CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
Transcript of CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
5902063
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile (212) 697-1559 Steven J. Reisman L. P. Harrison 3rd Conflicts Counsel for the Debtors and Debtors-In-Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
: In re: : Chapter 11 : BALLY TOTAL FITNESS OF : Case No. 08-14818 (BRL) GREATER NEW YORK, INC., et al., : : (Jointly Administered) Debtors. : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
FIRST INTERIM APPLICATION OF CURTIS, MALLET-PREVOST,
COLT & MOSLE LLP, AS CONFLICTS COUNSEL, FOR THE DEBTORS AND DEBTORS-IN-POSSESSION FOR ALLOWANCE OF COMPENSATION FOR
PROFESSIONAL SERVICES RENDERED AND FOR REIMBURSEMENT OF ACTUAL AND NECESSARY EXPENSES INCURRED
FOR THE PERIOD DECEMBER 3, 2008 THROUGH MARCH 31, 2009
NAME OF APPLICANT: CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
AUTHORIZED TO PROVIDE PROFESSIONAL SERVICES TO:
DEBTORS AND DEBTORS-IN-POSSESSION
DATE OF RETENTION: DECEMBER 22, 2008 NUNC PRO TUNC TO DECEMBER 3, 2008
PERIOD FOR WHICH COMPENSATION AND REIMBURSEMENT IS SOUGHT:
DECEMBER 3, 2008, THROUGH MARCH 31, 2009
AMOUNT OF COMPENSATION REQUESTED: $683,814.00
AMOUNT OF EXPENSE REIMBURSEMENT REQUESTED:
$ 42,881.43
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TOTAL COMPENSATION AND EXPENSE REIMBURSEMENT REQUESTED:
$726,695.43
TOTAL COMPENSATION AND EXPENSES PREVIOUSLY REQUESTED AND AWARDED:
NONE
Exhibits to Current Fee Application
The following exhibits are attached hereto and incorporated herein by reference:
Exhibit “A” Certification Under Guidelines for Fees and Disbursements for Professionals in Respect of the First Application of CMP for Interim Compensation and Reimbursement of Expenses
Exhibit “B” By-Timekeeper Summary of Hours Devoted and Compensation Sought (includes billing rate and year of admission to practice)
Exhibit “C” Summary of Expenses
Exhibit “D” By-Matter Summary of Hours Devoted and Compensation Sought
Exhibit “E” Detailed Description of the Work Performed and Time Expended during the Compensation Period
5894242
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Steven J. Reisman L. P. Harrison 3rd Conflicts Counsel for the Debtors and Debtors-in-Possession
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
: In re: : Chapter 11 : BALLY TOTAL FITNESS OF : Case No. 08-14818 (BRL) GREATER NEW YORK, INC., et al., : : (Jointly Administered) Debtors. : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
FIRST INTERIM APPLICATION OF CURTIS, MALLET-PREVOST, COLT & MOSLE LLP, AS CONFLICTS COUNSEL, FOR THE DEBTORS AND DEBTORS-IN-POSSESSION, FOR ALLOWANCE OF COMPENSATION FOR
PROFESSIONAL SERVICES RENDERED AND FOR REIMBURSEMENT OF ACTUAL AND NECESSARY EXPENSES INCURRED
FOR THE PERIOD DECEMBER 3, 2008 THROUGH MARCH 31, 2009
TO THE HONORABLE BURTON R. LIFLAND, UNITED STATES BANKRUPTCY JUDGE:
Curtis, Mallet-Prevost, Colt & Mosle LLP (“CMP”), as conflicts counsel for Bally
Total Fitness of Greater New York, Inc., and certain of its direct and indirect subsidiaries, as
debtors and debtors- in-possession (collectively, the “Debtors”) in the above-captioned Chapter
11 cases (the “Chapter 11 Cases”), respectfully submits this application (the “Application”) for
allowance of its first interim compensation for professional services rendered for the period
December 3, 2008 through and including March 31, 2009 (the “Compensation Period”), and for
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reimbursement of expenses incurred in connection with such services. In support of this
Application, CMP respectfully states as follows:
JURISDICTION
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334.
This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). Venue is proper
pursuant to 28 U.S.C. §§ 1408 and 1409.
SUMMARY OF PROFESSIONAL FEES AND REIMBURSEMENT OF EXPENSES REQUESTED
2. This Application has been prepared in accordance with the Amended
Guidelines for Fees and Disbursements for Professionals in Southern District of New York
Bankruptcy Cases adopted by the Court on April 19, 1995 (the “Local Guidelines”), the United
States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of
Expenses Filed Under 11 U.S.C. § 330 adopted on January 30, 1996 (the “UST Guidelines”) and
the Administrative Order Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals Pursuant to Sections 331 and 105(a) of the
Bankruptcy Code entered January 7, 2009 [Docket No. 381] (the “Interim Compensation Order,”
collectively with the Local Guidelines and UST Guidelines, the “Guidelines”). Pursuant to the
Local Guidelines, a certification regarding compliance with the same is attached hereto as
Exhibit A.
3. CMP attorneys and paraprofessionals expended a total of 1,400 hours
representing the Debtors during the Compensation Period for which CMP requests
compensation. Pursuant to this Application, CMP seeks allowance of interim compensation for
services rendered to the Debtors during the Compensation Period in the amount of $683,814 and
for reimbursement of expenses incurred in connection with the rendering of such services in the
aggregate amount of $42,881.43, as well as authorization for the Debtors to pay CMP
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$589,932.63, representing 80% of the fees incurred during the Compensation Period (reflecting a
20% holdback) and 100% of the expenses incurred during the Compensation Period.1
4. During the Compensation Period, other than pursuant to the Interim
Compensation Order, CMP has received no payment and no promises of payment from any
source for services rendered or to be rendered in any capacity whatsoever in connection with the
matters covered in this Application. There is no agreement or understanding between CMP and
any other person, other than members of the firm, for the sharing of compensation to be received
for services rendered in these cases.
5. The fees charged by CMP in the Chapter 11 Cases are billed in accordance
with its existing billing rates and procedures in effect during the Compensation Period. The rates
CMP charges for the services rendered by its professionals and paraprofessionals in the Chapter
11 Cases are the same rates CMP charges for professional and paraprofessional services rendered
in comparable nonbankruptcy related matters. Such fees are reasonable based on the customary
compensation charged by comparably skilled practitioners in comparable non-bankruptcy
matters in a competitive national legal market.
6. Pursuant to the UST Guidelines, annexed hereto as Exhibit B is a
schedule setting forth all CMP professionals and paraprofessionals who have performed services
in the Chapter 11 Cases during the Compensation Period, the capacity in which each such
individual is employed by CMP, the hourly billing rate charged by CMP for services performed
by such individual, the aggregate number of hours expended in this matter and fees billed
therefor and the year in which each professional was first licensed to practice law in the State of
New York.
1 CMP reserves the right to request the holdback to the extent The Court is inclined to consider authorization of payment thereof.
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7. Annexed hereto as Exhibit C is a schedule specifying the categories of
expenses for which CMP is seeking reimbursement and the total amount sought for each
individual expense category.
8. Pursuant to the UST Guidelines, annexed hereto as Exhibit D is a
summary of CMP’s time records billed during the Compensation Period by project categories.
9. To the extent that time or disbursement charges for services rendered or
disbursements incurred relate to the Compensation Period, but were not processed prior to the
preparation of this Application, CMP reserves the right to request additional compensation for
such services, and reimbursement of such expenses in a future application.
MONTHLY FEE STATEMENTS
10. CMP has provided the Debtors, the United States Trustee for the Southern
District of New York (the “United States Trustee”), the Debtors’ lead bankruptcy counsel, the
statutory committee of unsecured creditors appointed in these cases (the “Creditors’
Committee”) and counsel to the administrative agent for the Debtors’ Senior Secured Lenders
(the “Secured Lenders”) with a monthly fee statement (each, a “Fee Statement”) for professional
services rendered and expenses incurred on behalf of the Debtors, along with a detailed report of
time entries and expenses during such time period. Pursuant to such Fee Statements, and in
accordance with the Interim Compensation Order, CMP has requested that the Debtors pay CMP
80% of its fees for professional services rendered and 100% of the expenses incurred. During
the Compensation Period, CMP submitted the following Fee Statements:
(a) Pursuant to the Interim Compensation Order, CMP served its Fee
Statement for the period from December 3, 2008 through and including December 31,
2008 (the “December Fee Statement”). The December Fee Statement sought the
payment of $101,853.50 in fees for services rendered, less the 20% holdback pursuant to
the Interim Compensation Order of $20,370.70, and the reimbursement of $2,019.73 in
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expenses. In accordance with the Interim Compensation Order, as of the date hereof,
CMP has received a total of $83,502.53 with respect to the December Fee Statement,
which represents payment for 80% of fees and 100% of expenses requested in the
December Fee Statement.
(b) Pursuant to the Interim Compensation Order, CMP served its Fee
Statement for the period from January 1, 2009 through and including January 31, 2009
(the “January Fee Statement”). The January Fee Statement sought the payment of
$56,862.50 in fees for services rendered, less the 20% holdback pursuant to the Interim
Compensation Order of $11,372.50, and the reimbursement of $160.12 in expenses. In
accordance with the Interim Compensation Order, as of the date hereof, CMP has
received a total of $45,650.12 with respect to the January Fee Statement, which
represents payment for 80% of fees and 100% of expenses requested in the January Fee
Statement.
(c) Pursuant to the Interim Compensation Order, CMP served its Fee
Statement for the period from February 1, 2009 through and including February 28, 2009
(the “February Fee Statement”). The February Fee Statement sought the payment of
$170,646 in fees for services rendered, less the 20% holdback pursuant to the Interim
Compensation Order of $34,129.20, and the reimbursement of $9,261.22 in expenses. In
accordance with the Interim Compensation Order, as of the date hereof, CMP has
received a total of $145,778.02 with respect to the February Fee Statement, which
represents payment for 80% of fees and 100% of expenses requested in the February Fee
Statement.
(d) Pursuant to the Interim Compensation Order, CMP served its Fee
Statement for the period from March 1, 2009 through and including March 31, 2009 (the
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“March Fee Statement”)2. The March Fee Statement sought the payment of $354,452 in
fees for services rendered, less the 20% holdback pursuant to the Interim Compensation
Order of $70,890.40, and the reimbursement of $31,440.36 in expenses. In accordance
with the Interim Compensation Order, as of the date hereof, CMP has not received any
payments with respect to the March Fee Statement.
11. Thus, to date CMP has received a total of $274,930.67 with respect to the
fees and expenses sought in the Fee Statements submitted during the Compensation Period,
which represents payment for 80% of fees and 100% of expenses sought for the first three
months of the Compensation Period (and which excludes amounts sought in the March Fee
Statement).
12. CMP maintains computerized records of the time spent by all CMP
attorneys and paraprofessionals in connection with the prosecution of the Chapter 11 Cases.
Subject to redaction for the attorney-client privilege where necessary to protect the Debtors’
estates, copies of these computerized records have already been furnished to the United States
Trustee, counsel for the Creditors’ Committee, and counsel to the Secured Lenders in the format
specified by the UST Guidelines.3
BACKGROUND
13. On December 3, 2008 (the “Petition Date”), each of the Debtors filed with
this Court a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code,
as amended (the “Bankruptcy Code”). The Debtors are continuing to operate their business and
manage their properties as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the
Bankruptcy Code.
2 CMP served the March Fee Statement on May 4, 2009, just four (4) days after the deadline for filing Fee Statements. CMP has not yet been paid any of the amounts requested in the March Fee Statement. 3 Providing the Court, the United States Trustee, the Creditors’ Committee or any other party or creditor with the time records shall not be deemed a waiver of any attorney/client privilege.
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14. On December 12, 2008, pursuant to Section 1102 of the Bankruptcy Code,
the United States Trustee appointed the Creditors’ Committee. No trustee or examiner has been
appointed for the Chapter 11 Cases.
15. CMP, through its co-counsel Kramer Levin Naftalis & Frankel LLP
(“Kramer Levin”), has confirmed that, to date, the Debtors have paid all quarterly fees due to the
United States Trustee.
RETENTION OF CMP
16. Pursuant to the Order of this Court dated December 22, 2008, CMP was
retained by the Debtors, nunc pro tunc to the Petition Date, to serve as conflicts counsel for the
Debtors. Among other matters, CMP is responsible for handling all bankruptcy, corporate and
litigation related matters where Kramer Levin or other counsel for the Debtors has an actual or
perceived conflict, and performing discrete duties as assigned by Kramer Levin and other
Debtors’ counsel that could be more efficiently handled by CMP.
17. Since its retention, CMP and Kramer Levin have coordinated their efforts
so that their work is complementary, not duplicative.
18. CMP has experience working as conflicts counsel in large bankruptcy
cases pending before this Court. CMP is presently acting as conflicts counsel in In re Lehman
Brothers Holdings, Inc., et al., Case No. 08-13555 (JMP) (Bankr. S.D.N.Y. 2008), In re Charter
Communications, Inc., et al., Case No. 09-11435 (JMP) (Bankr. S.D.N.Y. 2009), In re Star
Tribune Holdings Corporation, Case No. 09-10244 (RDD) (Bankr. S.D.N.Y. 2009) and In re
Northwest Airlines Corporation, et al., Case No. 05-17930 (ALG) (Bankr. S.D.N.Y.). As a
result of this experience and CMP’s representation as conflicts counsel in other cases, the
assignment of tasks between Kramer Levin and CMP is being maintained efficiently and with a
clear delineation of duties.
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19. The work encompassed by this Application for which CMP seeks
compensation was performed efficiently and at the lowest cost to the estates. All of the work
summarized in this Application was performed in a manner to ensure minimal duplication of
services in an effort to keep the administrative expense to the Debtors’ estates to a minimum.
SUMMARY OF SERVICES RENDERED BY CMP DURING THE COMPENSATION PERIOD
20. During the Compensation Period, CMP performed substantial services for
the Debtors. These services were necessary to effectively administer the Chapter 11 Cases.
21. In accordance with the Guidelines and CMP’s internal billing procedures,
CMP has established separate matter numbers and matter names for distinct project categories in
these Chapter 11 Cases. The following summary is not a detailed description of the work
performed, as the day-to-day services and the time expended in performing such services are
fully set forth in Exhibit E. The summary highlights certain areas in which services were
rendered to the Debtors, and identifies some of the issues to which CMP directed its attention
during the Compensation Period.
22. Case Administration. A total of 136 hours of services were performed
and CMP is seeking allowance of $58,343 in fees. This matter covers a variety of different
services undertaken by CMP attorneys and paraprofessionals in the general administration of the
Debtors’ Chapter 11 Cases. CMP attorneys and paraprofessionals spent time on case
administration in order to keep involved and informed with respect to the matters on which CMP
advises the Debtors as well as communicate with the conflict parties and other stakeholders of
the Debtors with respect to ongoing matters in the Debtors’ case. To the extent possible, CMP
attorneys and paraprofessionals billed administrative matters under the appropriate matter and
the relatively small amount of time billed to case administration was necessary to CMP’s smooth
and effective administration of the matters assigned to it in these Chapter 11 Cases. Services
rendered by CMP in connection with this matter included the monitoring of the case docket for
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pleadings with potential conflict implications, reviewing and maintaining a case docket of
significant pleadings filed with the Court and keeping a calendar of critical dates in the Chapter
11 Cases.
23. Court Appearances. A total of 16.80 hours of services were performed
and CMP is seeking allowance of $10,436.50 in fees. CMP prepared for and attended Court
hearings with respect to matters where CMP handled motions and objections on issues where
Kramer Levin had a conflict, matters related to the status of the case, settlement agreements, and
other matters heard at omnibus hearings during the Compensation Period.
24. Cash Collateral, DIP and Other Financing. A total of 27 hours of
services were performed and CMP is seeking allowance of $13,608 in fees. During the
Compensation Period, CMP attended to matters related to the Debtors’ use of cash collateral. On
December 3, 2008, the Debtors filed their Emergency Motion Pursuant to Sections 105, 361, 362
and 363 of the Bankruptcy Code, and Rule 4001(b) of the Federal Rules of Bankruptcy
Procedure for (I) Entry of Interim and Final Orders (A) Authorizing the Use of Cash Collateral,
(B) Granting Adequate Protections to Prepetition Secured Parties and (C) Granting Related
Relief, and (II) Scheduling a Final Hearing (the “Cash Collateral Motion”). The Debtors’
existing prepetition secured lenders consented to the use of cash collateral subject to the Debtors’
grant of certain adequate protection and the Court entered an order approving the use of cash
collateral on an interim basis on December 5, 2008. CMP reviewed the Cash Collateral Motion
and has reviewed subsequent requests for interim use of cash collateral pursuant to the Cash
Collateral Motion.
25. Creditors/Shareholders Inquiries. A total of 2.50 hours of services were
performed and CMP is seeking allowance of $1,687.50 in fees. CMP attended to matters
(a) relating to the formation of the Creditors’ Committee, and (b) responses to general creditor
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inquiries about the status of the case, the Debtors’ schedules and the bar date for filing proofs of
claim.
26. Contracts/Leases Assumption and Rejection. A total of 297.40 hours of
services were performed and CMP is seeking allowance of $155,911 in fees for services
rendered in connection with the following matters:
(a) December Rent Motion – During the Compensation Period, CMP
collaborated with Kramer Levin on issues relating to and in drafting the Motion of
Debtors Pursuant to Section 105(a) of the Bankruptcy Code for an Order Establishing
Procedures for Resolving the Applicability of Section 365(d)(3) of the Bankruptcy Code
and other matters related to the Debtors’ landlords and leases.
(b) Utilities Motion – During the Compensation period, CMP assisted
Kramer Levin in drafting the Motion of the Debtors for Entry of an Order under 11
U.S.C. §§ 105(a) and 366 (i) Prohibiting Utilities from Discontinuing, Altering, or
Refusing Service and (ii) Establishing Procedures for Determining Adequate Assurance
of Payment (the “Utilities Motion”), reviewed numerous objections to the Utilities
Motion, commented on the Debtors’ omnibus reply to objections to the Utility Motion
and worked to resolve objections with the Debtors’ utility providers.
(c) AIG Insurance Motion – During the Compensation Period, CMP
analyzed the Debtors’ proposed renewal insurance program with affiliates of American
Insurance Group, prepared and filed the Debtors’ Motion for an Order Pursuant to
Sections 105(a), 363(b) and 365(a) of the Bankruptcy Code, Authorizing and Approving
(i) the Debtors’ Assumption of Certain Insurance Agreements and (ii) the Debtors Entry
Into and Insurance Program with Certain Affiliates of American International Group (the
“AIG Insurance Motion”). In addition, CMP prepared for and presented the AIG
Insurance Motion, which was approved by the Court on January 14, 2009.
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(d) Westfield Motion to Compel – During the Compensation Period, CMP
reviewed the Motion of Westfield, LLC for an Order Compelling Payment of Accrued
Rent Pursuant to 11 U.S.C. §§ 365(d)(3) (the “Westfield Rent Motion”), analyzed the
leases and legal issues that were raised by the Westfield Rent Motion, and prepared and
filed an objection to the Westfield Rent Motion.
(e) AFCO Premium Finance Motion – During the Compensation Period,
CMP prepared and filed a Motion Authorizing the Debtors to Incur Secured Debt and to
Enter Into Premium Financing Agreement Pursuant to Section 364(c)(2) of the
Bankruptcy Code. The preparation of this motion required CMP to analyze new
insurance policies as well as negotiate the terms of the motion and order with the
provider of the insurance premium financing.
27. Adversary Proceedings and Contested Matters. A total of 530.20 hours
of services were performed and CMP is seeking allowance of $263,521.50 in fees. During the
Compensation Period, CMP (a) reviewed the Adversary Complaint filed by Great American
Insurance Company (the “GAIC Complaint”) seeking declaratory judgment that $10 million in
insurance proceeds paid to the Debtors were not property of the Debtors’ estate, and reviewed
substantial background information relating to a pending litigation in the Northern District of
Illinois seeking, inter alia, insurance coverage under policies purchased by the Debtors for
directors’ and officers’ liability insurance (the “Illinois Coverage Action”), (b) prepared and filed
a motion to dismiss the GAIC Complaint, (c) prepared and filed a reply memorandum in
response to the memorandum of Great American Insurance Company in opposition to the
Debtors’ motion to dismiss the GAIC Complaint, (d) researched pertinent legal issues relating to
the Great American Complaint and the status of the Illinois Coverage Action, (e) prepared for
and argued the motion to dismiss the GAIC Complaint, (f) reviewed the Memorandum Decision
and Order Dismissing the GAIC Complaint, and the notice of appeal by Great American
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Insurance Company of the Memorandum Decision and Order Dismissing the Great American
Complaint and related documents and filings in connection with preparation for the appeal, (g)
prepared for mediation of the Illinois Coverage Action. CMP also consulted with the Creditors’
Committee about its strategy for handling the GAIC Complaint.
28. Automatic Stay Matters . A total of 347.20 hours of services were
performed and CMP is seeking allowance of $163,941 in fees. During the Compensation Period,
because Kramer Levin has conflicts with RLI Insuance Company (“RLI”) and certain of the
other insurance companies that are party to the Illinois Coverage Action, CMP reviewed and
prepared to respond to the Motion by RLI for Relief from Stay to Allow Continued Prosecution
of Insurance Coverage Litigation (the “RLI Stay Motion”). In addition, because the Illinois court
ruled that the claims by a number of the Debtors’ insurance companies for rescission of the
Debtors’ policies could continue as to certain of the Debtors’ former officers and directors, CMP
moved to enforce the stay as to those claims. The stayed litigation that is subject of the RLI Stay
Motion is the Illinois Coverage Action. CMP prepared and filed: (a) an Objection to the RLI
Stay Motion, (b) a Motion to Enforce the Stay with respect to the entire Illinois Coverage Action,
and (c) an omnibus reply to the various objections to the Motion to Enforce the Stay. To this
end, in addition to research and drafting, CMP interviewed the Debtors’ former counsel to the
Illinois Coverage Action, reviewed voluminous pleadings from the Illinois Coverage Action, and
monitored hearings and activity in the Illinois Coverage Action. CMP consulted with Counsel to
the Creditors’ Committee about its actions with respect to the RLI Stay Motion and the Debtors’
Motion to Enforce the Stay.
29. Plan and Disclosure Statements. A total of 13.10 hours of services were
performed and CMP is seeking allowance of $9,048.50 in fees. During the Compensation
period, CMP reviewed and provided comments to the proposed plan and disclosure statement
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with particular attention to matters for which Kramer Levin has an actual or perceived conflict of
interest.
30. CMP Fee Applications and Monthly Statements. A total of 29.80 hours
of services were performed and CMP is seeking allowance of $7,317 in fees. CMP prepared and
served its monthly Fee Statements and the First Interim Fee Application, all in accordance with
the Guidelines.
THE REQUESTED COMPENSATION SHOULD BE ALLOWED
31. Section 331 of the Bankruptcy Code provides for interim compensation of
professionals and incorporates the substantive standards of Section 330 to govern the Court’s
award of such compensation. See 11 U.S.C. § 331. The awarding of interim compensation
should be based upon the circumstances of the particular case. In re Nana Daly’s Pub., Ltd., 67
B.R. 782, 787 (Bankr. E.D.N.Y. 1986).
32. Section 330 of the Bankruptcy Code provides that a court may award a
professional employed under Section 327 of the Bankruptcy Code “reasonable compensation for
actual necessary services rendered . . . and reimbursement for actual, necessary expenses.” 11
U.S.C. § 330(a)(1). The Court has broad discretion in determining whether to allow
compensation and in determining the amount of the compensation. In re Nine Assocs., Inc., 76
B.R. 943, 944 (Bankr. S.D.N.Y. 1987).
33. Section 330(a)(3) of the Bankruptcy Code sets forth criteria to be
considered in reviewing requests for compensation and reimbursement:
In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including –
(A) the time spent on such services;
(B) the rates charged for such services;
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(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;
(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; and
(E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.
11 U.S.C. § 330(a)(3).
34. Courts within the Second Circuit have employed the “lodestar approach”
for calculating judicial awards of compensation to attorneys. The lodestar approach was
articulated by the Second Circuit in New York State Ass’n for Retarded Children, Inc. v. Carey,
711 F.2d 1136 (2d Cir. 1983). The lodestar method of determining reasonable compensation
involves multiplying the hours spent on a case, based on attorney time records, by a reasonable
hourly rate of compensation for each attorney based on prevailing market rates for private law
firms performing services for non-governmental clients. In re McLean Industries, Inc., 88 B.R.
36, 39 (Bankr. S.D.N.Y. 1988). Once calculated, this lodestar figure may be adjusted upward or
downward to take into account the facts of the particular case. In re Baldwin United Corp., 79
B.R. 321, 347 (Bankr. S.D. Ohio 1987). Factors regarding the difficulty, complexity and
contingent nature of the case may thereafter be employed to arrive at a reasonable and just
compensation in excess of the lodestar figure. In re Stable Mews Assocs., 49 B.R. 395, 398
(Bankr. S.D.N.Y. 1985); In re Chriss, 38 B.R. 655, 657 (Bankr. S.D.N.Y. 1984).
35. In the instant case, CMP respectfully submits that the services for which it
seeks compensation in this Application meet or exceed the standards set forth in Section 330 of
the Bankruptcy Code and applied by bankruptcy courts in this Circuit to determine the
reasonableness of professional fees sought from a debtor’s estate. CMP respectfully submits that
the services provided to the Debtors during the Compensation Period were necessary and
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beneficial to the Debtors’ efforts to reorganize their estates. The professional services that CMP
rendered were focused on pursuing an efficient reorganization of the Debtors’ businesses that
maximizes the value of the estates and recovery to creditors. CMP’s rates charged to the Debtors
are identical to the rates charged by CMP for comparable services in a non-Chapter 11 context.
Such services were not only necessary to benefit the Debtors’ estates, but also to enhance
potential recovery to creditors. Accordingly, CMP further submits that the compensation
requested herein is reasonable and warranted in light of the nature, extent, and value of such
services to the Debtors, their estates and all parties in interest.
FEES AND ACTUAL AND NECESSARY DISBURSEMENTS OF CMP
36. CMP has devoted 1,400 hours of actual recorded time for attorneys and
paraprofessionals during the Compensation Period, resulting in time charges of $683,814.
During the Compensation Period, CMP’s billing rates for attorneys ranged from approximately
$250 to $785. Allowance of the compensation requested in this Application results in an average
blended rate for attorney work of approximately $488.44 per hour.
37. Throughout the Compensation Period, CMP sought to assign projects in
the Chapter 11 Cases to partners, associates and paraprofessionals who could most efficiently
and expeditiously handle them. CMP respectfully submits that the legal services reflected in this
Application are fair and reasonable and the compensation requested is commensurate with the
quality of services provided to the Debtors.
38. CMP has incurred $42,881.43 in out-of-pocket expenses and
disbursements during the Compensation Period directly attributable, and necessary, to CMP’s
representation of the Debtors in the Chapter 11 Cases, all in accordance with the Guidelines.4
CMP has advanced all of the expenses for which reimbursement is sought prior to seeking
reimbursement for such expenses in this Application. The charges for expenses are intended to
4 CMP’s standard practice is to treat certain expenses as having been incurred when such obligations are recorded and reflected as payable in CMP’s accounting system.
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reimburse CMP for its direct operating costs that are not built into the hourly rates charged by
CMP. CMP’s expenses include charges for services such as duplicating, word processing,
postage, long-distance telephone calls, court reporting/transcripts, Lexis/Nexis and Westlaw
research, courier service, transportation, working meals, Pacer – ECF, overtime and search fees.
CMP only charges clients for expenses incurred by that particular client. This billing structure is
designed to pass expenses on to the clients who actually benefit from their use while keeping the
hourly rates more reasonable for clients that do not require extensive use of such reimbursable
services. CMP includes in this Application only those items of expense, in addition to fees, that
it normally charges its clients.
39. No part of the compensation to be received pursuant to this Application
will be shared with any other person or firm, and no other agreements, either express or implied,
to share any compensation received as attorneys for the Debtors have been, or will be, made by
CMP.
NOTICE
40. Notice of this Application has been presented to: (i) the Debtors; (ii)
Kramer Levin, as lead bankruptcy counsel for the Debtors; (iii) the United States Trustee; (iv)
counsel to the administrative agents for the Debtors’ prepetition Secured Lenders; and (v)
counsel for the Creditors’ Committee. In light of the nature of the relief requested herein, the
Debtors submit that no other or further notice is required. A copy of this Application is also
available on the website of the Debtors’ notice and claims agent, Kurtzman Carson Consultants
LLC, at http://www.kccllc.net/bally.
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CONCLUSION
WHEREFORE, CMP respectfully requests that (i) the Application be granted
and that CMP be awarded $683,814 in compensation for legal services rendered to the Debtors
during the Compensation Period, and $42,881.43 for reimbursement of expenses, (ii) the Court
authorize and direct the Debtors to pay CMP $315,001.96, representing all unpaid fees and
expenses for the Compensation Period, subject to a 20% holdback of fees, and (iii) the Court
grant such other and further relief as may be just and proper.
Dated: May 4, 2009 Respectfully submitted, New York, New York CURTIS, MALLET-PREVOST,
COLT & MOSLE LLP By: /s/ Steven J. Reisman Steven J. Reisman L.P. Harrison 3rd 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Conflicts Counsel for the Debtors and Debtors-in-Possession
5894242
EXHIBIT A
5894242
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Steven J. Reisman L. P. Harrsion 3rd Conflicts Counsel for the Debtors and Debtors-in-Possession
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
: In re: : Chapter 11 : BALLY TOTAL FITNESS OF : Case No. 08-14818 (BRL) GREATER NEW YORK, INC., et al., : : (Jointly Administered) Debtors. : : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CERTIFICATION UNDER GUIDELINES FOR FEES AND DISBURSEMENTS FOR
PROFESSIONALS IN RESPECT OF THE FIRST APPLICATION OF CURTIS, MALLET-PREVOST, COLT & MOSLE LLP FOR INTERIM COMPENSATION AND
REIMBURSEMENT OF EXPENSES
I, Steven J. Reisman, hereby certify that:
1. I am a partner with the applicant firm, Curtis, Mallet-Prevost, Colt & Mosle
LLP (“CMP”), with primary responsibility for the Chapter 11 cases of Bally Total Fitness of
Greater New York, Inc., and certain of its direct and indirect subsidiaries, as debtors and debtors-
in-possession (collectively, the “Debtors”), in respect of compliance with the Amended
Guidelines for Fees and Disbursements for Professionals in Southern District of New York
Bankruptcy Cases, adopted by the Court on April 19, 1995 (the “Local Guidelines”), the United
States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of
Expenses Filed Under 11 U.S.C. § 330, adopted on January 30, 1996 (the “UST Guidelines”) and
-2- 5894242
the Administrative Order Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals Pursuant to Sections 331 and 105(a) of the
Bankruptcy Code entered January 7, 2009 (the “Interim Compensation Order,” collectively with
the Local Guidelines and UST Guidelines, the “Guidelines”).
2. This certification is made in respect of CMP’s application, dated May 4, 2009
(the “Application”), for interim compensation and reimbursement of expenses for the period
commencing December 3, 2009 through and including March 31, 2009 (the “Compensation
Period”) in accordance with the Guidelines.
3. In respect of Section B.1 of the Local Guidelines, I certify that:
• I have read the Application;
• to the best of my knowledge, information, and belief formed after reasonable inquiry, the fees and disbursements sought fall within the Local Guidelines and the UST Guidelines;
• other than the discounts disclosed in the Application, the fees and expenses sought are billed at rates in accordance with practices customarily employed by CMP and generally accepted by CMP’s clients; and
• in providing a reimbursable service, CMP does not make a profit on that service, whether the service is performed by CMP in house or through a third party.
4. In respect of Section B.2 of the Local Guidelines, I certify that CMP has
complied with these provisions requiring it to provide the Debtors, counsel for the statutory
committee of unsecured creditors appointed in these cases (the “Creditors’ Committee”), the
United States Trustee for the Southern District of New York (the “United States Trustee”) and
counsel to the administrative agent for the Debtors’ Senior Secured Lenders (the “Secured
Lenders”) with, on a monthly basis, a statement of CMP’s fees and expenses accrued during the
previous month.
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5. In respect of Section B.3 of the Local Guidelines, I certify that the Debtors,
the United States Trustee and counsel for the Creditors’ Committee are each being provided with
a copy of the Application.
Dated: New York, New York May 4, 2009
/s/ Steven J. Reisman STEVEN J. REISMAN A Member of the Firm
5894242
EXHIBIT B
5894242
BALLY TOTAL FITNESS OF GREATER NEW YORK, INC., et al. CHAPTER 11
CASE NO. 08-14818 (BRL)
Summary Of Fees For First Interim Application
Of Curtis, Mallet-Prevost, Colt & Mosle LLP, As Conflicts Counsel For The Debtors And Debtors-in-Possession,
For Allowance Of Compensation For Services Rendered And For Reimbursement Of Actual and Necessary Expenses Incurred
For The Period December 3, 2008 Through March 31, 2009
Name of Professional(s) Year Admitted
(NY) Hourly
Rate Hours
Engaged Total
Value(s)
PARTNERS
Steven J. Reisman 1991 $785.00 56.70 $ 44,509.50 L. P. Harrison 3rd 1984 730.00 47.10 34,383.00 Turner P. Smith 1980 730.00 14.10 10,293.00 Timothy A. Barnes 2007 675.00 81.50 55,012.50 Theresa A. Foudy 1994 675.00 191.80 129,465.00 COUNSEL
Myles Bartley 1999 $595.00 166.90 $ 99,305.50 Jerrold Bregman 1990 595.00 1.40 833.00 Maryann Gallagher 1988 595.00 208.80 124,236.00
ASSOCIATES
Joshua Brook 2003 $535.00 19.70 $ 10,539.50 Joseph Clyne 1984 415.00 3.40 1,411.00 John Balzano 2007 375.00 7.50 2,812.50 Veronique Hodeau 2007 375.00 80.80 30,300.00 Julie Arkush 2008 335.00 62.70 21,004.50 Stefanie K. Beyer 2008 335.00 12.00 4,020.00 Nicholas James 2008 335.00 2.90 971.50 Christina Manthei 2008 335.00 8.90 2,981.50 Steven Gibbs Pending* 290.00 20.80 6,032.00 Sarah Hale Pending* 280.00 113.40 31,752.00 Chelsea McLean Pending* 280.00 189.20 52,976.00 PARALEGALS/CLERKS
Oleg Bitman Not Applicable $190.00 30.10 $ 5,719.00 Samuel Coe Not Applicable 190.00 41.20 7,828.00 Jed Cohen Not Applicable 190.00 1.00 190.00 Ramon Miyar Not Applicable 190.00 13.50 2,565.00 Laura Raposo Not Applicable 190.00 24.60 4,674.00
TOTAL 1,400.00 $ 683,814.00
* Admission to the bar is still pending; however, this attorney has passed the NY Bar.
5894242
EXHIBIT C
5894242
BALLY TOTAL FITNESS OF GREATER NEW YORK, INC., et al. CHAPTER 11
CASE NO. 08-14818 (BRL)
Summary Of Expenses For First Interim Application
Of Curtis, Mallet-Prevost, Colt & Mosle LLP, As Conflicts Counsel For The Debtors And Debtors-in-Possession,
For Allowance Of Compensation For Services Rendered And For Reimbursement Of Actual and Necessary Expenses Incurred
For The Period December 3, 2008 Through March 31, 2009
DESCRIPTION AMOUNT
DUPLICATING $ 2,327.90 WORD PROCESSING 7,219.07
TELEPHONE EXPENSE 78.32 LEXIS/NEXIS, WESTLAW RESEARCH 31,424.02
COURIER SERVICE 59.50 MEALS EXPENSE 480.13 TRANSPORTATION EXPENSE 905.55
SEARCH FEES 88.05 PACER – ECF 259.60
POSTAGE 3.53 COURT REPORTING/TRANSCRIPTS 16.80 OVERTIME 18.96
TOTAL: $42,881.43
5894242
EXHIBIT D
5894242
BALLY TOTAL FITNESS OF GREATER NEW YORK, INC., et al. CHAPTER 11
CASE NO. 08-14818 (BRL)
SUMMARY OF CURTIS, MALLET-PREVOST, COLT & MOSLE LLP’S TIME RECORDS BILLED DURING THE COMPENSATION PERIOD
BY PROJECT CATEGORY FOR THE PERIOD DECEMBER 3, 2008 THROUGH MARCH 31, 2009
WORK CODE DESCRIPTION HOURS AMOUNT Matter No. 100 Case Administration 136.00 $ 58,343.00
Matter No. 110 Court Appearances 16.80 10,436.50
Matter No. 220 Cash Collateral, DIP and Other Financing 27.00 13,608.00
Matter No. 310 Creditors/Shareholders Inquiries 2.50 1,687.50
Matter No. 330 Contracts/Leases Assumption and Rejection 297.40 155,911.00
Matter No. 410 Adversary Proceedings and Contested Matters 530.20 263,521.50
Matter No. 430 Automatic Stay Matters 347.20 163,941.00
Matter No. 500 Plans and Disclosure Statements 13.10 9,048.50
Matter No. 700 CMP Fee Applications & Monthly Fee Statements
29.80 7,317.00
TOTAL 1,400.00 $ 683,814.00
5894242
EXHIBIT E