The U.S. Trustee assigned to the GenOn Energy case filed with the U.S. Bankruptcy Court an objection to the Debtors’ motion for entry of an order approving the notes offering procedures and related forms and authorizing the Debtors to pay reasonable documented fees and expenses of the noteholder advisors.
The Trustee asserts, “The United States Trustee objects to the part of the Motion that provides for the payment of the Noteholder Advisors’ Fees and Expenses without an application and allowance under 11 U.S.C. section 503(b). The Bankruptcy Code contains specific provisions pertaining to the payment of attorneys’ fees and expenses.…Under this Motion, the Ad Hoc Committee, the GenOn Steering Committee, and the GAG Steering Committee would reap the benefits of section 503(b)’s administrative status without subjecting themselves to its burdens. Debtors argue that because they have provided for these fees and expenses, as well as their administrative status, in a contract being entered into under Section 363, they need show no more than their own business judgment. However, the plain meaning of the Bankruptcy Code’s text is clear and determinative.”
In addition, “The payment provisions sought in the Motion conflict with the statutory standards and procedures for payment of administrative expenses because they authorize certain creditors to be paid administrative expenses without the necessity of filing an application and meeting their evidentiary burden for payment under Section 503(b)….If the Motion were approved, but the deal between the noteholders, NRG, and the Debtors collapsed and the current Plan was not confirmed, the Noteholder Advisors would have been paid without any showing that their clients made a substantial contribution to the case. Furthermore, the total amount of fees and expenses being sought is unknown, as is how the reasonableness of the fees will be reviewed.”
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