One Vision Park, Inc.

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MEMO RE BOHANNON MOTION
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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
ONE VISION PARK, INC.,
Debtor.
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Case No. 09-31130 TEC
Chapter 11
MEMORANDUM DECISION RE DEBTOR’S MOTION TO USE ESTATE FUNDS TO
COMPENSATE MICHAEL BOHANNON AS CLAIMS REVIEWER
On May 21, 2010, the court held a hearing on Debtor’s motion
to use estate funds to compensate Michael Bohannon as claims
reviewer (the Motion). 	Peter W. Ito appeared for Debtor.
Christopher Kuhner appeared for the Unsecured Creditors Committee.
John Elstead appeared for Michael Ohayon. 	Upon due consideration,
the court hereby grants the Motion. 	This memorandum decision shall
constitute the court’s findings of facts and conclusions of law.
FACTS
On May 29, 2009, the United States Trustee appointed David
Bohannon, Dean Delis, and five other holders of prepetition claims
to the Official Committee of Unsecured Creditors.
Signed and Filed: June 02, 2010
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
June 03, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-31130 Doc# 634 Filed: 06/02/10 Entered: 06/03/10 12:47:55 Page 1 of
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MEMO RE BOHANNON MOTION
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On August 27, 2009, MD Mortgage Direct filed claim nos. 25 and
26 against the estate (collectively, the MD Direct Claims). 	Claim
no. 25 is an unsecured claim in the sum of $177,000. 	Claim no. 26
is an unsecured claim in the sum of $300,000. 	MD Mortgage Direct
is a California corporation of which Dean Delis is president,
secretary, and sole shareholder.
On November 9, 2009, the court signed an order denying
Debtor’s motion to employ Steve Jaca and Mr. Delis as claims
reviewers under section 327, but authorizing Debtor to use estate
funds, pursuant to section 363, to pay Mr. Delis and Mr. Jaca to
assist Debtor in its review of claims.
In the present Motion, Debtor seeks authority, under section
363(b) to pay Mr. Bohannon $150 per hour for his services in
reviewing the MD Direct Claims. 	Debtor seeks to employ Mr.
Bohannon to review those claims to avoid any conflict of interest
in having Mr. Delis review the MD Direct Claims, and because Debtor
believes Mr. Bohannon is a neutral, impartial third party. 	In
support of the Motion, Mr. Bohannon filed a declaration stating
that he has information essential to Debtor’s review and analysis
of the MD Direct Claims.
Debtor does not seek to employ Mr. Bohannon as a professional
pursuant to section 327.
Michael Ohayon filed opposition to the Motion, arguing that
Mr. Bohannon should not be employed to review the MD Direct Claims,
because Mr. Bohannon is not disinterested, and because he has no
special knowledge that would assist Debtor in reviewing the MD
Direct Claims.
Case: 09-31130 Doc# 634 Filed: 06/02/10 Entered: 06/03/10 12:47:55 Page 2 of
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MEMO RE BOHANNON MOTION
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LAW
Section 363(b) provides that a bankruptcy court may authorize
a debtor to “use . . ., other than in the ordinary course of
business, property of the estate.” 	A debtor who wants to use funds
from the estate for a transaction outside the ordinary course of
business must obtain advance approval from the bankruptcy court.
E.g., In re 240 North Brand Partners, Ltd., 200 B.R. 653, 659 (9th
Cir. BAP 1996). 	The bankruptcy court must find a valid business
justification for the expenditure. 	Id.
The court determines that Debtor and the Committee have a
valid business reason for using estate funds to pay Mr. Bohannon to
review the MD Direct Claims, because Mr. Bohannon is a neutral
third party who has essential information to Debtor’s review and
analysis of the those claims, and because the claims-review service
Mr. Bohannon is providing is not a service typically performed by a
member of a creditors’ committee. 	Thus, it is appropriate to allow
Debtor to pay Mr. Bohannon for performing this service.
Allowing Debtor to use estate funds to compensate Mr. Bohannon
at a rate of $150 per hour for his review of the MD Direct Claims
satisfies an important bankruptcy policy of minimizing costs of
administration, because $150 per hour is significantly less than
the hourly rate that would otherwise be charged for those services
by counsel for Debtor, the Committee, or their paralegals. 	See In
re Jenkins, 188 B.R. 416, 420 (9th Cir. BAP 1995). 	Equally
important, Debtor is seeking prior authority to expend the funds,
thus enabling the court to police the use of estate funds for
services performed for the estate.
Mr. Bohannon need not be disinterested to be compensated for
his services under section 363, because Mr. Bohannon is not a
Case: 09-31130 Doc# 634 Filed: 06/02/10 Entered: 06/03/10 12:47:55 Page 3 of
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MEMO RE BOHANNON MOTION
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professional. 	The functions he will be performing for the estate
are reviewing the documentation supporting the MD Direct Claims and
perhaps asking MD Mortgage Direct to reduce its claims. 	Mr.
Bohannon does not have any final settlement authority with respect
to the claims. 	It is the professionals employed by the Debtor and
the Committee who will recommend to Debtor and the Committee what
course to take regarding the MD Direct Claims.
The use of estate funds to compensate Mr. Bohannon for the
services in question is not inconsistent with section 503(b)(3),
which provides that members of a committee may be paid their
expenses but no compensation, because the services in question go
well beyond the services typically performed by members of a
creditors committee. 	E.g., U.S. Trustee v. Bethlehem Steel Corp.
(In re Bethlehem Steel Corp.), 2003 WL 21738964 (S.D.N.Y. 2003).
For the reasons set forth above, the court determines that
Debtor has a valid business reason for paying Mr. Bohannon for his
services with respect to the MD Direct Claims, and that Debtor may
use estate funds to pay Mr. Bohannon compensation for his services
at the rate of $150 per hour, subject to court approval after
notice and opportunity for objection by creditors.
**END OF MEMORANDUM**
Case: 09-31130 Doc# 634 Filed: 06/02/10 Entered: 06/03/10 12:47:55 Page 4 of
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MEMO RE BOHANNON MOTION
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COURT SERVICE LIST
John C. Elstead, Esq.
The Elstead Law Firm
7460 Woodrow Dr.
Oakland, CA 94611
Case: 09-31130 Doc# 634 Filed: 06/02/10 Entered: 06/03/10 12:47:55 Page 5 of
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