens, with interest, and elimination of MACCO's guarantee liability.169

The Wichita, Kansas, apartment complexes, consisting of more than 1,900 units, similarly suffered from deferred maintenance prior to Trustee's appointment. RSC's Steve Martens testified at the hearing held in July 2011 concerning the condition and status of the Wichita properties. His initial review revealed undocumented employees, an absence of equipment to maintain the properties, an outdated rent control system, and a general lack of organization.170 The physical condition of the properties, which were built in the 1950s and 1970s, were "run down" and showed "signs of significant deferred maintenance, both on the exterior and interior."171 In addition, rent rolls included tenants that had vacated the property some time earlier.172 Tenant security deposits had not been segregated and tenant refunds had been paid from operating accounts.173 Utility companies were on a cash only basis, and in many units, where electrical service had been disconnected for a long period of time, the meter had been removed. Those units could not be occupied until city inspectors certified the electrical systems and the meters were replaced.174 The city of Wichita reported 147 existing code violations, including swimming pool violations involving drains, fences and equipment, and chronic criminal activity at the vacant Battin apartment complex.175

Upon taking over management of the properties, Mr. Martens's team performed triage to identify units that needed immediate attention such as water leaks, and to determine which units could be made ready to lease with little expense and which could not be rented without substantial investment. Trustee and management left vacant the units needing extensive investment ("down units") and focused available resources on units that could be made rentable by, for instance, moving appliances from mold or water damaged units to other units. With respect to the code violations, pools that could be brought up to code were, and the few that had more extensive problems were drained and closed.176 RSC managers made efforts to improve occupancy by instituting promotions, tie-ins, and referral discounts, and by advertising in the city-wide apartment guide.

With little to work with, Trustee and RSC made significant strides toward improving the safety, appearance, and services at the Wichita properties (within the confines of available funding), eliminated all code violations, evicted non-paying tenants, hired and trained competent maintenance and leasing personnel, established procedures, kept utilities and insurance current, established tenant security deposit accounts, and established reliable financial records.177

Occupancy, and employee morale, suffered from interference by Price and McGinnis, who contacted employees of the apartment complexes with rumors that they would shortly be taking over management, which caused confusion and disruption. When word got out that a property was under contract for sale, employees sought other employment, creating vacancies for on-site managers and maintenance personnel that were difficult to fill during the sometimes lengthy periods between contract and closing.178

Price and McGinnis both complained of broken windows at the Battin property, contending that Trustee neglected to secure Battin with fencing and on-site security. It is undisputed, however, that the complex was 100% vacant when Trustee was appointed, and that LP Battin Apartments, LLC, lacked any source of income. A large complex built in the 1950s, Battin was located in a high crime area of Wichita and was subjected to repeated vandalism. In fact, even before Trustee was appointed, the City cited Price and McGinnis with code violation notices relating to the condition of the property.179 When Mr. Martens inspected Battin before RSC was retained, he observed numerous broken windows and doors that had been kicked in. He considered the units too unsafe to even enter for inspection.180 Trustee and his management team met with Wichita officials to address the code violations. Trustee used part of the $300,000.00 fund to fix violations, and then sought to abandon the property. In September 2011, Trustee, the lender, and Price and McGinnis agreed that in lieu of a formal abandonment, McGinnis would maintain the property and that the lender would advance funds to McGinnis for that purpose.181 For Price and McGinnis to place blame for Battin's dismal condition on Trustee and RSC when the evidence established that serious code violations existed before Trustee was appointed, that Battin generated no income, and that McGinnis and the lender willingly assumed the burden of maintaining the property, is hypocritical and further underscores their utter lack of candor to the Court.

In most cases, however, Trustee was able to work closely and cooperatively with lenders and property managers to tackle deferred maintenance issues, providing lenders with rehabilitation plans, budgets, and progress and occupancy reports to justify his use of cash collateral.182 For example, with respect to the Cedar Lake property, Trustee obtained the lender's consent to use half of the rental income for maintenance and rehabilitation.183 Priority was placed on matters affecting safety of the tenants and on units that could be made ready for lease with minimal investment. Most lenders would advance $1,000.00 to $2,000.00 per unit to increase occupancy.184 That said, many units required $15,000.00 to $20,000.00 in repairs. It made no economic sense for lenders to advance funds to refurbish those units because rents would not offset the investment in any reasonable time period.185 In addition, it was well known that the apartment complexes were to be sold and the loans satisfied. Price highlights these "down units" as examples of Trustee's neglect, but again, fails to explain how Trustee could have funded the rehabilitation of those units.186

The Court finds that Trustee made the best of a bad situation. These were physically decrepit and financially troubled properties, many involved in foreclosure or bankruptcy proceedings. They required significant investment of new money for maintenance and rehabilitation — money not available to Trustee. Trustee properly refused to adopt McGinnis's unconventional methods of financing the maintenance and operations of these marginally habitable properties. The Court deems Trustee's skills and business judgment in safeguarding, operating, and selling the properties impeccable. Trustee focused on tenant health and safety, resolved code violations, protected and maintained the physical assets to the extent funds were available, constructed credible books and records, satisfied all the post-petition liabilities left unpaid by McGinnis, reduced the estate's guarantee liabilities, and negotiated sales resulting in cash to the estate to pay administrative expenses and unsecured creditors, all while fielding constant demands, threats and interference from McGinnis and Price.

H. Price's Proposed Plan and Disclosure Statement

In May 2012, shortly after Trustee disposed of MACCO's non-income producing properties, Price proposed a plan of reorganization in which she would retain her equity in MACCO. Pursuant to the plan, creditors would retain their pre-bankruptcy claims and rights, which, she claimed, rendered them unimpaired and therefore not entitled to vote on the plan.187 Price filed a separate motion seeking a declaration that such treatment of creditors did not impair their rights ("Impairment Motion"), drawing vehement objections from Trustee, the Committee, and several creditors. Counsel for Price explained to the Court that Price desired to "attempt to confirm the plan by consents under 1129(a) as opposed to cramdown under 1129(b). That's what this is about."188

On July 6, 2012, Price filed a second amended plan and a second amended disclosure statement, which also attempted to disenfranchise all classes of claims by labeling them unimpaired.189 This filing also drew objections by Trustee, UST, AAB, QCB, FAA, the Committee, and Louis F. Vargas, a litigation creditor. These parties outlined dozens of instances of inaccurate or misleading information contained in the disclosure statement, as well as the omission of highly relevant information. The objecting parties also argued that the plan itself was patently unconfirmable. According to AAB:

Another creditor echoed that sentiment.

On August 2, 2012, a few days before the scheduled hearing on the Impairment Motion, Price withdrew the motion.192 The Court then set a hearing on the adequacy of the second amended disclosure statement for September 12, 2012. On August 20, 2012, however, Price filed her third amended plan and disclosure statement. This time, she designated all claims as impaired, proposed to reaffirm and except from discharge all guarantee claims, and proposed to pay all other unsecured claims from funds drawn on a $5 million letter of credit. Price would retain her equity ownership in MACCO, with Price and McGinnis serving as its officers.193

The UST, Trustee, AAB, FAA, QCB, and the Committee filed new objections to this third effort. These parties had recently discovered that Division Properties, LLC — an entity Price purchased from Trustee in January 2012, and which owned and operated the Remington Apartments and the Winslow Glen Apartments in Oklahoma City — filed a Chapter 11 case in the Northern District of Texas.194 This was Division Properties, LLC's second Chapter 11 filing in two years. The first case was filed in 2010 in the Western District of Oklahoma in order to stay Wells Fargo from proceeding with receivership and foreclosure actions. In 2012, Division Properties, LLC, again under management of McGinnis, was in default of its loan obligations, and Well Fargo again sought a receivership and foreclosure, which prompted the second bankruptcy filing, this time in Dallas, Texas. Moving to dismiss the bankruptcy, Wells Fargo alleged bad faith and venue shopping. Three weeks into the case, the debtor in possession had not yet requested permission to use cash collateral, and Wells Fargo sought an order prohibiting any unauthorized use. In September 2012, an agreed cash collateral order was entered requiring Division Properties to make substantial adequate protection payments to Wells Fargo, which McGinnis represented would be funded by Price's investor, Mr. Snyder. That order was immediately breached when adequate protection payments were not made. Supplemental negotiated orders to cure those defaults were similarly breached. Thereafter, a proposed Section 363 sale to Mr. Snyder or his entity, who allegedly promised to satisfy the mortgage debts in full, failed to close, notwithstanding being afforded numerous extensions over a two-month period. After being hindered from exercising its rights for more than six months, Wells Fargo obtained a dismissal of the case and a 180-day bar order.195

The Division Properties bankruptcy cast serious doubt on the feasibility of Price's proposed plan for MACCO. None of the objecting creditors would consider entering into a reaffirmation agreement with MACCO in exchange for allowing Price and McGinnis to retake control of MACCO. Creditors were also justifiably skeptical of the proposed $5 million letter of credit. No documentation of a firm commitment by the proposed funder had been provided. Indeed, the latest Division Properties fiasco underscored the unlikelihood that the promised funding would be forthcoming.

The disclosure statement hearing set for September 12, 2012, was stricken upon Price's request to allow her to file a fourth amended plan and disclosure statement. The Court afforded Price until September 21, 2012, to file a disclosure statement that appended a written commitment from the proposed grantor of credit.196 Price timely filed her fourth amended disclosure statement, but the so-called commitment attached was not by any means definite. NBC Bank offered to fund a $5 million letter of credit only if various conditions were met, including the deposit of a $5 million CD, payment of a commitment fee of $400,000.00, bringing current loans made by NBC to other Price entities, and the execution of guarantees by various individuals and entities.197 Also attached to the disclosure statement were letters executed by Ed Snyder and David Lieberman, manager of an LLC affiliated with Price and McGinnis, promising to fulfill NBC Bank's conditions. In yet another round of objections, Trustee, QCB, AAB, FAA, the Committee, and the UST expressed legitimate doubt that the contingencies attached to the proposed funding of the plan would ever occur. Nothing in the disclosure statement established that the parties offering to meet these conditions had the financial means to do so.198 All objecting parties urged the Court to deny approval of the disclosure statement as lacking sufficient information, and as not conducive to a confirmable plan. None of the objecting creditors wanted the fate of their claims resting in the hands of Price or McGinnis. At Price's request, the hearing on the fourth amended disclosure statement was continued indefinitely.199

In the meantime, Price continued purchasing assets from the MACCO estate, resulting in the release of claims against MACCO by some of the objecting creditors. On December 21, 2012, Price tried again, filing her fifth amended plan and disclosure statement proposing to pay certain creditors in full and guaranteeing payment to others, underwritten by a $20 million line of credit again allegedly promised by Mr. Snyder.200 Again Trustee, UST, AAB, FAA, and the Committee filed objections, asserting concerns similar to those previously made. Weighing the long history of breached agreements, many creditors concluded that Price and McGinnis had no intention of complying with the plan terms if it were confirmed.

In her First Modified Fifth Amended Plan, Price designated a third party disbursement agent. This plan was modified a second and third time in conjunction with discussions among the parties.201 However, the third modified disclosure statement remained objectionable to Trustee, the Committee, the UST, and secured creditors.202 Again, among other issues, there was no evidence of a binding commitment of any lender to supply a $20 million line of credit to fund the plan. Mr. Snyder's commitment, attached to the disclosure statement, was unsigned, and Mr. Snyder's financial ability to make such a commitment was again unaddressed. The parties negotiated and collaborated on another disclosure statement, and each party filed supplemental objections.203 A fourth modified fifth amended plan and disclosure statement were filed on March 8, 2013.204 The commitment letter attached to the disclosure statement was not still signed. At a hearing on March 11, 2013, the parties agreed to defer further proceedings on the plan until contracts to sell the last two operating SPEs closed and the lender, AAB, released its $18 million guarantee claim against MACCO, at which point the validity of the $20 million letter of credit commitment would be moot.205

Accordingly, Trustee moved to sell the two remaining SPEs, SEP Riverpark Plaza, LLC and JU Villa Del Mar Apartments, LLC, to Price and her affiliates. The sale was scheduled to close in May 2013, but Price objected to fees and expenses included in the secured lender's claim — fees and expenses AAB was forced to incur in response to Price's litigiousness during the course of the bankruptcy case.206 The objection delayed the closing of the sale, as well as resolution of the plan and disclosure statement issues.207 On May 23, 2013, AAB and Price entered into a stipulation208 as to the amount of AAB's claim. The sale of SEP Riverpark Plaza, LLC and JU Villa Del Mar Apartments, LLC did not close until August 28, 2013, however. Price did not propose another modified plan.

Price's plan of reorganization failed for the same reasons the Global Agreement failed — Price and McGinnis promised more than they could or would deliver. In both instances, Price claimed that all creditors would be paid and claims would be released, but she failed to produce written evidence of a credible funding source. Since Price and McGinnis lacked any record of transparency or trustworthiness, Trustee and the Committee as fiduciaries, and the UST as watchdog, reasonably and responsibly required assurances that Price and McGinnis, or their affiliates, could financially perform their contractual obligations prior to relinquishing property of the estate. Nor were creditors willing to give Price and McGinnis the benefit of the doubt. Unfortunately, the plan process was extremely time-consuming, and amplified fees and expenses across the board, including those of Counsel, MED PLLC, and Trustee.

I. Renewed Attempt to Disband the Committee

As noted, the Committee actively opposed the proposed plan's intended treatment of unsecured creditors. Shortly after filing her first amended plan, Price filed a Motion for Order Declaring Cessation of Bona Fide Existence of Creditors' Committee, or in the Alternative, Determination of its Lack of Standing.209 Again, she argued that because the three original Committee members had been paid in full, the Committee should be dissolved.210 Two members continued overseeing the proceedings on behalf of the unsecured creditor body. One of them, Jackie Hill, purchased a small unsecured claim after McGinnis paid his original claim, and therefore he was in fact an unsecured creditor. Claiming to be victimized by the Committee's aggressive oversight, however, Price contended that "it is inexplicable that the United States Trustee has permitted the membership of the Committee to evolve to the point where it has become merely a tool for the non-economic agenda of a single creditor whose original claim has long since been satisfied."211 In its defense, the UST argued that the Committee was a distinct entity that had fiduciary responsibilities to the entire body of unsecured creditors, and could not be terminated simply because its individual members' claims had been strategically paid by a third party.212

Tellingly, no one but Price and McGinnis challenged the adequacy of the Committee's representation of the unsecured creditor body or Committee counsel's representation or cost to the estate. The Committee had been an effective advocate; its original investigation of McGinnis's activity while operating MACCO as debtor in possession led to the appointment of Trustee and the preservation of the $1.375 million settlement proceeds; and its efforts during the sales to Price increased purchase prices and earnest money deposits, all to the benefit of unsecured creditors.213 The estate was fortunate that the two original Committee members agreed to continue in that role — the majority of unsecured creditors were disinclined to serve, having watched the existing Committee members intimidated, manipulated, and sued by Price and McGinnis.214

After a full hearing, Price's motion to disband the Committee was denied.215 On July 23, 2012, the UST appointed two additional unsecured creditors to the Committee — Cobblestone Apartments of Tulsa and Louis F. Vargas.216 Approximately one week later, an entity controlled by Price and McGinnis purchased Vargas's claim.217

J. Adversary Proceedings

As required under Section 1104 of the Bankruptcy Code, Trustee and MED PLLC engaged in forensic accounting to determine potential recoveries to the estate for unauthorized post-petition transfers and for fraudulent or preferential transfers.218 Trustee and Counsel commenced or joined in at least twelve adversary proceedings.

1. Pending Adversaries Seeking Recoveries from Price and McGinnis

In 2012, Trustee filed four complaints, and in 2013, two additional complaints seeking recovery of a total of approximately $6.5 million in transfers made by MACCO to Price, McGinnis, or an individual or entity affiliated with them.219 In December 2012, McGinnis filed a motion to suspend the prosecution of the 2012 proceedings to "reduce the distraction and expenses caused by this litigation, which increases the administrative costs and depletes the resources available to fund a 100% plan."220 The motion drew objections from Trustee and the Committee. After a hearing, the motion was denied, and the Court set scheduling conferences in the adversary proceedings for May 6, 2013.221 At the scheduling conferences, the Court set the matters for trial on September 16, 2013. On July 16, 2013, the defendants filed motions to withdraw the reference. Judge Jackson suspended discovery and scheduling order deadlines pending the District Court's ruling on whether withdrawal of reference was warranted. The motions to withdraw reference have been under advisement since September 16, 2013.

In September 2013, Price and McGinnis again filed applications to stay or dismiss the adversaries against them because, they alleged, the estate had sufficient cash to pay all remaining claims in the case. Again, the applications were denied.

In December 2013, in connection with Price and McGinnis's agreement to convert the Chapter 11 cases to Chapter 7, Trustee agreed to dismiss the adversary proceedings on the ground that at that point it did appear, in fact, that the estate had sufficient cash to pay Chapter 11 administrative expenses and unsecured claims. Trustee duly filed motions to dismiss, and then withdrew them after Price and McGinnis failed to tender the required releases. Once releases were in hand, Trustee refiled the motions to dismiss. Two creditors and the UST have objected to dismissal of these adversary proceedings against Price and McGinnis, however, in light of the drain on the estate's cash resulting from the continued post-conversion litigation Price and McGinnis have pursued, which may render the estate administratively insolvent after all. All pending motions in these adversary proceedings will be addressed by the Court after all Chapter 11 administrative expense claims are determined by final orders.

2. Adversary Seeking Subordination of Claims.

Trustee and Counsel were also drawn into the Committee's adversary proceeding against Mr. Ledbetter, McGinnis, Price, and First Enterprise Bank ("FEB"), in which the Committee alleged a complicated conspiracy to defraud the estate.222 Price, McGinnis and FEB moved to dismiss the case, arguing that the Committee did not have standing to bring the action, and then objected when Trustee moved to intervene and be substituted as plaintiff.223 The parties ultimately agreed to allow Trustee as substitute plaintiff, and the matter was successfully concluded shortly thereafter when Trustee obtained agreed subordinations. FEB withdrew its unsecured proof of claim in the amount of approximately $1.1 million on September 10, 2013, and the adversary proceeding was dismissed.

3. First Specialty Insurance Corporation litigation.

In connection with NV Brooks's sale of the storm-ravaged Brooks apartment complex to Living Investments, LLC, Trustee assigned insurance proceeds, estimated to be in excess of $1.3 million, to the purchaser.224 The insurer, First Specialty Insurance Corporation ("First Specialty"), refused to pay the claim, and in September 2013, filed an action in New York County court against the members of NV Brooks Apartments, LLC (i.e., MACCO (99%) and General Properties, Inc. (1%)), seeking a declaration that it was not obligated to pay the claim. As Trustee's Counsel did not have expertise in insurance matters and was not licensed to practice in New York, Trustee identified Oklahoma counsel with such expertise, and New York local counsel that agreed to charge Oklahoma rates, and filed a motion for authority to employ the firms to defend against the First Specialty's New York action and to pursue a bad faith breach of contract claim against First Specialty in Oklahoma.225

Price and McGinnis objected to the retention of counsel, contending that General Properties, Inc., a McGinnis company, had already retained counsel to represent General Properties, Inc. and MACCO226 in the New York action, and that Price, as MACCO's ultimate residual interest holder, did not want the estate to incur the expense of retaining additional counsel. Price further stated that she was "unwilling" to defend the declaratory judgment action or pursue the bad faith claim "regardless of the benefits she may receive."227 Price's stated intent to abandon the insurance claim alarmed Living Investments, LLC, causing its counsel to enter an appearance in the MACCO case, file a response to the objection to the employment application, and prepare for and attend a hearing on the matter in order to advise Judge Jackson of the stakes involved.228

At the hearing, which was attended by six attorneys, Price abruptly modified her stance and stated that she was "just objecting to the hiring of lawyers in New York."229 Trustee's motion to retain special counsel was granted.230 Price and McGinnis appealed the order to the Bankruptcy Appellate Panel (the "BAP").231

Thereafter, Trustee commenced the bad faith breach of contract proceeding against First Specialty in the district court of Cleveland County, Oklahoma, which First Specialty removed to federal court.232 Trustee also filed an adversary proceeding against First Specialty alleging that the New York action was filed in violation of the automatic stay.233

The Court was recently informed that the three interrelated First Specialty cases have been settled.

K. The UST's Motion to Convert vs. Price's Motion to Dismiss

On September 10, 2013, shortly after the last of MACCO's operating assets were sold, the UST filed a motion to convert the MACCO and NV Brooks cases to cases under Chapter 7.234 In addition to proceeds from Trustee's operation and liquidation of the hard assets, MACCO and NV Brooks also held avoidance, recovery, collection, and insurance claims against third parties, as described above. The UST believed conversion was preferable to dismissal because —

With the recent withdrawal of FEB's $1.1 million claim and the disposition of Trustee's other claims objections, unsecured claims in the MACCO case now totaled less $600,000.00 and the Committee requested a partial distribution to unsecured creditors upon conversion, which Trustee and the UST supported.

Price and McGinnis objected to conversion, and moved to dismiss the cases.236 Price again argued that all creditors and administrative expenses could be paid with cash on hand, and that pursuing the claims against herself, McGinnis, and their affiliates was unnecessary to complete the administration of the estate, and would result in needless additional administrative expenses.237 The Committee and unsecured creditors "overwhelmingly oppose[d] any dismissal of the case."238 Trustee argued that it would be a mistake to "put [Price and McGinnis] back in control of a substantial fund of money and trust that they will pay the legitimate creditors of the estate which include both unsecured and administrative creditors."239 Trustee also pointed out that NV Brooks lacked sufficient cash to pay its unsecured creditors in full; that claims by Living Investments, LLC, and the public adjuster were outstanding; and that Price did not intend to pursue the bad faith breach of contract claim against First Specialty. For those reasons, Living Investments, LLC and NV Brooks itself, through its own counsel, likewise opposed dismissal and wholeheartedly supported appointment of a Chapter 7 trustee to proceed with the multifaceted First Specialty litigation.240

Price and McGinnis then filed an amended dismissal motion, proposing that MACCO's accumulated funds be deposited into escrow and an outside escrow agent be appointed to insure that creditors and administrative claimants were paid.241 Trustee countered that a Chapter 7 trustee would do just that, but under the watchful eye of the bankruptcy court.242 A hearing on the motion to dismiss and motion to convert was set for December 3, 2013.

During this period, Price and McGinnis served Trustee with substantial discovery requests, ostensibly in preparation for a hearing on the motion to convert and motion to dismiss, and requested the Court to shorten the time for Trustee to respond.243 Trustee objected to the scope and breadth of the requests, and after an expedited hearing, the Court ordered Trustee to answer just three interrogatories and one document request (modified by an appropriate time parameter) on an expedited basis.244 Price also filed a motion to deconsolidate the NV Brooks case from the MACCO case, to which Trustee and counsel for NV Brooks objected because both entities were embroiled in the First Specialty litigation, neither estate had been fully administered, and deconsolidation would serve no purpose.245

L. The Conversion Agreement

At the December 3, 2013, hearing on the UST's motion to convert and Price's motion to dismiss, the parties announced an agreement on the following terms (the "Conversion Agreement"): (1) the MACCO and NV Brooks cases would be converted to Chapter 7; (2) Trustee would be appointed as Chapter 7 trustee in each case; (3) the Committee would be dissolved; (4) a partial distribution (90%) would be made to unsecured creditors, with interest on the full amount of the claims added to the final distribution; (5) a Chapter 11 administrative expense claims bar date would be set; (6) Price would file tax returns for all the SPEs for tax years 2010, 2011 and 2012 within 60 days so MACCO could file its outstanding fiduciary returns; (7) the adversary proceedings pending against Price, McGinnis, and related parties would be dismissed in exchange for mutual releases; (8) Price would dismiss the appeal to the BAP of the order approving employment of special counsel in the First Specialty litigation; (9) the parties would cooperate in prosecuting and defending the three pending lawsuits involving First Specialty; and (10) Trustee would file monthly interim reports.246

Counsel for Trustee prepared an agreed order incorporating the terms of the Conversion Agreement announced in open court. Although Price and McGinnis refused to sign or approve the form of order, the Court entered it on December 16, 2013, and both cases were converted to Chapter 7.247 Trustee was appointed as the Chapter 7 trustee for both estates248 and Trustee was authorized to retain Counsel to represent him.249 At that point, the MACCO estate had approximately $1.6 million in cash.

Trustee and Counsel immediately took action to implement the Conversion Agreement by (1) obtaining authority to distribute over $500,000.00 to pay 90% of each allowed unsecured claim, and making such distributions; (2) obtaining and giving notice of an administrative claims bar date of January 31, 2014; and (3) filing motions to dismiss in the adversary proceedings involving Price and McGinnis.

Not only did Price and McGinnis refuse to sign the agreed order, they also refused to comply with it. On the very day of the hearing in which they agreed to dismiss the BAP appeal, Price and McGinnis filed a brief explaining why the appeal should not be dismissed as interlocutory.250 Two weeks later, they filed their designation of record on appeal and statement of issues to be presented.251 On December 20, 2013, the BAP directed Trustee to respond to Price's argument that the appeal should not be dismissed as interlocutory. Trustee filed his response on December 23, 2013.252 In the end, the BAP dismissed the appeal as jurisdictionally defective, but not before Counsel was forced to invest significant time responding to an appeal of a non-appealable order that Price and McGinnis had agreed to voluntarily dismiss — another complete waste of everyone's time and resources.253

Also in violation of the Conversion Agreement and agreed order, Price and McGinnis refused to provide Trustee with the mutual releases required as a condition for Trustee's dismissal of the adversary proceedings. Trustee filed motions to dismiss the adversary proceedings in good faith, but when the releases were not forthcoming, he was forced to withdraw his motions. After releases were finally provided, new motions to dismiss were drafted, filed, and noticed.

As of the date of the Fee Hearings, Price had still not filed the SPEs' tax returns, although her counsel represented that most of the returns were completed and ready to be filed.254 One reason the returns had not been filed was that Price objected to Trustee's motion to pay the accountant that has been retained to complete the SPE's returns.

M. Contested Chapter 11 Issues After Conversion

At the time of conversion, just a few matters remained to be resolved in order to complete the administration of the Chapter 11 estate — i.e., determining and paying final administrative expenses and filing tax returns. Those matters likely could have been completed within a few months but for Price and McGinnis's repetitive, baseless, and irresponsible challenges to the integrity, skill, professionalism, and effectiveness of Trustee and Counsel in administering these Chapter 11 cases.

1. Objections to Fee Applications and Affirmative Claims

On January 8, 2014, Counsel timely filed its final application seeking allowance and payment of $76,585.00, and expenses of $2,048.85, for the period of July 1, 2013 to December 16, 2013, and for final approval of all approved and paid interim fees and expenses.255 On January 29, 2014, Price filed an objection, requesting disallowance of Counsel's administrative claim for fees and expenses in full. Price also advanced affirmative claims against Counsel, alleging breach of fiduciary duty, misrepresentation, negligence, legal malpractice, gross negligence, mismanagement, gross mismanagement, slander, libel, and misuse of funds and estate property.

On January 27, 2014, MED PLLC timely filed its final application for compensation, seeking fees of $11,902.00 and expenses of $23.47 for the period of July 1, 2013 to December 16, 2013, and for final approval of all approved and paid interim fees and expenses. On January 31, 2014, Trustee timely filed his final application. At that time, Trustee would have been satisfied with a final payment of $82,145.74,256 which represented compensation based on the number of hours spent in that final time period. Aware of Price's blanket objection to Counsel's fees and the tort claims lodged against Counsel, however, Trustee reserved the right to seek up to his full statutory commission under 11 U.S.C. § 326 in the event he had to invest substantial additional time seeking payment and defending himself.

Price objected to both MED PLLC's and Trustee's final applications, asking the Court to deny all compensation, and to recover and setoff damages for alleged breaches of fiduciary duty, misrepresentation, negligence, mismanagement, gross mismanagement, slander, libel, and misuse of funds and estate property.257 Soon thereafter, Price sued Trustee in the United States District Court on the same claims, and then on the eve of a hearing on Trustee's fee application, she filed a motion to withdraw the reference of the fee application dispute to District Court, delaying the hearing indefinitely. Price also objected to compensating other professionals in the case and sued the property management companies that Trustee retained, all of which required Trustee's attention and participation. Trustee, therefore, has exercised his reservation of the right to request compensation based on the full amount of commissions calculated under Section 326. Based upon $48,821,986.27 in qualifying disbursements to creditors, Trustee is to entitled up to $1,487,910.00 under Section 326. After deducting amounts paid under interim orders, the unpaid balance of the Section 326 commission is $748,387.22.258

On April 14, 2014, Bankruptcy Judge Sarah Hall held a settlement conference in an effort to resolve Price's objections to these fee applications. When no settlement was reached, Judge Jackson set hearings on Trustee's and MED PLLC's fee applications for May 5, 2014. Trustee and Counsel spent the weeks after the settlement conference preparing witnesses, exhibits, and briefs for trial on all issues and claims raised by Price. At 5:56 p.m. on May 1, 2014, Price filed a motion asking the District Court to withdraw the reference of Trustee's and MED PLLC's fee applications so that her fee objections could be tried with the civil lawsuit filed in the District Court.259 Judge Jackson, sua sponte, entered an order striking the hearings "to be reset if necessary after resolution of pending matters in the District Court."260 Between the time of the failed settlement conference and the scheduled hearing date, Counsel spent at least 90 hours (incurring $22,500.00 in fees), and Trustee and his assistants spent at least 100 hours (incurring $23,150.00 in fees), preparing for a trial that did not occur, again due to the machinations of Price and McGinnis.261

2. District Court Lawsuit

On or about March 17, 2014, McGinnis purchased an unsecured claim against MACCO.262 On April 2, 2014, McGinnis263 and Price filed a complaint in the United States District Court for the Western District of Oklahoma against Trustee and Counsel264 alleging negligence, gross negligence, breach of fiduciary duty, gross mismanagement, breach of duty of loyalty, and legal malpractice, demanding not less than $39 million and a jury trial.265 As Counsel was a named defendant, Trustee was forced to hire separate counsel to defend himself. On April 17, 2014, Price and McGinnis dismissed Counsel from the District Court lawsuit with prejudice, "provided that this dismissal shall not affect Plaintiffs' rights with respect to the defensive claims they have asserted ... in connection with the fee applications of Janice Loyd and Bellingham & Loyd, P.C."266

Trustee and MED PLLC moved to dismiss the complaint on grounds that (1) the Barton doctrine barred Price and McGinnis from suing Trustee without leave of the bankruptcy court; (2) rulings in the bankruptcy case on the same set of facts precluded Price and McGinnis from reasserting the claims in the District Court; and (3) Trustee and his professionals were immune from suit for actions taken as court-appointed officers.267

As stated above, when Price and McGinnis filed a motion in the bankruptcy court asking the Court to recommend that the District Court withdraw the reference of the Trustee's and MED PLLC's contested fee applications, all contested professional fee applications were stayed by Judge Jackson. Trustee, the UST, and certain unsecured creditors filed objections to the motion to withdraw the reference. Price and McGinnis then filed a series of motions requesting this Court to authorize them, under the Barton doctrine, to sue Trustee and his professionals in the District Court, generating another flurry of responses and replies. Litigation in connection with the motion to withdraw reference and the Barton doctrine motions, and in the District Court lawsuit, consumed the summer and part of the fall of 2014.

On September 17, 2014, the District Court dismissed the complaint against Trustee and MED PLLC for lack of jurisdiction under the Barton doctrine268 and denied Price and McGinnis leave to further amend the complaint against Trustee and MED PLLC. On October 31, 2014, Judge Jackson entered his Recommendation That District Court Decline to Withdraw Reference to Bankruptcy Court because (1) it was not timely filed; (2) the bankruptcy court had jurisdiction to hear and finally determine the matters before it; and (3) judicial economy, convenience, and uniformity and efficiency in administration of the estate, and conservation of the parties' resources all weighed against withdrawal of the reference.269 Judge Jackson also denied Price and McGinnis's request for authority to sue Trustee under the Barton doctrine.270 Price and McGinnis appealed the Order Denying Motion for Barton Doctrine Relief to the District Court.271

3. Fee Hearings

Counsel's fee application was tried on November 3, 2014 through November 7, 2014. Trustee's and MED PLLC's applications, as well as Price and McGinnis's claims against Counsel, Trustee, and MED PLLC, were tried on January 20, 2015 to January 27, 2015. Over the course of more than a year after the Conversion Agreement, administrative expenses in this case swelled due solely to the litigiousness and vindictiveness of Price and McGinnis. Their failed attempts to sue Counsel and Trustee in the District Court and their aggressive pursuit of objections to fees substantially increased the level of Chapter 11 administrative expenses, thus reducing the amount potentially available to unsecured creditors, subordinated creditors, and Price herself.

N. Trustee's First Application for Interim Compensation

Before addressing Price and McGinnis's current objection to Trustee's final application, and the merits of their claims against Trustee, the Court notes that many issues now before the Court were raised and fully litigated in connection with Trustee's first application for compensation.

On June 13, 2012, Trustee applied for compensation for his initial nine-month period as trustee, requesting a fee of $227,416.58.272 Price objected, contending that Trustee's services "were not beneficial to the estate and were in fact detrimental to the estate;" "were neither reasonable nor necessary to the administration of the estate;" and not calculated properly.273 She alleged that when Trustee was appointed, the estate had approximately $2 million in cash and unsecured creditors of about $156,000.00, and although all properties "were being well managed by" McGinnis and Price, Trustee fired the entire staff and replaced them with professional management companies that mismanaged the properties.274 She further alleged that Trustee made no effort to determine the identity of creditors and "has done everything in his power to prolong the administration of the estate incurring needless professional fees in the process."275 Finally, she alleged that his fee should be calculated according to disbursements reported on the Monthly Operating Reports.

At that time, Trustee also filed the first application for interim compensation and reimbursement of expenses for MED PLLC in the amount of $190,694.85.276 Price objected to MED PLLC's application on the ground that the PLLC "is but the alter ego of Michael E. Deeba and his staff," that the Bankruptcy Code did not authorize employment of a trustee's own firm as a financial consultant, and that the services performed by the PLLC were bookkeeping services that were duties of Trustee, and therefore were not separately compensable.277 In addition, Price objected to compensating two contract CPAs because they did not file affidavits of disinterestedness, and she objected to services rendered on behalf of the non-debtor SPEs.278 Price also contended that the rates charged were excessive.279 A hearing on the contested applications was set for July 18, 2012.

On Friday, July 13, 2012, only five days before the hearing, Price served sweeping generic subpoenas on Trustee, Counsel, the property management companies, and the UST demanding the production of, among other documents, "all communications, including emails, pertaining to the Estate of Macco Properties, Inc." by 9:00 a.m. on Tuesday, July 17, 2012. Each subpoenaed party was forced to quickly file a motion to quash the subpoenas, and in some cases, a motion for protective order to assert privileges. As was her pattern and practice, instead of pursuing the subpoenas or addressing the motions to quash and for protective order, Price simply withdrew the subpoenas, having caused another needless increase in the cost of administering the estate.

At the hearing, Trustee presented compelling evidence refuting each of Price's objections to the applications for compensation.280 The evidence established that during the first interim period, Trustee devoted 80 to 90 percent of his total time to this case, precluding him from taking other engagements. Trustee maintained detailed time records of services rendered, and meticulously differentiated between time spent on trustee functions (which he presented in connection with the application for a commission as Trustee)281 and time spent on accounting and bookkeeping functions (which were detailed in MED PLLC's application).

In justifying retaining a contract CPA, Trustee testified that when he entered the case, he "noticed a runner running back and forth with large amounts of cash and checks, large amounts of checks made out to cash to run down to cash the checks at the banks [to prevent] utility cutoffs."282 None of the ledgers reflected unpaid utility bills, however. To sort out what payables were outstanding, MED PLLC used the services of the contract CPA to review the ledgers, bills, and dozens of checking accounts, and to communicate with the utility and insurance companies in order to obtain accurate information. This CPA was identified in the original application to retain MED PLLC, and was charged with "assess[ing] the debtor's accounting systems, to kind of do an internal control check."283 This CPA "had experience going into companies for banks, for creditors, and also companies calling him to come in and be their interim CFOs."284 Due to the disorderly state of financial records turned over to Trustee, the CPA's services were essential in order to establish a baseline for Trustee's accounting for the estate. Upon the resolution of the initial crisis, Trustee no longer needed the services of the contract CPA, and relied exclusively on MED PLLC support personnel for his accounting and bookkeeping needs.

With respect to the necessity for services of the second alleged "contract" CPA, Trustee explained that under McGinnis's management, no written agreement between MACCO and the supposed third-party employee leasing company had been signed,285 workers compensation insurance was grossly insufficient, and payroll checks were bouncing. This CPA, who was an employee of MED PLLC and not a contract CPA, was asked to "mirror payroll" in order to insure that employees were insured and paid.

Trustee calculated his fee based on disbursements to third parties, and carefully avoided counting intercompany transfers. Further, Trustee, as representative of the majority interest holder in the SPEs, collected and accounted for revenues and expenses within the SPEs; thus, payments to vendors and other post-petition creditors by the SPEs constituted disbursements made by Trustee.

At the hearing on the first application, Price also attempted to establish that Trustee failed to perform his duties under 11 U.S.C. § 1106, specifically that he did not "file a plan." Trustee credibly explained that in the first nine-month period:

Price also renewed charges that Trustee failed to file a report concerning formulation of a plan,287 that he mismanaged the apartment complexes, and that he caused a huge loss in value of the properties — claims made and rejected by the Court ten months earlier in the 52-Page Order.

Price also argued then, as she does now, that Trustee should have immediately paid off the unsecured creditors listed on the schedules drafted by McGinnis, and dismissed the case. Trustee testified that he would not and could not have done that:

The Committee supported Trustee's applications, applauding the transparency and accounting Trustee provided, and confirming his services as necessary to the administration of the estate and as beneficial to creditors.289 Counsel for FAA supported the applications, "welcom[ing] the sense of trust that they obtained once the trustee became appointed and started acting."290 As counsel for the UST pointed out:

Price's rehashed objections were again overruled, and the Court approved Trustee's and MED PLLC's applications in full.

Many of these twice-rejected objections have resurfaced in Price and McGinnis's objections to Trustee's and MED PLLC's final fee applications, but nothing presented by Price and McGinnis at the most recent hearings warrants a different result.

III. CONCLUSIONS OF LAW

A. Application of Chapter 11 Trustee

Trustee filed three interim fee applications, a final fee application, and three supplements to his final fee application, and seeks final approval of compensation in the amount of $1,487,910.00, the full amount of the commission on disbursements calculated under Section 326.292 Trustee presented two highly respected experts, D.R. Payne and Professor Jack Williams, in support of his application.293 Their unrefuted testimony was especially helpful to the Court.

To the extent that Price objects to the form of the applications and billing statements, the Court finds and concludes Trustee's time keeping and narrative was detailed and precise, and allowed the Court to perform a meaningful review of the services provided to determine whether the time spent was reasonable.294

Section 330(a)(7) of the Bankruptcy Code governs how the court "shall treat" the compensation of trustees. It provides:

Section 326(a) provides a formula for calculating a trustee's commission as follows:

Section 330(a)(1) is the general provision governing the process of compensating estate professionals. It states:

A Chapter 11 trustee must establish that its request for compensation is reasonable under the same standards applicable to attorneys and other professional persons employed by the estate. These standards are set forth in Section 330(a)(3) and (a)(4), which provide —

Thus, in determining a Chapter 11 trustee's compensation, the Court must determine the commission the Chapter 11 trustee would be entitled to under Section 326, based on "moneys disbursed" by the trustee. Because Section 326 provides that "reasonable compensation" is "not to exceed" the amount calculated under the commission formula, that calculation sets a ceiling on a trustee's compensation.299 The Court must also assess "reasonable compensation" under both Section 330(a)(3) and (a)(4). This analysis results in a "lodestar" based on the number of hours reasonably spent multiplied by reasonable hourly rates, which may be adjusted up or down depending on the circumstances. Finally, the Court has wide discretion to enhance or reduce compensation under certain circumstances after evaluation of the so-called Johnson factors.300

Since the 2005 amendments to the Bankruptcy Code, which added Section 330(a)(7) ("[i]n determining the amount of reasonable compensation to be awarded to a trustee, the court shall treat such compensation as a commission, based on section 326"), it is unclear whether the Section 326 commission-based compensation should be "treated" as presumptively reasonable, subject to rebuttal by application of the Section 330(a)(3) and (a)(4) factors, or whether the lodestar analysis of Section 330(a)(3) and (a)(4) sets the presumptively reasonable fee, which can be enhanced by application of the Johnson factors, but only up to the Section 326 cap.301 The Court need not decide the issue, however, because under the circumstances of this case, it would arrive at the same result either way.

1. Section 326 Calculation

Trustee seeks as compensation the full Section 326 commission based upon disbursements of $48,821,986.27 (the "Section 326 Base").302 This figure appropriately does not include the value of abandoned property, or the value of releases of debt against the estate resulting from the assumption of the debt by another entity.303 Applying the graduated statutory commission percentages to the Section 326 Base results in a commission of $1,487,910.00. Trustee has been paid $739,522.78 under interim compensation orders, leaving an unpaid balance of $748,387.22.304

Expert witness D.R. Payne was asked to independently verify the numbers Trustee included in his Section 326 Base, including whether Trustee accurately backed out intra — and inter-company transfers. Mr. Payne reviewed all the relevant source documents used by Trustee, including bank statements and reconciliations, closing statements, accounting ledgers, and monthly operating reports of the five Chapter 11 estates for which he disbursed funds. Using the source documents, Mr. Payne's testing and analysis determined that every dollar for which Trustee claimed a commission could be verified as a disbursement, with a few immaterial deviations.305 In his review, Mr. Payne identified disbursements made upon the sales of six properties that Trustee omitted from his commission calculation but which, in Mr. Payne's opinion, could have and should have been included.306 After Mr. Payne's testimony, Trustee supplemented his compensation request to add two of the inadvertently omitted disbursements identified by Mr. Payne, waiving the others.307

Price points to certain disbursements she contends should be excluded from the Section 326 Base. First, she disputes the inclusion of disbursements made by the SPEs to their own creditors because they were not disbursements made in the MACCO Chapter 11 case and not reflected in MACCO's monthly operating reports. Mr. Payne testified that because MACCO was a property management company operating a large "business enterprise" consisting of real property and SPEs that held real property, Trustee had a duty and responsibility to oversee, control, and account for all of the SPEs' disbursements.308 Trustee undertook these responsibilities and performed services that can be compensated only by including these disbursements in the Section 326 Base.

Price also argues that since the Court had not appointed Trustee in any of the Chapter 11 cases of the subsidiary SPEs, Trustee should not be compensated for trustee services rendered in those cases. These SPEs were "debtors in possession." MACCO was their sole managing member. The only individual authorized to act on behalf of MACCO was Trustee. Trustee became the fiduciary wholly responsible for managing and operating the debtor SPEs, complying with laws and regulations, paying the operating and administrative expenses, disposing of assets, paying creditors, filing reports, and otherwise fulfilling the duties of the debtors in possession. Notwithstanding that he had not been appointed trustee in those Chapter 11 cases, he functioned as trustee, as no other individual had authority to act on behalf of the SPEs.

Moreover, maintaining the businesses of all debtor and non-debtor SPEs, including receiving and disbursing funds, was necessary to preserve the value of MACCO's estate. Trustee's obligation to the MACCO enterprise required him to actively oversee and direct the operations of dozens of large multi-family and business properties, manage the demands of creditors, and determine how to realize from each asset the best result for the estate. All funds flowing through the entire business enterprise were managed and accounted for by Trustee. Again, Trustee rendered significant services that can be compensated only by including SPE disbursements in the Section 326 Base.

Price also argues that "constructive" disbursements cannot be included in the Section 326 Base, and contends that payment of secured debt at the closing of a sale of property by the title company or escrow agent is a "constructive" rather than an actual disbursement. Price is correct that "constructive" disbursements do not qualify as disbursements for Section 326 purposes, but she is incorrect in her definition of a "constructive" disbursement.

A "constructive" disbursement, according to case law, occurs when a trustee surrenders property to a secured creditor in full or partial satisfaction of its claim rather than liquidating the property and disbursing the proceeds. The majority position is that the value of surrendered property does not constitute "moneys disbursed," and therefore "constructive" disbursements must be excluded from the Section 326 base.309

Price has not identified any "constructive" disbursements in Trustee's Section 326 Base, however. Trustee sold either real property or the estate's interest in an entity, converting these assets into cash. These moneys were generally disbursed by Trustee's agents, under Trustee's direction, to parties in interest that were entitled to the funds.

Trustee appropriately included disbursements of funds made at closings in his Section 326 Base.

Price also objects to including disbursements made to professionals in the case in the Section 326 Base. Although some courts located in the Eastern District of New York agree with the position taken by Price,311 the better view is that disbursements to administrative claimants under Section 503(b)(1) are not excluded from the Section 326 base.312 Section 326(a), which provides for commission-based compensation on "all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims,"313 does not either explicitly or implicitly exclude "moneys disbursed" to administrative claimants or any subset thereof.

Price contends that Trustee's Section 326 compensation should be limited to disbursements reported in MACCO's monthly operating reports, which would result in maximum compensation of $27,316.00.314 The law does not require that result, and the circumstances of this case do not support that result. Disbursements that Trustee made to creditors of MACCO's subsidiaries with proceeds of the sales eliminated MACCO's exposure on its guarantees, and constituted valuable services to the MACCO estate.

The Court concludes that Trustee used an appropriate methodology to calculate his Section 326 Base, and properly calculated the commission under the Section 326 formula to be $1,487,910.00.

2. The Adjusted Lodestar Test

In the Tenth Circuit, trustee compensation is tested for reasonableness using the adjusted lodestar approach, which requires the determination of (a) the lodestar (hours × rate) after evaluating the "nature, the extent, and the value" of services under Section 330(a)(3) and (a)(4); and (b) whether extraordinary results or other circumstances warrant an adjustment of the lodestar (by evaluating the "Johnson factors").315 The Court's Section 330(a)(3) analysis is as follows:

a. Time spent

Trustee and his staff recorded 4,398 hours from May 31, 2011 to October 31, 2014, 3,208 of which are attributable to Trustee himself.316 On January 20, 2015, Trustee testified that he had expended an additional 180 hours since October 31, 2014.317 The Court notes that Trustee also spent time preparing for and attending the Fee Hearings in January 2015, which the Court conservatively estimates added another 60 hours. The Court concludes that Trustee and his staff spent a minimum of 4,638 hours administering the Chapter 11 case. In reviewing Trustee's time sheets, it is obvious to the Court that Trustee performed efficiently, delegated appropriately, and exercised stellar billing judgment. Trustee also incurred, and continues to incur, expenses that have not been applied for, including legal fees, copying costs, expert witness fees, and other out of pocket costs.318

b. Rates

In his fee applications, Trustee billed his services at an hourly rate of $275.00, and billed his staff's services at rates ranging from $55.00 (accounting clerk) to $150.00 (CPA). The rates charged by Trustee and his staff are on the low end of the range of rates this Court has approved in other cases for professionals with comparable credentials and skills.319 For example, from 2001 to 2007, the Court approved compensating professionals functioning as interim management and liquidating trustee at rates of $410 to $450 per hour.320 In this case, witness David Payne, who has accepted similar assignments as Trustee, and practices in the same region as Trustee, charges an hourly rate of $345.00.321 The Court finds that a reasonable hourly rate that would compensate Trustee for the broad spectrum of specialized services he efficiently provided in managing, operating, liquidating, and administering the five Chapter 11 estates should be no less than $345.00 per hour.

c. Services were necessary to the administration of the case, or beneficial at the time at which the service was rendered toward the completion of the case

It has been established and justified multiple times that ample cause existed for the appointment of a trustee — specifically incompetence and gross mismanagement of the affairs of MACCO by McGinnis, both before and after the filing of the Chapter 11 case. Once appointed, Trustee performed all necessary services to: bring the MACCO estate into compliance with the Bankruptcy Code and other federal, state and local laws; collect and protect property of the estate; segregate and protect secured creditors' cash collateral; pay unpaid administrative expenses and prevent termination of insurance; protect the interests of employees and tenants; employ experienced professionals; investigate the acts, conduct, assets, liabilities and financial condition of MACCO and its subsidiaries; investigate and stabilize MACCO's businesses and properties and determine whether financial and physical conditions warranted continued operations; furnish information to all parties in interest; examine, dispute, and settle proofs of claim as appropriate; determine whether reorganization or liquidation was appropriate; investigate transfers and potential recoveries; and bring adversary proceedings as appropriate. Trustee's requirement for releases of guarantees in connection with sales of real property and the SPEs, and Trustee's cooperation with and reporting to lenders, was especially beneficial to all creditors.

All services performed by Trustee were necessary and beneficial toward the completion of the administration of the estate, even though the case dragged on for much longer than necessary. As set forth in the findings of fact, with Price and McGinnis repeatedly challenging Trustee's authority, his competence, his business judgment, and his motivations, even the most routine tasks became monumental undertakings, consuming extraordinary resources — not only those of Trustee and Counsel, but also those of creditors and their counsel, the UST and its counsel, and the Court and its staff. But services rendered by Trustee in responding to the unwarranted challenges were, unfortunately, necessary to the administration and/or beneficial toward the completion of the administration of the estate.

Objections by Price regarding the necessity and benefit of Trustee's services include an allegation that Trustee unnecessarily kept the case open for his own benefit. No credible evidence supports that contention.322

Price also argues that Trustee should have quickly abandoned all the assets and dismissed the case so the estate could have avoided Trustee and professional fees.323 FAA's counsel, Mr. Tuepker, testified that Trustee's decision to sell assets was far more beneficial to FAA, and other creditors, than abandonment of the assets would have been. To illustrate, Mr. Tuepker related the nightmarish tale of a condominium that was abandoned at FAA's request early in the case.324 Once the property was returned to Price's control, she transferred it to a related entity and immediately filed bankruptcy on behalf of that entity in Dallas, Texas, which further delayed FAA's foreclosure. Accordingly, FAA and the other secured lenders strongly preferred that Trustee maintain control of their collateral. More to the point, MACCO's unsecured guarantees would not have been released had all assets been abandoned.

Price also argues that neither Trustee nor Counsel should be compensated for liquidating MACCO's real property and MACCO's interests in the SPEs because Price and McGinnis brought the purchasers to the table and caused the secured lenders to execute releases of their claims against MACCO.325 However, according to Mr. Tuepker, whose client possessed a "huge" contingent deficiency claim,326 both Trustee and Price were critical to getting his client paid.327 Although Price was the purchaser (or agent for the purchaser), and negotiated the sales terms with Trustee, Mr. Tuepker insisted that FAA would not have been fully paid had Trustee not required the release of MACCO guarantees as a condition of the sales of the SPEs holding the collateral.328 Like the other creditors holding guarantee claims, after FAA was paid in full, it withdrew its claims against MACCO, significantly reducing the pool of unsecured creditors. Trustee's and Counsel's insistence upon releases was of extreme and vital benefit to the estate and its creditors.329

Indeed, the fact that Price purchased the properties, arranged for someone else to purchase the properties, or obtained an investor or lender to facilitate the purchase of the properties is irrelevant to the question of whether Trustee's services benefitted the estate. Trustee was interested in disposing of the properties in a way that best benefitted the estate — it did not matter who the purchaser was or how the purchaser obtained the money to close the transaction. He testified: "As long as I got a release and the secured creditors were taken care of and the taxing authorities were taken care of and the post-petition payables were taken care of, ... and the unsecureds [of the SPEs in their own Chapter 11 cases] were taken care of, that was my responsibility. My responsibility wasn't to trace to where Ms. Price was getting her money."330

In the end, Trustee accomplished extraordinary results, relieving the estate of in excess of $70 million in direct and potential liability arising from secured claims. Trustee resolved all outstanding fraud litigation against MACCO for which $11.5 million in claims had been filed. He also obtained the withdrawal of the $1.1 million claim of FEB, ultimately reducing unsecured claims from $60 million to approximately $600,000.00. Trustee then paid 90% of those allowed claims. During the course of the case, Trustee worked cooperatively with lenders and professional property managers to maintain properties and address deferred maintenance, and preserved the going concern value of the operating properties through the dates of sale. Trustee managed to pay in excess of $1 million in post-petition debts left unpaid by McGinnis, and contested and settled other administrative claims that arose when McGinnis operated MACCO as debtor in possession.

d. Amount of time spent was commensurate with the complexity, importance, and nature of the problem, issue, or task addressed

The task of preserving, operating, and administering an estate that encompasses four or five luxury residences in three states, several office and business properties, a shopping center, vacant land, and more than thirty large low-income multi-family housing complexes held in debtor-controlled SPEs — and addressing $100 million dollars in claims — would be a complex and time-intensive task in the best of circumstances. Regrettably, the complexity was intensified by the prior mismanagement, lack of cooperation, and obstruction by Price and McGinnis. They refused to turn over the estate's books and records and interfered in the management of the real properties; left a chaotic state of financial affairs that lacked controls and appropriate cash management systems and properties suffering severe deferred maintenance; deployed a barrage of legal challenges to Trustee's authority; wasted time on transactions by consistently failing to perform as agreed; and initiated unnecessary contested matters, for which Trustee had to prepare for and appear in court, many of which were withdrawn at the last minute. The Court finds that the number of hours spent by Trustee and his staff was commensurate with the complex overlay imposed by its former management. In spite of all the challenges, Trustee performed extremely efficiently. He sparingly assigned accounting/financial management tasks to MED PLLC, consistent with the allocation of duties mandated by Section 328(b).

e. Professional person is board certified or otherwise demonstrated skill and experience in the bankruptcy field

Although Trustee is an appointed trustee, and not a "professional person" retained under Section 327 or 1103, Trustee is undoubtedly experienced and skilled in the bankruptcy field as established by his extensive resume which was admitted as Trustee's Exhibit 216. He has been a Certified Public Accountant since 1986, is a Certified Insolvency and Restructuring Advisor, and is certified in financial forensics by the AICPA. His numerous fiduciary assignments include appointments as Chapter 11 trustee, examiner, financial advisor, liquidating trustee, and state court receiver, including one assignment in which he was entrusted with operating and managing nineteen financially distressed nursing homes.331

Price argues that Trustee's decision to maintain the case in a Chapter 11 posture, manage and operate the businesses and properties, and sell property — allegedly for the sole benefit of secured creditors — was not a course of action a "reasonable professional" would have taken.332 Although Trustee's sale of real property and/or interests in the SPEs resulted in the payment of the SPE's secured creditors, those same creditors possessed large unsecured guarantee claims against MACCO, and the elimination of those guarantees greatly benefitted all of MACCO's unsecured creditors. Professor Williams concluded that, in his expert opinion, "the trustee's approach has been reasonable and in the best interest of the estate, and certainly in furtherance of the effective and equitable closing of the case, including the operating the debtor's business."333 Price did not present any expert testimony on any issue, and failed to rebut Professor Williams's opinion with any competent evidence concerning what direction a "reasonable professional" would have taken. Moreover, the Court, over a four year period, authorized or approved every substantive step in the course of Trustee's administration of the estate, after notice to all constituents of the estate. The "reasonableness" of Trustee's approach was never questioned by the UST, the Committee, individual creditors, or the Court.

f. Compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than bankruptcy cases

A Chapter 11 trustee does not exist in cases other than bankruptcy cases, and Section 326 provides the statutory formula to calculate trustee compensation, subject to a reasonableness analysis. Whether other court-appointed fiduciaries are paid more or less than what Trustee requests is a function of other statutory schemes, and comparing results under non-bankruptcy law would be an exercise in second-guessing the adequacy or excessiveness of those schemes rather than the reasonableness of Trustee's request.

Upon consideration of the Section 330(a) factors, the Court finds that a reasonable hourly rate for Trustee's services is $345.00 and reasonable rates for his staff are as billed. The Court further finds that all hours billed were reasonable and necessary to the administration of the estate. Applying the applicable rates to hours billed by Trustee and his staff results in a lodestar of $1,243,889.75.334 Trustee also incurred unreimbursed expenses related to the Chapter 11 case in the amount of $20,028.36.

3. Johnson Factors

Under the MiniScribe case, the Court may adjust the lodestar to arrive at an appropriate fee.335 The fee may not exceed the amount derived under Section 326's commission formula, however. To determine whether an adjustment is appropriate, the Court must assess the twelve Johnson factors: (1) The time and labor required; (2) the novelty and difficulty of the issues; (3) the skill required to perform the services properly; (4) the preclusion of other employment due to accepting the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the professionals; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.336

a. The time and labor required

Trustee and his staff were required to invest substantial time and labor dealing with relentless maneuvers to oust him, to frustrate his legitimate efforts to operate and manage the properties, and to otherwise obstruct the administration of the estate with meritless motions and objections. Almost every transaction between Trustee and Price and McGinnis required multiple continuances, multiplying the number of hours spent in closing the sales (and in the case of the Global Agreement, the transaction spanned three months and never closed). Much time was wasted addressing Price's uncomfirmable plan over the course of more than a year.

The state of the books and records, the condition of the properties, and the prior commingling of assets, all required that Trustee invest far more time and labor stabilizing the estate than would ordinarily be necessary. The raw number of hours billed establishes that this case was labor intensive.

b. The novelty and difficulty of the issues

The structure of MACCO and its subsidiaries added a level of complexity to the administration of the estate. Trustee's duties expanded to include not only operating and administering MACCO's own assets, but also to operating, protecting, and preserving the SPEs' property as well. In addition, the case was made difficult from Trustee's first day on duty to the present day by the overbearing demands, threats, and lawsuits directed at him by Price and McGinnis. This factor weighs strongly in favor of enhancing Trustee's compensation.

c. The skill required to properly perform the services

Trustee's credentials are exceptionally suited to the issues that arose in this case, and his expertise and experience, as well as his integrity and patience, produced outstanding results. Trustee stabilized the business operations, preserved the properties, resolved code violations, sold assets and obtained releases of tens of millions of dollars of guarantee liabilities, resolved all secured claims, and paid 90% of unsecured claims. Trustee's extraordinary skill set warrants compensation at rates in excess of those billed.

d. The preclusion of other employment due to accepting the case

In the early stages of Trustee's tenure, ninety percent of his total billing time for all clients was devoted to this case.337 In the first nineteen months, this case comprised approximately 72% of Trustee's overall billable time, which precluded him and his firm from taking other work.338 Spending hundreds of uncompensated hours over the last 18 months just trying to get paid for his extraordinary service to the estate has also precluded him from working on compensable matters for paying clients. This factor weighs in favor of an enhancement of the lodestar.

e. The customary fee and whether the fee is fixed or contingent

Section 326 sets an absolute limit on the amount of fees Trustee may be awarded, yet Trustee must continue to devote time to complete the administration of the estates notwithstanding the Section 326 cap. Trustee will be expending additional time not only attending to ordinary Chapter 11 duties, such as filing tax returns, but also defending himself and his firm against Price's appeals of orders dismissing her claims against them. Every hour spent litigating further dilutes Trustee's effective hourly rate.339 As satellite litigation pursued by Price and McGinnis against Trustee and other estate professionals continues to consume estate resources, Trustee also faces a risk of non-payment or reduced payment due to possible administrative insolvency. This factor weighs heavily in favor of allowing Trustee the maximum compensation allowed.

f. Time limitations imposed by the client or the circumstances

The circumstances of this case required Trustee to act quickly and decisively to remedy the serious operational issues at various points in the case. Especially in the initial stage, Trustee devoted his full time and attention to the case in order to address emergencies, such as lapsing insurance policies, utility cutoff notices, tenant safety issues, commingling of cash, and all the other issues set forth in Trustee's Initial Report.340 Other unforeseen circumstances complicated Trustee's duties, including a tornado that devastated apartment complexes in Norman, Oklahoma, and Wichita, Kansas.

The use of Trustee's time was also dictated by Price and McGinnis's efforts to sabotage Trustee's expeditious administration of the estate.

g. The amount involved and the results obtained

As stated above, Trustee accomplished extraordinary results, relieving the estate of in excess of $70 million in direct and potential liability arising from secured claims, resolving all outstanding fraud litigation against MACCO for which $11.5 million in claims had been filed, and ultimately reducing unsecured claims from $60 million to approximately $600,000.00 in allowed claims, of which Trustee paid 90%. Trustee worked cooperatively with lenders and professional property managers to maintain properties and address deferred maintenance, and preserved the going concern value of the operating properties through the dates of sale. Trustee also paid in excess of $1 million in post-petition debts left unpaid by McGinnis. If not for the interference of Price and McGinnis, administrative claims would have been insubstantial, unsecured creditors would have been fully paid, and funds would have been available to equity.

h. The experience, reputation, and ability of the professionals

Professor Williams recognized Trustee's excellent reputation, locally and nationally.341 In his 52-Page Order, Judge Jackson found clear evidence that Trustee had the expertise and experience required to operate MACCO and its subsidiaries.342 This Court finds that Trustee has demonstrated the highest caliber of stewardship under the most challenging circumstances that this Court has ever witnessed.

i. The "undesirability" of the case

To say this case was undesirable is an understatement. Generally, a Chapter 11 trustee will have the cooperation of displaced management, "particularly if there were guaranties."343 Such parties "are trying very hard usually to get the information to the trustee, they are trying very hard to right the ship, they are trying very hard to reestablish or reaffirm relationships."344 That did not happen in this case. Displaced management hid information, held the proceedings hostage, laid obstructions in front of every step Trustee took to fulfill his duties, and filed objections with no intention of pursuing them, withdrawing them at or on the eve of hearings. Displaced management was an obstacle to orderly administration. Challenges to Trustee's authority took the guise of threats and frivolous lawsuits.

This case, in the opinion of Professor Williams, "is not the type of case that's contemplated by the structure of the code, particularly the fee structure for Chapter 11 [trustee] services."345 "When you start to pile on a lot of litigation that's not the type that would be contemplated in a bankruptcy case, ... you can easily start to approach — and then bust through the Chapter 11 trustee fee caps that are [in] Section 326."346 "In many jurisdictions and many districts, somebody of Mr. Deeba's caliber would not have taken this case as a Chapter 11 trustee. They may have taken the case as an examiner without the [Section] 326 caps, or as an expert witness under [Rule] 704, which is kind of a construct that's been designed to in some instances circumvent some of the limitations of the code. But in a situation like this with so much litigation that's ancillary to the efficient administration of the bankruptcy case, the close of that case and the operations of the debtor's business, it is going to be more and more difficult to find qualified people who would be willing to take this assignment."347

Professor Williams further opined that due to the animosity directed at Trustee, "what should have taken hours took days, and what should have been resolved in days took weeks or months. And that increases the expense, it increases the pressure, increases the tension unnecessarily so."348

Emblematic of Professor Williams's observation is the episode in which Price attempted to thwart Trustee's retention of a public adjuster to professionally assess property damage suffered by the Brooks apartments in Norman, Oklahoma, and the Cedar Lakes apartments in Wichita, Kansas. Typically, routine motions to employ professionals to assist in identifying compensable elements of damage in order to obtain a full and fair insurance settlement for the estate would draw no objections. Indeed, the Court granted Trustee's motions within a day of filing, and the adjuster commenced work. One month later, however, Price filed a two-page motion asking the Court to vacate the orders, complaining that she did not have a chance to weigh in, and she thought the terms were unreasonable. Trustee filed a response explaining the extraordinary benefits of a public adjuster, particularly in cases with complicated multiple claims. Already, the public adjuster had identified three distinct yet inter-related claims, including hail damage from a 2009 storm, fire damage from the 2010 fire that resulted in two deaths, and the 2012 tornado damage.349 And Trustee noted that the proposed fee was below the fee customarily charged by public adjusters.

Hearings on Price's motions were set in both the Brooks and the Cedar Lake cases. Trustee filed notices of witnesses and exhibits and prepared for the hearings. Two days prior to the scheduled hearings, Price moved to continue the hearings due to McGinnis's unavailability, and they were continued one week. Again, Price moved for and obtained a continuance and the hearings were moved two weeks out. Trustee's adjuster was not available on the continued date, so the hearings were reset a fourth time. On the day before the fourth scheduled hearings, Price withdrew her motions.

Price caused Trustee and Counsel, as well as the public adjuster, to needlessly respond to Price's complaints and prepare for hearings that were never held. This routine employment authorization took three months to finalize. As a result of Price's motions to vacate, Counsel billed for services that included drafting, filing, and noticing at least eight pleadings; conferring with Trustee; calling and emailing Price's counsel; conferring with Court personnel to schedule and notice four hearings; and preparing witnesses, exhibits and argument for four hearings, none of which occurred. Time entries for these services total, at the very least, 16 hours, resulting in fees of $4,000.00.

Trustee expended at least 18.6 hours ($5,115.00) reacting to the objection. His time included preparing exhibits; researching fees in the industry; analyzing options and costs; meeting with the adjuster's personnel; meeting with Counsel; preparing for hearings multiple times; attempting to renegotiate the adjuster's fees; and preparing worksheets and aids to the Court to explain the three separate damage events, the need for a public adjuster, and the basis for the fee structure. In the ordinary case, retention of the adjuster would have cost the estate at most a couple hundred dollars in legal fees. In this case, the exercise exploded into a three month ordeal costing the estate more than $10,000.00, and more importantly, delaying the adjuster's work and the estate's insurance recovery.350 Counsel and Trustee's time sheets also illustrate the lengths to which Counsel and Trustee would go to try to accommodate Price's concerns.

Another example: Trustee's application to employ special litigation counsel to sue First Specialty for refusing to pay more than $1.3 million in insurance claims also drew baseless objections by Price and McGinnis. Retention of extremely well-qualified counsel on extremely reasonable terms to preserve the estate's insurance claim and honor the estate's obligations to the purchaser of the Brooks apartments under a Court-approved sale should not have been controversial. Counsel spent more than 28 hours351 (and incurred fees of almost $7,000.00) over the course of two months — responding to objections that lacked any factual basis, consulting with myriad parties with actual interests at stake in the litigation, and preparing for and attending a hearing — to accomplish what should have taken at most one or two hours.

The adjuster and special counsel examples are relatively puny matters. Larger matters provided greater opportunities for Price and McGinnis to hinder the efficient administration of the estate, to obstruct Trustee in carrying out his fiduciary duties, to delay resolution of uncontroversial issues, and to intimidate all constituents of the estate by misusing the legal process.352 Their misplaced zeal resulted in a severe dissipation, and frankly, exhaustion, of estate and judicial resources.

Trustee has not been paid for any work on this case since September 2013, an exceptional delay in the payment of fees due to litigation that has been exceptionally protracted. Serving the public as a Chapter 11 trustee, an appointed fiduciary with no interest in the outcome of the case, should not result in hardship. As Professor Williams stated: "Mr. Deeba was appointed the Chapter 11 trustee in the case. He didn't file the motion for the appointment of the Chapter 11 trustee, he stepped up and agreed to do the job, and did it consistently with the orders and directives of Judge Jackson in the case."353

The Court also takes to heart Professor Williams's concern that highly skilled professionals, such as Trustee, are and will continue to be reluctant to accept Chapter 11 trustee appointments because they risk being inadequately compensated.354 The structure of the Chapter 11 compensation regime is partly at fault. The Section 326 ceiling on trustee compensation presupposes that a commission on disbursements is rationally related to the reasonable value of services provided by a Chapter 11 trustee. When the goal is reorganization, as opposed to liquidation, however, there is no relationship between the amount of estate funds disbursed and the amount of time and effort required of trustee to manage and operate the enterprise, negotiate with creditor groups, propose a plan, and otherwise satisfy all fiduciary responsibilities and requirements imposed on Chapter 11 trustees by the Bankruptcy Code. When a Chapter 11 appointment is accepted, the trustee has no way to predict whether the end result will be reorganization, liquidation, dismissal, or conversion, or whether any disbursements will be made by the trustee.

The risk of inadequate compensation also arises when, as in this case, litigation consumes the Chapter 11 trustee's time and prevents the orderly administration of the Chapter 11 case. The Bankruptcy Code does not provide a mechanism for Chapter 11 trustees to be compensated for unexpected or unwarranted diversions from the ordinary tasks that lead to disbursements to creditors. Both risks add to the undesirability of accepting an appointment as Chapter 11 trustee.

The "undesirability of the case" factor weighs overwhelmingly in favor of compensating Trustee as fully as the Section 326 compensation cap allows.

j. The nature and length of the professional relationship with the client

This factor is inapplicable to the circumstances of this case.

k. Awards in similar cases

No evidence was submitted with respect to what trustees have been awarded in similar cases. Trustee states that "it is difficult to compare the services and time required of the Trustee where the level of acrimony evidenced in the motion practice and ancillary litigation pursued by Price and McGinnis are virtually unprecedented in this jurisdiction."355 The Court agrees, and therefore assigns no weight to this factor one way or the other. The Court notes, however, that enhancements in professional fees based on just a few Johnson factors, such as "outstanding services that generated exceptional results," have been upheld,356 and that bankruptcy courts have "`considerable discretion' when determining whether an upward or downward adjustment of the lodestar is warranted."357

Based upon the arduous and undesirable nature of this case; the extraordinary results achieved in spite of the obstacles; the hardship imposed on Trustee and his firm, who have been precluded from taking other clients and have not been paid since September 2013; and the likelihood of having to continue to provide services to complete the administration of the Chapter 11 estate, the Court finds and concludes that Trustee is entitled to an upward adjustment to the lodestar of at least 20%, resulting in a reasonable fee of at least $1,492,667.70. The application of the Section 326 ceiling on compensation mandates reduction of the award to $1,487,910.00, of which he has been paid $739,522.78, leaving a balance due of $748,387.22. Trustee is also awarded expenses in the amount of $20,028.36. Trustee's administrative expense claim is therefore allowed in the amount of $768,415.58.

B. Application of MED PLLC

MED PLLC is a professional corporation established by Trustee through which he practices as a Certified Public Accountant, Certified Insolvency and Restructuring Advisor and Certified Financial Forensics professional. The firm employs a staff of financial professionals with various levels of skills, expertise, and experience, whose services are billed accordingly. The firm's services include business assessment, financial reorganization, crisis management, turnaround management, transaction advice, insolvency consulting, forensic investigation, and litigation support.358 All staff members are experienced in bankruptcy matters.359

The Court approved Trustee's retention of MED PLLC as financial consultant and accountant to assist Trustee in assessing the business and performing financial and accounting duties, including cash flow analysis and budgeting; cash management; cash collateral control, reporting, and negotiation with lenders; assessing reorganization strategies and plan development; account reconciliation; forensic analyses of prepetition and debtor in possession books and records; compilation of records and figures for preference and fraudulent transfer evaluation; and preparing tax returns and monthly operating reports.360

MED PLLC filed three interim fee applications, a final application, and a supplement.361 Pursuant to the orders granting the three interim applications, MED PLLC has been paid a total of $297,138.75 for services rendered and $10,908.45 for expenses advanced from May 31, 2011, through June 30, 2013.362 MED PLLC was last paid for services in this case two years ago, in September 2013. In its final fee application and supplement, MED PLLC requests final approval of all interim compensation paid, and the allowance and payment of $20,327.97 for services rendered and expenses advanced from July 3, 2013, through April 14, 2014.363 Price's objections to paying MED PLLC are identical to her objections to compensating Trustee, i.e., she contends that the services were not necessary or beneficial to the estate.364

As a professional employed under Section 327, MED PLLC is entitled to reasonable compensation as assessed under Section 330(a)(3) and (a)(4), and adjusted by the Johnson factors, if necessary. Section 330(a)(3) and (a)(4) provide:

As an initial matter, it is not unusual for a trustee to hire his own accounting firm to provide accounting and financial consulting services in connection with a bankruptcy case.366 The Bankruptcy Code anticipates that a trustee may serve and be compensated separately for these dual roles in Section 328(b):

Thus, when a trustee retains his or her own firm to perform professional services — whether legal, financial advisory, or accounting — additional scrutiny is warranted to insure that "trustee" services are not billed as "professional" services. Trustee described the methodology he employed in segregating trustee services from professional services; he also testified that unless a service was clearly an accounting service, he recorded it as trustee time rather than professional time.368 Mr. Payne testified that after performing a side-by-side testing review of Trustee's time sheets and MED PLLC's time sheets, it was his expert opinion that Trustee properly allocated his and his employees' time to trustee functions and accounting/financial advisor functions according to the Bankruptcy Code and professional standards.369 The Court, in its own review, finds that Trustee's applications and MED PLLC's applications include comprehensive and detailed narratives of the services performed, and concludes that MED PLLC's fee applications contain only time entries reflecting accounting/financial advisor services.

1. Time spent and whether it was reasonable in light of the complexity, importance, and nature of the problem, issue, or task addressed

MED PLLC billed the estate for 2,395.5 hours of services, approximately 80% of which were rendered by staff members whose billing rates are significantly lower than Trustee's rate.370 The Court finds and concludes, for the same reasons as set forth above in connection with its Section 330(a) analysis of Trustee's compensation, that the number of hours expended by MED PLLC, although large, is reasonable considering the complex and difficult circumstances of this case.

2. Rates charged and whether rates are consistent with those charged by comparably skilled professionals in non-bankruptcy cases

Professional services rendered by Trustee were billed at an hourly rate of $275.00, and other MED PLLC professionals billed at rates ranging from $55.00 (accounting clerk) to $175.00 (CPA). Mr. Payne testified that MED PLLC's rates are comparable to rates charged and approved in bankruptcy and non-bankruptcy cases, and in Oklahoma's business community. Mr. Payne opined that the overall fee charged for the case is reasonable under the circumstances of the case.371 The Court concludes that MED PLLC's rates are reasonable and are comparable to rates charged by financial professionals in bankruptcy and non-bankruptcy cases.

3. Skill and experience in the bankruptcy field

As set forth above, Trustee is a member of the American Insolvency and Restructuring Association, an organization that provides specialized training to professionals serving in bankruptcy and restructuring cases. All professionals employed by MED PLLC have extensive experience in accounting and financial consulting in bankruptcy cases.

4. Whether services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, the case

When Trustee was appointed, he took control of the day-to-day operations of dozens of apartment complexes and became controlling member/manager of dozens of SPEs whose cash and finances had been commingled with MACCO's or with other SPEs. Wearing his financial consultant hat, Trustee quickly assessed the financial status, cash flow, and profitability of various real estate holdings, and accounted to lenders for use of cash collateral. Throughout the case, the estate benefitted from the financial consulting services of MED PLLC's bankruptcy-savvy staff, who assisted with accounting for revenues and payables, claims research and analysis, evaluating property sales, locating and reconciling bank records, and performing economic analyses for litigation or reporting purposes. The Court concludes that the services rendered by MED PLLC were necessary and beneficial, and that Price's contentions otherwise are unsupported by the evidence.

With respect to the Johnson factors, the Court adopts its findings and conclusions stated above in connection with Trustee's application for compensation, but concludes that no adjustment to lodestar is necessary to adequately compensate MED PLLC. Accordingly, MED PLLC's final application should be allowed in the amount of $20,327.97, and all fees previously applied for and paid should be allowed on a final basis.

C. Application of Counsel

The Court approved Trustee's employment of the firm of Bellingham & Loyd, PC, to advise Trustee with respect to his rights, duties, and obligations under the Bankruptcy Code and other applicable law; assist in preparation of all pleadings and documents; assist in identifying and analyzing claims against the estate and in objecting to claims; represent Trustee in all bankruptcy proceedings, contested matters, and adversary proceedings; and represent Trustee with respect to any other matters that may arise in connection with the estate.372

Counsel filed five interim fee applications, all of which were unopposed and were approved by the Court.373 Counsel has been paid fees in the amount of $697,917.50 and has been reimbursed for expenses in the amount of $25,252.28, for at total of $723,169.78. In its final fee application and two supplements, Counsel seeks allowance and payment of an additional $196,475.00 in fees and reimbursement of $4,328.63 in expenses, for a total of $200,803.63.374

Counsel's client, Trustee, meticulously reviewed each of Counsel's fee applications, compared Counsel's time entries and descriptions with his own time sheets, and concluded that the time spent and fees requested were both reasonable.375 Trustee also reviewed Counsel's application for fees for services rendered to Trustee as Chapter 7 Trustee, and determined that $7,500.00 requested in that application (30 hours) should be allocated to the Chapter 11 fee application. Accordingly, Counsel requests the allowance of fees and reimbursement of expenses as a Chapter 11 administrative expense in the total amount of $208,303.63.

Price and McGinnis believe that none of Counsel's fees or expenses should be allowed. They contend that (1) Counsel's services and advice to the Trustee did nothing to protect or benefit the estate but, on the contrary, diminished the value of the estate to the detriment of creditors and equity owners, and any benefit to creditors in this case resulted solely from the efforts of Price and McGinnis; (2) Counsel was motivated by the desire to "plunder" the estate by accruing excessive fees for unnecessary services;376 (3) Counsel knew or should have known that reorganization was never a viable possibility and therefore should have advised dismissal or conversion of the case; (4) time spent litigating their fee applications is not compensable;377 and (5) the fee applications do not comply with the United States Trustee Guidelines for fee applications, and should be summarily overruled for that reason alone.

1. Objection to Form and Content of Fee Applications

Dealing with the last objection first, the Court notes that the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330 ("Guidelines")378 are guidelines only and have no force of law.379 By local custom and practice in the Western District of Oklahoma, and with tacit approval of the UST, fee applicants do not strictly adhere to certain of the Guidelines. For example, the UST and other parties that review fee applications in the district prefer that fee applicants report all services in chronological order rather than segregating them by project category as suggested by the Guidelines.380 However, as was customary, Counsel did tag each service with a project category code (i.e., claims administration, asset disposition, litigation, etc.) so that the total number of hours and fees associated with each category could be calculated. Counsel provided those totals in its fee applications.

Price also alleged that Counsel violated the Guidelines by not billing in tenths of an hour and by "block billing." The Court finds, however, that Counsel recorded time contemporaneously with providing services using TABS billing software, and did in fact bill in tenth of an hour increments (as opposed to, say, quarter-hour or half-hour increments).

"`[B]lock billing' refers to the time-keeping method by which each lawyer and legal assistant enters the total daily time spent working on a case, rather than itemizing the time expended on specific tasks."381 In the recent BP Pipelines case, the Tenth Circuit noted that it has "never mandated a reduction or a denial of a fee request based on block billing."382 In any event, Price did not present a single witness, expert or otherwise, to establish that Counsel's applications contained inappropriate block-billing. All witnesses that testified about the issue concluded that Counsel billed in tenths of an hour and did not "block bill," and confirmed that Counsel's time records permitted them to determine what services were performed and whether the time spent was reasonable.383

The Court has reviewed each and every time entry contained in Counsel's applications.384 Each entry delivers a precise, detailed, and thorough narrative of the services performed, and the amount of time spent on such services. The Court is able, without difficulty, to determine the necessity, nature, extent, and value of each service, and therefore whether the time allocated to such service was reasonable. Price's objections to the form and content of the fee applications are overruled.

2. Standards for Review of Counsel's Fee Applications

Counsel is a "professional person" whose compensation is subject to Section 330(a), which provides in pertinent part —

Again, the process includes determining a lodestar under Section 330(a)(3) and (a)(4) and determining whether an adjustment is appropriate under the so-called Johnson factors386 to arrive at a reasonable fee.

3. Section 330(a)(4) Analysis

Price's central objection to compensating Counsel hinges on her view that Counsel's services and advice to Trustee did not result in a benefit to the estate, but instead, in her opinion, diminished the value of the estate to the detriment of creditors and equity owners. It is essentially an objection under Section 330(a)(4) that Counsel's services are not compensable because they were not "reasonably likely to benefit the estate."387 Price takes the position that Counsel knew or should have known that reorganization was never a viable possibility, and services rendered in pursuing any course other than dismissal or conversion were unnecessary and therefore not compensable.388

Price cites several cases that deny fees for a lack of benefit to the estate where counsel forged ahead knowing that there was no reasonable possibility of a successful reorganization,389 including the Tenth Circuit case of In re Lederman Enterprises, Inc.390 In Lederman, the Tenth Circuit affirmed the bankruptcy court's denial of attorney fees for services rendered to a debtor in possession that filed a Chapter 11 case and proposed a plan in bad faith. The Tenth Circuit stated that "the beneficial nature of legal services must be determined before a reasonableness inquiry may even be conducted."391 Entitlement to attorney fees for legal services rendered to a trustee turned on whether the services were "actual" and "necessary," and that "[a]n element of whether the services were `necessary' is whether they benefited the bankruptcy estate."392 Lederman's counsel's services were not compensable because they "provided no demonstrable benefit to the bankruptcy estate" and therefore were not "necessary."393

Lederman was decided before Section 330(a) of the Bankruptcy Code was amended in 1994. Prior to 1994, Section 330(a) provided in full as follows:

Lederman's implication that only services that provided a "demonstrable benefit" to the estate were "necessary" and therefore compensable is unsustainable in light of the complete revision of Section 330 in 1994.395 Currently, Sections 330(a)(3)(C) and (a)(4)(A) explicitly direct courts to allow compensation for services "necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case"396 and to deny compensation for "unnecessary duplication of services" and "services that were not (I) reasonably likely to benefit the debtor's estate; or (II) necessary to the administration of the case."397

Contrary to Price's assertions, legal services may be "reasonably likely" to benefit to a Chapter 11 estate even if no plan of reorganization is proposed or confirmed. Benefit to the estate "is not restricted to success measured by confirmation of a plan or the prospect of confirming a plan."398 For example, counsel's advice and services may benefit the estate, as happened in this case, "by maximizing value for creditors through an orderly or emergency liquidation of assets by Section 363 sales."399 Moreover, "[t]he appropriate time for measuring benefit to the estate is as of the time the services are provided, and not at the time the court ultimately reviews the fee application.... Courts may allow compensation where counsel's services promoted the bankruptcy process and contributed to the administration of the estate, but did not otherwise provide an economic benefit to the estate."400 In addition, "[n]ecessary and actual fees are allowable in situations where the fees are unavoidably incurred," such as responding to events not subject to counsel's control, "even if they are not of a benefit to the estate."401

With these principles in mind, the Court will assess the validity of Price's specific contentions that Counsel's fees were not necessary, beneficial, or compensable. First, the Court notes that the appointment of a Chapter 11 trustee occurs only when the affairs of the debtor have been mishandled prepetition, postpetition, or both. Accordingly, legal advice and services rendered to a Chapter 11 trustee will necessarily depend on the evolving "facts on the ground" — i.e., the realities facing the trustee and the estate — rather than an abstract notion of how a Chapter 11 case should proceed. Unforeseeable and irregular situations beyond counsel's and trustee's control must be addressed, sometimes on an emergency basis and without fully developed information. That happened in this case in spades. For example, Counsel worked hundreds of hours in the first months of the case responding to unforeseeable, threatening, and ultimately meritless challenges to Trustee's legitimacy and scope of duties. Services rendered to prevent Price and McGinnis from retaking management of MACCO and its SPEs were absolutely beneficial to the estate and necessary to the administration of the case because, as testified to by numerous creditors as well as by expert witness Mark Toffoli, Trustee and Counsel brought stability, order, integrity, trust, cooperation, and transparency to the businesses and to the Chapter 11 proceedings, and were crucial to preserving the estate and ultimately insuring creditors were paid according to the priorities set forth in the Bankruptcy Code.

The Court also notes that Counsel had no role in filing MACCO's Chapter 11 case, and therefore cannot be faulted for commencing a case that had no reasonable possibility of success. Nor can Counsel be blamed for not timely developing and filing a plan of reorganization in light of the initial disorder, dysfunction, and hostile legal proceedings that consumed the early months after Trustee's appointment, which was immediately followed by a three-month effort to consummate the Global Agreement with Price, which was followed by piecemeal sales of non-income producing properties to Price, which was followed by sales of operating entities to Price and responding to Price's own proposed plan, followed by conversion to Chapter 7 once all operating assets had been liquidated and claims determined. Counsel's advice and services were necessarily rendered to advance the case toward completion.

With respect to the Global Agreement, Price contends that had Counsel sought modification of the agreement to exclude the Frontier Bank release, the transaction could have closed, the estate would have reaped $5 million in cash, and the case could have been wrapped up quickly, saving hundreds of thousands of dollars in administrative expenses. In addition, she alleges that because the piecemeal sales of the same assets generated only $2.5 million, Counsel's decision not to seek modification caused the estate to lose $2.5 million. Thus, she argues, Counsel's services were not beneficial to the estate.402 Section 330(a)(3)(C), however, requires the Court to look at whether "services were... beneficial at the time at which the service was rendered toward the completion of the case. The weight of the evidence establishes that there were many obstacles to the closing of the Global Agreement, including the lack of support by the Committee, the wariness of the secured lenders, and the questionable commitment of the mysterious investor. When it became obvious that Price was unable to close after many extensions, Counsel immediately (within a day or two) drafted and filed motions to sell non-income producing properties, which benefited the estate by reducing expenses that were not offset by revenues, and diligently continued to move the case toward its conclusion in an orderly, systematic manner.

Price persists in arguing that when Trustee was appointed, Counsel should have advised Trustee to quantify unsecured claims, pay the claims from funds to which MACCO had access, and dismiss the case, and that all other services rendered by Counsel were unnecessary. As stated above, however, the evidence establishes that the small pool of unsecured claims Price contends should have been paid in 2011 did not reflect dozens of multimillion dollar potential deficiency/guarantee claims, and therefore Counsel properly advised Trustee that his fiduciary duties prohibited the payment of a few selected unsecured creditors. In the end, after Trustee obtained releases of guarantees, the final amount of prepetition unsecured claims was still in excess of four times the amount of claims Price identified for payment in 2011. Moreover, at the time Trustee was appointed, the estate did not have any uncontested funds to pay these unsecured creditors, and these creditors could not have been paid in any event until one million dollars in accrued unpaid priority administrative expenses were satisfied. Counsel's advice to Trustee was sound.

4. Section 330(a)(3) Analysis

a. Time spent

Counsel billed a total of 3,674.8 hours for services rendered in the Chapter 11 case through November 3, 2014. An additional thirty hours of Chapter 11 services that were inadvertently billed to the Chapter 7 estate brings the total time spent to 3,704.8 hours.403

Some of the time billed falls out-side the scope of the orders authorizing Trustee to retain Counsel, however. One of the lawyers who performed services, Christopher Stein, who was "of counsel" to Counsel's firm, first provided services on July 5, 2011. He filed affidavits of disinterestedness on July 7, 2011, and July 8, 2011,404 but an application for authority to employ Mr. Stein as additional counsel to Trustee was not filed until July 26, 2011.405 Ms. Loyd testified that at the time she assigned certain urgent matters to Mr. Stein, she believed that the original application referenced "of counsel" to the firm and that his employment had been authorized, but later, upon review of Counsel's original application, she discovered it did not mention Mr. Stein or "of counsel."406 Mr. Stein performed 60.3 hours of valuable services to Trustee prior to seeking authority to be retained. Unfortunately, these hours must be subtracted from the number of compensable hours.

Ms. Loyd also billed some time outside the scope of the retention orders. Prior to the date the order appointing Trustee was entered and an application to retain Counsel was filed (June 2, 2011), Ms. Loyd spent 9.2 hours familiarizing herself with the MACCO Chapter 11 case and related Chapter 11 cases, preparing for the hearing on the appointment of Trustee, and advising Trustee concerning immediate matters. A paralegal spent 5.0 hours preparing files for Counsel's review. The Court concludes that extraordinary circumstances prevented Counsel from filing an application on behalf of Trustee for approval of Counsel's employment prior to spending 9.2 hours of attorney time and 5.0 hours of paralegal time on the case, i.e., the impossibility of filing a document on behalf of a trustee who had not yet been appointed.407 These hours are compensable.

Some "estimated time" must also be subtracted from the total hours billed. Counsel's second supplement to the final fee application, which was filed a few days before the Fee Hearings began in November 2014, included estimates of 35.0 hours to prepare witnesses and exhibits for hearings on Trustee's and MED PLLC's fee applications, and 16.0 hours to attend the hearings and present evidence. Because Trustee and MED PLLC were represented by other counsel by the time their fee applications were heard in January 2015, another 51.0 hours must be deducted from the total time spent.408 These deductions result in a total of 3,593.5 compensable hours.

Although the number of hours appears large, the Court is satisfied that Counsel applied meticulous billing judgment. Counsel's billing statements reflect numerous "no charge" entries where more than one attorney was involved or where amendments to pleadings were necessary. Duplication of services among the three lawyers working on the case was avoided. Counsel made a concerted effort to reduce administrative expenses by negotiating rather than litigating with creditors, and greatly succeeded in limiting contested matters to a minimum, with the exception of matters contested by Price and McGinnis, over which Counsel had little control. Counsel kept travel to a minimum and reduced hourly rates for travel time by half. Moreover, Counsel did not bill the estate for a significant amount of time spent litigating with Price and McGinnis post-conversion.409

The Court recognizes that the number of hours spent on this case is larger than typically seen in a Chapter 11 case due to "responses necessitated by the maneuvering of the other side."410 "[P]art of an attorney's calculus of the amount of time reasonably necessary for a case is the vigor which the opponents bring to the dispute."411 The number of hours Counsel spent in this case is quite reasonable in light of the fierce opposition they encountered.

b. Rates charged

Mr. Bellingham and Ms. Loyd billed the estate at the rate of $250.00 per hour, and Mr. Stein billed the estate $200.00 per hour. Expert witness Mark Toffoli testified: "For the levels of experience that those three [individuals] have, [they are] chronically low billing rates, in my opinion."412 In 2011, when Counsel was retained, "seasoned bankruptcy lawyer[s]" were charging $280.00 to $300.00 per hour.413 Both Mr. Bellingham and Ms. Loyd billed the estate at $250.00 per hour even after they increased their rates to other clients to $300.00 per hour. Price has not objected to Counsel's rates.

The Court finds and concludes that Counsel's rates are at the lowest end of the range of rates it has seen in Chapter 11 cases in the past eighteen years on the bench, and the rates are more than reasonable in light of the decades of relevant bankruptcy experience possessed by these lawyers, the prevailing rates in the region, and Counsel's efficient and effective use of resources.

c. Whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title

Counsel's services were necessary to Trustee's administration of the estate. Counsel's advice and services insured that Trustee met his responsibilities under the Bankruptcy Code and Rules and that all transactions were properly documented, noticed, and approved. Counsel appeared and represented Trustee at numerous hearings, and defended Trustee against removal and lawsuits. Counsel represented Trustee in adversary proceedings seeking recovery of estate property, and in fulfilling his duties as a managing member of the debtors in the associated Chapter 11 cases. Counsel drafted and reviewed thousands of pleadings, briefs, notices, orders, agreements, reports, loan documents, releases, correspondence, and all other documents necessary to the administration of the estate.

As detailed in the sections analyzing Trustee's and MED PLLC's fee applications, the hours Counsel necessarily spent on otherwise routine matters ballooned as a result of pointless objections raised and pursued by Price and McGinnis. Nevertheless, Counsel persevered in rendering high-quality advice and legal representation to Trustee. Ultimately, all secured lenders were paid in full, guarantees were released, and unsecured claims were reduced to a handful and received 90 cents on the dollar.

d. Whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed

This was a complex and difficult case. The docket sheet in the MACCO case exceeds 400 pages. MACCO owned four SPEs that were also debtors and whose cases required significant services of Counsel. The case was especially complicated by animosity and litigiousness not of Counsel's making. Counsel was efficient and did not overstaff or overbill. The Court finds Counsel's ability to address all the unique, complex, and important issues arising in this case with only three lawyers is a testament to their deep experience and well-honed skills.

e. Whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field

All three lawyers are experienced bankruptcy practitioners. Ms. Loyd has practiced in excess of 25 years. She served as a panel trustee for 22 years, administering more than 20,000 cases. Her experience with Chapter 11 cases includes representing debtors, debtors-in-possession, trustees, creditors, and committees. She has been appointed as a Chapter 11 trustee and a liquidating trustee. Her experience, reputation, and abilities as a highly experienced bankruptcy practitioner led to her appointment, in 2014, to the bankruptcy bench. Also highly experienced and regarded, Mr. Bellingham has practiced in the commercial litigation and bankruptcy fields for over 40 years, and Mr. Stein has practiced for in excess of 15 years in the bankruptcy and litigation arenas.

f. Whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title

Counsel's rates are eminently reasonable when compared to other non-bankruptcy litigators and transactional lawyers of their caliber in the region.

Based upon these Section 330(a)(3) considerations, the Court concludes that Counsel reasonably spent 2,824.8 hours from May 27, 2011 through July 22, 2013,414 and was paid interim compensation of $697,917.50, from which $12,060.00 (60.3 × $200.00) must be backed out, resulting in a lodestar of $685,857.50 for the interim period. Counsel's blended rate during this period is $242.80, which the Court finds very reasonable and appropriate.

Since July 22, 2013, Counsel has accrued in excess of 768.7 hours,415 for which Counsel has not been paid. Because Counsel charged other clients up to $300.00 per hour as of the date of the fee hearing, the Court concludes that these hours should be compensated at the rate of $300.00 to adjust for the significant delay in payment, a cost that should not be borne by Counsel.416 Accordingly, the Court sets the lodestar for services rendered after July 22, 2013, at $230,610.00.

5. Johnson Factors

With respect to the Johnson factors that overlap the Section 330(a)(3) considerations, the Court will not repeat its findings, but incorporate them by reference into the Johnson factor analysis. These overlapping topics are: (1) The time and labor required (see subsection a above); (2) The skill requisite to perform the legal service properly, and the experience, reputation, and ability of the attorneys (see subsection e above); and (3) The customary fee (see subsections b and f above).

a. The novelty and difficulty of the questions

Although Price and McGinnis claim that early conversion or dismissal was the most reasonable and economical disposition of the case, they overlook the complexity they created by launching MACCO into Chapter 11 and then ignoring their own fiduciary duties as representatives of the debtor in possession. Their mismanagement, misappropriation, self-dealing, and lack of accounting, combined with their unwarranted interference with Trustee's performance of his duties, required Trustee to obtain legal advice and legal services above and beyond those routine to the administration of a Chapter 11 estate. The case would not have been a "simple" one in any event, due to the magnitude of debt, the number and condition of properties and businesses, and the necessity of managing SPEs in and out of bankruptcy, but those challenges were intensified by the antagonism and lack of cooperation on the part of Price and McGinnis.417

b. The preclusion of other employment by the attorney due to acceptance of the case

Counsel advises that "the engagement did not preclude [Counsel] from accepting other engagements."418

c. Whether the fee is fixed or contingent

Because satellite litigation pursued by Price and McGinnis against Trustee and other estate professionals continues to consume estate resources, Counsel faces a risk of nonpayment or reduced payment due to possible administrative insolvency.

d. Time limitations imposed by the client or the circumstances

Early in the case, Counsel had to react to issues discovered by Trustee on an emergency basis (i.e., obtaining funds to pay delinquent post-petition payables, such as wages, insurance, taxes, etc.). Price and McGinnis's threats, demands, and obstructions were additional circumstances that imposed short time triggers on filing responses and preparing for hearings. Price and McGinnis's inability to close transactions caused Counsel to have to file multiple pleadings to extend closing dates and obtain hearings, also resulting in wasted time and duplication of services for which Counsel was not at fault.419

e. The amount involved and the results obtained

Counsel's effective representation of Trustee, beginning with its defense against Price's multiple motions and suits seeking to remove Trustee, led to remarkable results in spite of the circumstances. On behalf of FAA, the single largest creditor with a claim in excess of $20 million, Mr. Tuepker testified that Counsel's services benefited the estate in that Trustee, with Counsel's legal advice and assistance, provided trustworthy information, operated MACCO and the SPEs in a manner consistent with fiduciary duties and contractual obligations to lenders, and protected the value of the collateral and the estate. FAA was paid in full, which Mr. Tuepker attributes to displacing Price and McGinnis with Trustee and Counsel.420

The estate was relieved of in excess of $70 million in direct and potential liability arising from secured claims, all outstanding fraud litigation against MACCO was resolved, and unsecured claims were reduced from $60 million to approximately $600,000.00 in allowed claims, of which 90% has been paid.

f. The "undesirability" of the case

Of the MACCO case, Ms. Loyd testified "in the first three days, it was desirable.... After then, it wasn't."421 Mr. Tuepker testified that he "wouldn't have wanted that work for a million dollars."422 Mr. Toffoli testified that the acrimonious nature of the case made it undesirable, remarking: "I would probably concur with Mr. Tuepker's observation the other day, that I wouldn't do this case for a million dollars."423 The case generated "a sustained level of animus that I don't think I've ever seen in 32 years."424 In addition, Price and McGinnis repeatedly accused Counsel of usurping Trustee's role and of committing malfeasance, and they ultimately brought suit against Counsel in District Court, seeking $40 million in damages. Although Counsel has devoted up to 100% of their time to this case, Counsel has not been paid since September 2013. For a three lawyer firm, non-payment of over $200,000.00 of earned compensation constitutes a hardship. The Court concludes that the undesirability factor alone weighs strongly in favor of enhancing Counsel's fee award.

g. The nature and length of the professional relationship with the client

Counsel represented Trustee in previous cases, and in this case they complimented each others' efforts effectively and efficiently.

h. Awards in similar cases

Evidence of an opponent's expenditure of time is relevant to judge the reasonableness of the time spent by Counsel.425 Price testified that it was her "best guess" that she and McGinnis incurred $300,000.00 to $500,000.00 in attorney fees during the course of the bankruptcy case.426 Counsel, however, had to not only react to Price's involvement in the case with equal vigor, but also provide advice and legal services necessary for Trustee's ordinary and proper administration of the case, including retention of various professionals, stay and abandonment matters, Section 363 sales transactions, business and insurance issues, recovery litigation, and communicating with and responding to creditors and other parties in interest.

In the Court's experience, the fees requested by Counsel in this case are commensurate with fees the Court has awarded in other Chapter 11 cases that were less complex and unquestionably less adversarial. Expert witness Mark Toffoli, too, testified that he recalled two other recent Chapter 11 cases in the district that were "nowhere remotely close to being this contentious" where the Court approved fees to counsel "every bit as large as what these fees are today."427

The Johnson factors bolster the Court's view that Counsel's representation of Trustee throughout the course of the case was highly professional, ethical, and commendable, and produced outstanding results under the most unpleasant and difficult circumstances. The Court is reluctant to adjust the fee upward, however, only because it appears that administrative expenses are likely to exceed assets, and any increase would come at the expense of unsecured creditors and other administrative expense claimants.

The Court concludes that Counsel is entitled to a total fee for services rendered to Trustee in the Chapter 11 case in the amount of $916,467.50,428 of which $697,917.50 has already been paid. Counsel is also awarded reimbursement of expenses in the amount of $4,328.63. Accordingly, Counsel's final allowed administrative expense claim consists of unpaid fees in the amount of $218,550.00 and unpaid expenses in the amount of $4,328.63.

D. Effect of the ASARCO Decision

On July 6, 2015, Price and McGinnis filed a supplemental brief, arguing that in light of the United States Supreme Court's decision in Baker Botts LLP v. ASARCO LLC ("ASARCO"),429 the Court must disallow "all fees requested by any of Movants for any litigation of their fee applications."430 After a careful reading of ASARCO, the Court concludes that the decision is not applicable to the facts of this case.

In ASARCO, the bankruptcy court authorized ASARCO, as debtor in possession, to retain Baker Botts431 as counsel to represent ASARCO and assist in administering the Chapter 11 estate. After ASARCO successfully reorganized, Baker Botts filed its final application for compensation under Section 330, seeking to be paid by the reorganized ASARCO. ASARCO objected to the amount of compensation, initiating a contested matter between ASARCO and its former lawyers (the "Compensation Dispute"). The Bankruptcy Court awarded Baker Botts compensation for representing the estate, and also awarded Baker Botts the fees it incurred litigating the Compensation Dispute with ASARCO. The United States Supreme Court held that the American Rule prohibited the bankruptcy court from awarding fees to Baker Botts for litigating the Compensation Dispute with ASARCO because in Section 330(a), "Congress did not expressly depart from the American Rule to permit compensation for fee-defense litigation by professionals hired to assist trustees in bankruptcy proceedings."432 The American Rule prohibits shifting attorney's fees from one party to the litigation to the other absent statutory authority. The Supreme Court held that allowing Baker Botts to collect the fees incurred litigating the Compensation Dispute from its adversary, ASARCO, would violate the American Rule.

In the MACCO case, Trustee, Counsel, and MED PLLC ("Estate Professionals") seek payment of compensation from the estate, but unlike ASARCO, the estate does not oppose compensating the Estate Professionals. Trustee, as sole representative of the estate, fully supports payment, and is advocating in favor of granting the Estate Professionals' applications in order to complete the administration of both the Chapter 11 estate and the Chapter 7 estate. Determining the amount of administrative expenses is also one of the prerequisites to determining whether the estate is solvent, and whether various pending adversary proceedings against Price, McGinnis and their affiliates should be pursued by Trustee for the benefit of the unsecured creditors.

Unlike ASARCO, the dispute in this case is between the Estate Professionals and third parties, Price and McGinnis, and the dispute is broader than simply an objection to the amount of compensation sought. Price and McGinnis's objection to compensating the Estate Professionals is grounded in the belief that they have personally have been damaged, and that by denying all compensation to the Estate Professionals, the estate would be flush with funds with no where to go but to Price, as the equity holder. The American Rule precludes fee shifting between these two sets of adversaries, but does not apply to preclude the Estate Professionals from being compensated by the estate for defending themselves from tort claims asserted by Price and McGinnis.433

Under the American Rule "`[e]ach litigant pays his own attorney's fees, win or lose, unless a statute or contract provides otherwise.'"434 Citing Alyeska Pipeline Service Co. v. Wilderness Society,435 the Supreme Court observed that Section 330(a)(1) is a statutory provision that authorizes courts to award attorney's fees in certain circumstances —

Legal services provided by Counsel to defend Trustee's and MED PLLC's fee applications from objections and setoff claims asserted by Price and McGinnis are clearly services to the "administrator of the estate."437 The estate has an obligation to pay all professionals that represent the trustee. Services rendered by Counsel in defending its own administrative expense claim from third party objections and setoff claims are also "actual, necessary services rendered" to assist Trustee in completing the administration of the estate. Trustee cannot complete the administration of the estate until all administrative expense claims are liquidated. Let it be said again: Trustee has no objection to compensating Counsel in the full amount billed by Counsel, and Counsel is not litigating against the estate.

The Supreme Court also noted in ASARCO that where attorneys seek compensation from an estate that opposes the compensation, an adverse relationship between attorney and the estate is created, which precludes the "services" rendered in litigating compensation from falling within Section 330(a)(1).

There is no issue as to loyalty of Counsel to Trustee and the estate, or of Counsel's disinterestedness. Counsel and Trustee are not adversaries. Counsel is instead defending itself, and its fees, from baseless claims of malfeasance asserted by Price and McGinnis, who argue that Counsel is not entitled to any compensation for representing Trustee and assisting him in, among other things, disposing of over $70 million in claims against the estate.439 Counsel is stuck in this litigation simply because it has diligently, loyally, and professionally performed services for Trustee and the estate.

For these reasons, the Court concludes that ASARCO is inapplicable to the facts of this case, as the Estate Professionals have and are continuing to provide services to the estate by defending against Price and McGinnis's objections and setoff claims in order to establish the amount of administrative expenses so that Trustee may finalize the administration of the Chapter 11 and Chapter 7 estates.

E. Price's Claims

In her objections to the fee applications, Price asserted affirmative claims against Counsel, Trustee, and MED PLLC seeking damages she alleges she suffered as a result of their administration of the estate, and she asks that the damages be offset against their fees.

As a matter of procedural history, the Court observes that the claims asserted in the objections are identical to claims asserted in the April 2014 lawsuit Price and McGinnis filed against these professionals in the District Court. But because Price and McGinnis failed to seek leave from the bankruptcy court before suing Trustee and his professionals in District Court, their lawsuit was dismissed for violating the Barton Doctrine.440 Price and McGinnis then filed motions in the bankruptcy court seeking permission to sue Trustee and his professionals in District Court, but Judge Jackson denied such relief. Accordingly, this Court is the only court with jurisdiction to adjudicate these claims.441

1. Claims against Trustee and MED PLLC

Price's allegations of gross negligence, breach of fiduciary duties, mismanagement, and intentional misconduct against Trustee have now been actually and fully litigated over the course of three trials in the bankruptcy court.442 Upon consideration of the facts found above and applicable law, the Court concludes that Price has not established by a preponderance of the evidence the elements of any of these claims.

a. Breach of fiduciary and statutory duties

Price advances a litany of statutory duties she contends Trustee breached. First, she claims that Trustee violated his duty under Section 1106(a)(5) of the Bankruptcy Code to file a plan, explain why he could not file a plan, or recommend conversion. Trustee was not able to propose a plan in the first few months of his trusteeship because Price and McGinnis were attacking Trustee's legitimacy and powers. Trustee was in the process of determining the status of the debtor, the SPEs, the various income and non-income producing properties, and over fifty bank accounts; identifying assets, debts, and creditors; addressing the one million dollars of post-petition payables left by McGinnis; managing and operating the SPEs, including reinstating utilities and insurance and retaining management professionals in two states; and protecting the assets of the estate from loss.443 After the entry of the 52-Page Order, Price immediately proposed the Global Agreement in which all of MACCO's assets would be sold to her and/or her investors. There was no reason for Trustee to propose a plan of reorganization under those circumstances, and Price and McGinnis, as the instigators of the liquidation efforts, are estopped from complaining that Trustee should have proposed a plan rather than working with them to liquidate the assets.

Although Loyd testified that it "was clear from within probably the first six months that a plan of liquidation was probably going to be what we were going to be pursuing,"444 it also became clear that since Price and her affiliates planned to purchase the assets on an expedited basis, and large chunks of the unsecured guarantee debt would be eliminated with each sale, it was unnecessary to incur the expense of proposing and confirming a plan. Moreover, immediately after Trustee completed the sales of all the non-income producing assets, and eliminated MACCO's direct secured debt, Price herself proposed a plan. Trustee acted reasonably by not filing a competing plan and by attempting to steer Price's disclosure statement and plan toward confirmation.445

Price and McGinnis also fault Trustee for not filing an investigative report as required by Section 1106(a)(4), but Trustee did in fact file an extensive interim report on August 19, 2011, detailing his findings.446 Price argues that Trustee did not address the likelihood of filing a plan or converting the case in the report. However, in the report, Trustee stated that he had —

More to the point, as Price and McGinnis were vigorously involved in every aspect of the case, they cannot complain about lacking information about Trustee's activities or his intentions regarding a plan or conversion.

Price also contends that Trustee should have recognized that reorganization was not feasible, and converted the case to a Chapter 7 case early on since all assets were ultimately liquidated and the case was ultimately converted. Professor Williams accurately pointed out that Price could have asked for conversion early in the case, but she did not, and in any event, transferring a huge operating enterprise to a Chapter 7 trustee would not have been in the best interests of the estate.448 Price does not articulate any benefit to early conversion to Chapter 7 other than the elimination of United States Trustee fees. The downside of conversion would have been the high likelihood that the SPEs could not have been sold as operating entities, and MACCO's guarantees of the SPEs' mortgage debts would not have been eliminated. Converting to Chapter 7 was not feasible until all operating assets had been sold.449 Immediately after the last SPE sale, the UST, with the backing of Trustee, did move to convert the remaining two Chapter 11 cases, MACCO and Brooks, to cases under Chapter 7.

Price argues that Trustee violated his duties under Section 1106 to file tax returns. Section 1106(a)(6) instructs that a Chapter 11 trustee shall —

Section 704(a)(8), made applicable to Chapter 11 trustees by Section 1106(a)(1), also provides that a trustee shall —

MACCO is a sub-chapter S corporation, a pass-through entity, so its tax attributes flow to Price as equity holder. The Internal Revenue Code imposes an obligation on Chapter 11 trustees to file an accurate income tax return for a sub-chapter S corporation, even though the estate is not a taxpayer and the filing of the return has no effect on the bankruptcy estate.452 Trustee testified that because he lacked confidence in the accuracy of the books and records he inherited,453 he could not produce an accurate return, and he so advised the Internal Revenue Service. Trustee was in regular contact with the Internal Revenue Service regarding pre and post-petition tax returns, provided information to it as requested, and provided updates as to the status of the returns.454 Professor Williams testified that Price could file her returns notwithstanding that MACCO has not filed its returns — "that's not unusual when you have an S corporation bankruptcy."455

Price also claims that Trustee breached fiduciary duties by abandoning properties in which there was equity available to the estate. In determining whether abandonment was appropriate, Trustee reviewed the lenders' appraisals of their collateral and obtained his own broker opinions as to the values of the properties at the time of the proposed abandonment. Trustee was satisfied, based on the condition of the properties, the lack of cash flow, and the extent of the liens, that there was no value to be had for the estate. In one case, Trustee abandoned a property that posed a danger to tenants for which he could not obtain the lender's authority to use cash collateral to repair. Price did not object to motions for abandonment, and in all cases, the Court entered orders approving abandonment as in the best interests of the estate, which orders are final and were not appealed.456

Price also argues that Trustee undervalued the properties he sold, thus realizing only approximately $2.5 million of the equity instead of approximately $34 million in equity that Price claims existed based upon appraisals obtained by McGinnis. The Court finds that some of the appraisals commissioned by McGinnis are suspect because they were based on unreliable operational information McGinnis provided to the appraisers, such as inflated rent rolls, or based upon pro forma financial data provided by McGinnis rather than on data from actual operations. The Court further finds that Trustee was justified in relying on indicators of value other than the appraisals because he was acutely aware, from fraud claims filed against MACCO, that the same types of financial information McGinnis provided to appraisers was also provided to prepetition purchasers of apartment complexes. These fraud plaintiffs alleged detrimental reliance upon inaccurate rent rolls and inflated revenue projections.457 Moreover, many of the McGinnis's appraisals were several years old and therefore not particularly indicative of the values at the time McGinnis drafted his schedules. Accordingly, many of the appraisals that underlie Price's lost equity claims are not persuasive evidence of the value of the properties at the time Trustee sold them.458

Price presented the testimony of Victor Thomas, of Multifamily Appraisal Specialists, who performed four appraisals in February 2011 at the request of McGinnis. Mr. Thomas appraised the apartment complexes owned by the four SPEs in Chapter 11 proceedings: JU Villa Del Mar Apartments, LLC; MA Cedar Lakes Apartments, LLC; SEP Riverpark Plaza Apartments, LLC; and NV Brooks Apartments, LLC.459 Cause exists to doubt the reliability of these appraisals because (1) Mr. Thomas relied upon McGinnis's rent rolls, which Trustee and the management professionals found inaccurate at the time Trustee took over; (2) McGinnis did not provide Mr. Thomas with a physical needs assessment report, so Mr. Thomas's appraisal assumed no latent deferred maintenance; and (3) Mr. Thomas considered only deferred maintenance observed in his visual inspection of the property, which included interiors of units selected by McGinnis's management team. In addition, Mr. Thomas inspected Riverpark Plaza, a forty-acre complex with over 500 units, on the same day he toured four other complexes, and therefore would not have had time to discover hidden deferred maintenance not disclosed by McGinnis.460 In connection with the Brooks property, McGinnis advised Mr. Thomas that one building had sustained "minor" fire damage and grossly underestimated the remaining repairs at $40,000.00, and did not disclose the extent of remediation required to purge the 82 criminal code violations. Mr. Thomas placed a value on each property consistent with the information provided. Nevertheless, Trustee sold three of the SPEs holding the properties for prices in excess of Mr. Thomas's appraised value. The Court approved the sale of the Riverpark Plaza entity to Price, without objection, for approximately eight and one-half percent below Mr. Thomas's appraised value.461 Mr. Thomas's testimony and appraisals do not support any breach of duty on the part of Trustee.

Price also faults Trustee for not immediately appraising the remaining properties in order to determine market value. Expert witness Payne opined that fiduciaries, seeking to avoid unnecessary administrative expenses, do not ordinarily retain an appraiser but will instead look for "indications of value" by researching comparable sales, obtaining brokers' opinions, reviewing lenders' appraisals, and obtaining prior appraisals from the debtor, if available.462 Trustee obtained broker opinions of value for the purpose of selling the properties, and also reviewed appraisals commissioned by the lenders whose loans were secured by the property.

To the extent that Price is arguing that Trustee's failure to have the properties formally appraised resulted in the loss of equity upon selling the properties at less than their market values, the Court finds that (1) Price and McGinnis participated in the transactions in which all but one of the properties or entities were sold; (2) neither Price nor McGinnis objected to the sales or appealed the sale orders;463 and (3) no one offered Trustee more for the assets than Price and McGinnis or their affiliates.464 No third party offers came close to paying the debt secured by the properties, except in the cases of Brooks Apartments and Charter Apartments,465 and in the case of Brooks, the third party purchaser paid more than Mr. Thomas's appraised value. Price did not present any evidence indicating that she, her investor, or any other potential buyer, were willing to pay more for the properties or entities.

The Court further finds, as explained more fully above, and as previously found after a full hearing on Trustee's first application for compensation in July 2012,466 that Trustee did not breach any duties in connection with the Global Agreement transaction.

b. Mismanagement and/or gross negligence

Price contends that when Trustee was appointed, her net equity in MACCO was approximately $34 million, but Trustee's liquidation of MACCO's assets produced only about $3 million, which, after payment of administrative expenses and unsecured claims will leave nothing to equity. Price claims that alleged mismanagement, failure to supervise the professional management companies, and failure to maintain and repair the properties resulted in her loss of in excess of $30 million in equity.

The allegation that Trustee mismanaged and neglected the SPEs and the non-income producing properties by refusing to move cash around as needed for maintenance and repair has been litigated at least twice already — in July 2011 in connection with Price's attempt to remove Trustee, and in July 2012 in connection with Price's objections to Trustee's first fee application. Both times, the Court determined that Trustee was absolutely prohibited from adopting prior management's cash management practices — that is, using funds generated by income-producing properties owned by one SPE (funds that constituted a lender's cash collateral), to pay operating expenses, capital costs, maintenance, and debt-service related to non-income producing properties, or another SPE's underperforming properties.

Price also contends that the property management professionals failed to properly train, manage, and supervise employees; maintain or repair the properties; or seek and maintain tenants, resulting in loss of income and decline in the condition of the properties, and that Trustee should be held responsible for failing to supervise their management. Both Price Edwards and RSC have extensive qualifications to manage multi-family properties, and Trustee's decision to retain these firms was approved by the Court. Upon retention, both firms encountered (1) seriously run down properties; (2) code violations and mold; (3) inaccurate rent rolls; (4) untrained employees; (5) disorganized books and records; and (6) absence of required equipment and insufficient funds available to maintain or repair units or grounds. These conditions were apparent immediately, and testimony of the same was presented in detail at the hearing in July 2011, and the Court so found. To the extent that bad things happened during the time the property management professionals operated the apartment complexes (e.g., employee theft, down units, decline in revenues), the Court concludes that Price failed to establish that these events resulted from any breach of duty on the part of Price Edwards, RSC, or Trustee. The Court finds specifically that Trustee maintained close and constant contact with the management professionals, kept himself informed regarding management and operational issues, and reacted to the same in a reasonable and responsible manner consistent with his fiduciary duties.

Price alleges that Trustee "pursued an intentional course of action of not maintaining the properties" and that he "starved the properties."467 The evidence establishes that Trustee negotiated with each secured lender for permission to use its cash collateral to address code violations, safety issues, maintenance, and repairs. Trustee's ability to keep the properties from further deteriorating was constrained by the ability of the particular property to generate income and the lenders' willingness to fund any particular repair.468 Trustee also obtained Court authority to use portions of the disputed $1.375 million in unencumbered funds to address the most urgent matters at each property.

In the final analysis, Price's testimony concerning the relative conditions of the properties before Trustee was appointed, when McGinnis was managing them, and after she purchased them back from Trustee was simply not credible. Price's testimony that Trustee and his management professionals allowed units to become contaminated with mold, for example, was undercut by testimony of the management firms' representatives, whose written inventories taken upon commencement of their assignments in July 2011 disclosed numerous units with pre-existing water leaks, water damage, and mold. Price's introduction of photos she took early in the bankruptcy, but represented were taken after she had repurchased the properties, further destroyed her credibility on the issue. Price did not establish that any decline in the condition of the properties, occupancy rates, or income was proximately caused by mismanagement, neglect, or any intentional or reckless course of action on the part of Trustee.

As Price failed to establish her claims by a preponderance of the evidence, judgment will be entered in favor of Trustee and MED PLLC on all claims.

2. Claims against Counsel

With respect to Price's claims of mismanagement and gross mismanagement, she failed to present any credible evidence that Counsel managed the businesses of MACCO or the SPEs, much less mismanaged them. Judgment shall be entered in favor of Counsel on these claims.

With respect to Price's breach of fiduciary duty claim, Counsel was retained and authorized to act as attorney for Trustee, and as such, Counsel had duties only to its client (Trustee) and the Court. Counsel does not owe fiduciary duties to the creditors, equity holders or any other constituent or beneficiary of the estate.469 Accordingly, Counsel could not breach fiduciary duties to Price or McGinnis. Judgment shall be entered in favor of Counsel on this claim.

The Court further concludes that Price and McGinnis failed to prove a claim of gross negligence. Gross negligence is characterized as a "lack of slight care and diligence" in performing duties owed to the plaintiff.470 The behavior complained of must be "so flagrant, so deliberate, or so reckless that it is removed from the realm of mere negligence."471

In this case, evidence is lacking to show that Counsel failed to exercise care and diligence. Overwhelming evidence indicates that Counsel's collective bankruptcy experience guided them in advising Trustee of his fiduciary duties and in assisting him in carrying out his duties. Counsel was heavily involved in all aspects of the case.

The Court finds no credible evidence to support Price and McGinnis's allegation that Ms. Loyd exercised extraordinary control over Trustee, that she was essentially acting as trustee,473 or that she made decisions that were intentionally detrimental to Price and McGinnis. Counsel's role was to advise Trustee as to legal matters, which Counsel did ethically and competently.474

Judgment shall be entered in favor of Counsel on Price's gross negligence claim.

F. Relief is Precluded by the Equitable Doctrine of "Unclean Hands"

Finally, the Court concludes that Price and McGinnis are barred from obtaining the relief they seek due to the "unclean hands" doctrine. A plaintiff requesting equitable relief "must come with clean hands."475 This doctrine "closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief."476 Section 105 permits courts to sua sponte exercise equitable powers not contrary to the Bankruptcy Code in order to carry out provisions of Code.477 And when facts warranting the application of the unclean hands doctrine come to a court's attention, the court should "close[] the doors,"478 and refuse to award any remedy to the party with unclean hands, in order to protect the integrity of the court.

Examples of the use of the unclean hands doctrine abound. In Goldstein v. Delgratia Mining Corp.,480 the District Court denied a class action plaintiff's motion to dismiss because plaintiff made multiple misrepresentations of fact in an attempt to mislead the court into believing that plaintiff's dismissal was not a tactical maneuver and would have no adverse effect on class members.

In the case of Hopper v. Everitt,482 a bankruptcy court declined to except plaintiffs' debt from discharge where plaintiffs' conduct during the transactions complained of included misrepresenting facts related to these transactions on public documents and to third party financial institutions.483

Recently, in Northbay Wellness Group, Inc. v. Beyries,484 the Ninth Circuit reversed a judgment declaring a debt owed by a debtor attorney to his client dischargeable. The debtor attorney stole $25,000 in cash that his client, a medical marijuana dispensary, deposited with the attorney in trust for future defense work. The bankruptcy court found that although the client established that the debt should be excepted from discharge under Section 523(a)(4), it refused plaintiff's prayer for relief under the unclean hands doctrine because the stolen funds were originally the proceeds of illegal marijuana sales. The Ninth Circuit determined, however, that "the unclean hands doctrine should not be strictly enforced when to do so would frustrate a substantial public interest."485 After balancing the two offenses, the Ninth Circuit held that the public interest weighed heavily against allowing an attorney to discharge a debt arising from conversion of client funds, regardless of the creditor's quasi-illegal occupation.

In In re Baetz,486 the bankruptcy court refused to award damages to debtors who claimed their landlord violated the automatic stay. Instead, the court found that these were "dishonest debtors who misled the landlord and its agents, and who were attempting to play games with the bankruptcy process"487 and that the "debtors' own conduct bears a significant portion of the responsibility for creating the stay violation."488

In Mitan v. Duval,489 the Sixth Circuit affirmed a bankruptcy court's decision to grant nunc pro tunc effect to its conversion of a Chapter 11 case to a Chapter 7 case, concluding it a proper use of the court's Section 105 power to prevent an abuse of the bankruptcy process by the debtor and his father, who invoked his status as creditor to have standing to appeal the conversion. "Any holding that the bankruptcy court erred in retroactively converting the case would ... [e]ffectively... give [debtor] the benefit of his continual refusal to cooperate and justify his abuse of the judicial process."490 The case was "full of extraordinary circumstances warranting equitable relief," citing with approval a case in which the court refused "to allow a party's `self-serving interpretation of bankruptcy procedure' to disrupt the normal administration of the bankruptcy estate."491

A party with unclean hands may be barred from asserting setoff,492 the equitable remedy sought by Price. In this case, the Court refuses to allow Price and McGinnis, through objections or by bringing claims, to block payment to Trustee and his professionals for work necessarily caused by Price and McGinnis's own prepetition misconduct, their post-petition disregard for the Bankruptcy Code, and their obstruction and interference in Trustee's fulfillment of his duties. Rewarding Price and McGinnis's conduct would be contrary to the public interest. It is hard enough to attract qualified persons willing to assume the difficult duties of a Chapter 11 trustee, counsel to trustee, and accountant to trustee.493 Permitting professional fees to become a target for displaced management's disgruntlement will drive away the most effective and accomplished practitioners — to the disservice of the entire bankruptcy system.494

A balancing of the equities in this case results in an overwhelmingly lopsided case against Price and McGinnis. Any injury they believe they have suffered by virtue of the size of the estate professionals' administrative claims was self-inflicted. The amount of time and effort necessary to administer the case, and consequently the amount of fees and expenses incurred by the estate, was induced by and is directly related to their wrongful, bad faith, or inequitable conduct, which included, without limitation:

Accordingly, the Court finds and concludes that the doctrine of unclean hands precludes Price and McGinnis from prevailing on their objections to, and their setoff claims against, the fees of Trustee, MED PLLC, and Counsel.

IV. SUMMARY AND CONCLUSION

Price and McGinnis chose to put MACCO and its subsidiaries in Chapter 11. Chapter 11 cases are complicated, and professionals with specialized knowledge and skills must be employed to insure compliance with Chapter 11's complex laws and rules. To ensure a debtor in possession does not run afoul, Chapter 11 provides for the appointment of a creditors committee to act as watchdog. The United States Trustee has enhanced responsibilities in Chapter 11 cases as well. When the United States Trustee and the committee suspect or discover fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor on the part of the debtor in possession's management, they have the duty to speak up in order to protect the creditor body and the integrity of the Chapter 11 mission, and to request the appointment of a Chapter 11 trustee. When evidence of malfeasance justifies the appointment of a trustee, another layer of complexity is superimposed on the case. The trustee, a third party with no agenda other than to bring the case into legal compliance consistent with strict fiduciary duties, and to exercise the business judgment of a competent executive, is saddled with a crisis, a financial mess that must be untangled and cleaned up. Once a trustee is appointed, the immediate task is to secure and protect all estate property and perform an investigation, report the findings, and assess a course of action that is in the best interests of creditors and the estate. The trustee is entitled to retain professionals — legal, financial, management — to assist him in these tasks, and they are all entitled to be paid.

Chapter 11 is an expensive option for a business seeking to reorganize, and becomes more expensive when it is necessary to appoint a trustee. In this case, Trustee and all his professionals did the jobs required of them under the Bankruptcy Code. The Committee performed its role exactly as the Bankruptcy Code envisioned, as did the UST. There was no conspiracy to "loot" the estate, no "cabal" intent on harming the interests of Price and McGinnis. Although the administrative expense claims in this case are higher than they should have been, the fault for the inflated administrative expenses rests exclusively upon Price and McGinnis.

Accordingly, the Chapter 11 administrative expenses sought by Trustee, Counsel, and MED PLLC are allowed as set forth above, and all claims asserted Price and McGinnis are denied. Separate orders and judgments will be entered in connection with each application contemporaneously herewith.

SO ORDERED this 10th day of September, 2015.