UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
IN RE: )
ITT EDUCATIONAL SERVICES, INC., et al.1 ) ) Case No. 16-07207-JMC-7A
Debtors. ) ) Jointly Administered
TRUSTEE’S MOTION FOR AUTHORITY
TO RECONCILE CERTAIN POSTPETITION CLAIMS OF THE AFFILIATED DEBTORS’ BANKRUPTCY ESTATES
Deborah J. Caruso, the chapter 7 trustee in this case (the “Trustee”), by counsel, requests entry of an order, pursuant to 11 U.S.C. §§ 105(a) and 503(b), authorizing the Trustee to
reconcile certain postpetition claims of the Affiliated Debtors’ bankruptcy estates on the following grounds:
I. JURISDICTION
1. The Court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).
2. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409.
3. The statutory predicates for relief are sections 105(a) and 503(b) of Title 11 of the United States Code (the “Bankruptcy Code”).
II. BACKGROUND
4. On September 16, 2016 (the “Petition Date”), ITT Educational Services, Inc.
(“ITT”), ESI Service Corp. (“ESI”) and Daniel Webster College, Inc. (“DWC,” and together with ITT and ESI, the “Affiliated Debtors”) filed voluntary petitions for relief under chapter 7 of the Bankruptcy Code. The Trustee was appointed interim trustee in each of the Affiliated
1 The debtors in these cases, along with the last four digits of their respective federal tax identification numbers are ITT Educational Services, Inc. [1311]; ESI Service Corp. [2117]; and Daniel Webster College, Inc. [5980].
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Debtors’ bankruptcy cases on the Petition Date pursuant to section 701(a)(1) of the Bankruptcy Code, and thereafter became the case trustee in each of the Affiliated Debtors’ bankruptcy cases following the conclusion of the first meeting of creditors on November 1, 2016, pursuant to section 702(d) of the Bankruptcy Code.
5. On October 4, 2016, the Court entered its Order Granting Motion for Joint Administration of Chapter 7 Cases [Docs 221 & 222], directing the Affiliated Debtors’
bankruptcy cases to be jointly administered for procedural purposes only.
Cash Collateral & Postpetition Financing
6. Shortly following the Petition Date, the Trustee obtained funds from the liquidation of the Affiliated Debtors’ deposit accounts and other sources and anticipated receiving additional funds of the Affiliated Debtors, all of which Cerberus Business Finance, LLC (“Cerberus”)2 asserted to be its cash collateral within the meaning of section 363(a) of the Bankruptcy Code (the “Cash Collateral”).
7. At the beginning of these cases, the Trustee urgently needed to utilize the Cash Collateral in connection with the administration of the Affiliated Debtors’ estates. In addition, due to concerns with lack of available funds to pay all of the immediate and necessary expenses in connection with the administration of the Affiliated Debtors’ estates, the Trustee sought authority to enter into a secured postpetition financing agreement with Cerberus in order to obtain postpetition financing in the aggregate amount of $6 million.
8. Pursuant to various interim and final orders, the Trustee obtained authority, on behalf of all three estates, to use Cash Collateral and to enter into the secured postpetition
2 As of the Petition Date, Cerberus was the primary secured creditor of the Affiliated Debtors (either as borrowers or guarantors) and was owed in excess of $20 million in principal, plus accrued interest, costs, expenses and
professional fees.
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financing agreement with Cerberus (the “Cash Use & Postpetition Financing Orders”). [See Docs 228, 567 and 641.]
9. At the beginning of these cases, with the exception of two expenses incurred by the DWC estate that were paid by the ITT estate,3 the Trustee only used Cash Collateral from the estate incurring the expense to pay the expense. However, the ITT estate quickly began
incurring expenses in excess of its available Cash Collateral.
10. Because the ESI and DWC estates had Cash Collateral in excess of the expenses each estate was incurring at the time, the Trustee, pursuant to the terms of the Cash Use &
Postpetition Financing Orders, utilized a portion of the Cash Collateral from these estates to pay the expenses incurred by the ITT estate. This was done in order to minimize the need for additional advances on the postpetition financing with Cerberus, and therefore, avoiding additional costs to the estates in connection with the postpetition financing.
11. The ITT estate received two advances on the postpetition financing with Cerberus in the total amount of $2,750,000. The ITT estate utilized the postpetition financing and other funds received from the liquidation of assets to pay joint expenses of the estates, such as certain professional fees, and other expenses that were not clearly identifiable as owing by a particular estate.
12. The ITT estate subsequently repaid the DWC estate the portion of its Cash Collateral that was transferred to the ITT estate.4 However, for purposes of ease of
administration, the Trustee continued paying certain joint expenses and other expenses that were not clearly identifiable as owing by a particular estate from the ITT estate, with the intention of
3 These expenses are included in the Trustee’s Proposed Reconciliation (as defined below).
4 The ITT estate has not repaid the ESI estate the portion of its Cash Collateral that was transferred to the ITT estate, but the Trustee intends to address this matter in the future.
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reconciling such expenses at a later time as provided in the Cash Use & Postpetition Financing Orders.
13. Specifically, the Cash Use & Postpetition Financing Orders provide that “[t]he Trustee and all other parties in interest reserve the right to seek such order from this Court as may be appropriate to allocate the relative burdens to be borne by each [Affiliated Debtor’s]
estate with respect to the use of Cash Collateral and the incurrence of the TIP Obligations.” [See Docs 567 & 641 ¶ 44.]
III. PROPOSED RECONCILIATION
14. The Trustee believes the cases have progressed to a point where it makes sense to reconcile the expenses between the ITT/ESI estates and the DWC estate, with the DWC estate paying its proportionate share of any joint expenses going forward. In addition, the Trustee has identified a certain asset that was jointly pursued by all three estates, but currently retained by the ITT estate. Accordingly, the Trustee is seeking to reconcile this asset and certain expenses between the estates. The Trustee’s proposed reconciliation (the “Proposed Reconciliation”) is attached and incorporated as Exhibit 1. At this time, the Trustee is not seeking to reconcile any assets or expenses between the ITT estate and the ESI estate and intends to address such issues in the future.
Assets to be Reconciled between ITT/ESI Estates and DWC Estate
15. Based on the Trustee’s Proposed Reconciliation as it relates to assets received by the ITT estate, the DWC estate has a claim in the amount of $172,270.00 against the ITT estate for a portion of an asset jointly pursued by all three estates, but currently retained by the ITT estate (the “DWC Allocation Claim”).
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16. Specifically, the DWC Allocation Claim relates to the $11,500,000 settlement with Deloitte & Touche LLP (the “D&T Settlement”) that was approved by the Court on January 30, 2019. [See Doc 3189.] The D&T Settlement involved, in part, a resolution of claims against Deloitte & Touche LLP arising from audits of the Affiliated Debtors’ 2014 and 2015
consolidated financial statements.
17. Based on the recommendation of BGBC Partner, LLP (“BGBC”), the Trustee’s accountants and financial advisors, the Trustee believes the most appropriate way to reconcile the D&T Settlement is based on the historic relationship of company revenues between the Affiliated Debtors. In 2015 (the last full calendar year before the Petition Date), the total revenues for all three Affiliated Debtors was $836,121,267, with DWC’s proportionate share at
$12,528,691, or 1.498%. Accordingly, the Trustee is proposing to proportion DWC’s share of the D&T Settlement at 1.498%, or $172,270.00.
18. Other than the D&T Settlement, the Trustee has not identified any other assets currently held by the ITT estate in which the DWC estate holds an interest in. However, certain assets were pursued jointly by the Affiliated Debtors’ estates in adversary proceedings, but are assets solely of the ITT estate. Such assets include the following:
(a) CUSO Settlement: This settlement involves a resolution, in part, of claims related to a certain Risk Sharing Agreement solely entered into by ITT and CUSO, whereby ITT guaranteed to CUSO the repayment of a portion of the amount due and owing on certain non-performing student loans CUSO made to former ITT students. In connection with the Risk Sharing Agreement, ITT was the only Affiliated Debtor that deposited funds into a collateral account held solely in the name of ITT, which CUSO alleged to maintain exclusive control over. Accordingly, the Trustee asserts that the DWC estate has no interest in the
$7,521,625 paid from the collateral account to the ITT estate, pursuant to the settlement.
(b) PEAKS Settlement: This settlement involves a resolution, in part, of claims related to certain agreements solely executed by ITT and other various non-debtor parties related to the PEAKS Loan Program, whereby ITT, in part, agreed to
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indemnify the Settling PEAKS Parties for certain events. In connection with these agreements, ITT also guaranteed certain amounts and made over $170 million in guarantee payments. Accordingly, the Trustee asserts that the DWC estate has no interest in the $9,587,500 settlement payment paid by the Settling PEAKS Parties to the ITT estate, pursuant to the settlement.
(c) Department of ED Settlement: This settlement involves a resolution, in part, of avoidance claims related to prepetition transfer of funds by ITT into an escrow account maintained by the United States Department of Education. Further, the settlement specifically provides that the $29,000,000 settlement payment represents a portion of the funds transferred by ITT into such escrow account.
Accordingly, the Trustee asserts that the DWC estate has no interest in the
$29,000,000 settlement payment paid by the United States Department of Education to the ITT estate, pursuant to the settlement.
19. In addition, in May 2020, following the termination and wind up of the ESI Pension Plan, Plan No. 005 (the “Pension Plan), the ITT estate received a reversion of
$32,071,016.00 from the overfunded Pension Plan (the “Reversion Funds”). DWC is not defined as an “employer” in the Pension Plan and no employee of DWC was a plan participant in the Pension Plan. Accordingly, the Trustee asserts that the DWC estate has no interest in the Reversion Funds received by the ITT estate.
Expenses to be Reconciled between ITT/ESI Estates and DWC Estate
20. Based on the Trustee’s Proposed Reconciliation as it relates to expenses paid by the ITT estate, the ITT estate has an administrative expense claim against the DWC estate in the amount of $541,503.98 (the “ITT Admin Claim”). Below is further explanation regarding the Trustee’s determination of the amount of the ITT Admin Claim.
21. As reflected in the Proposed Reconciliation, the vast majority of the expenses to be reconciled involve professional fees that were not clearly identifiable as being incurred by a particular estate or were a joint expense. The Proposed Reconciliation provides a detail
explanation of the Trustee’s method in determining DWC’s proportionate share of all expenses identified to be reconciled, which is summarized herein.
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Reconciliation Based on Estate’s Actual Share of Expense
22. The following expenses have been reconciled based on each estate’s actual share of the expenses:
(a) Rubin & Levin, P.C.: The Proposed Reconciliation includes fees and expenses of Rubin & Levin, P.C. (“Rubin & Levin”), as general counsel, incurred and paid in full through February 2021. All such fees and expenses were paid by the ITT estate because the vast majority of the fees and expenses were incurred in connection with matters solely involving ITT. Rubin & Levin has analyzed its time records in order to determine the DWC estate’s proportionate share of the fees and expenses incurred through February 2021 and determined it to be
$254,871.77 ($248,869.94 in fees and $6,001.83 in expenses). Beginning March 1, 2021, Rubin & Levin has billed the DWC estate separately.
(b) A&G Realty Partners, LLC: The ITT estate previously reimbursed A&G Realty Partners, LLC for certain expenses in the amount of $88,060.66 in
connection with the sale of real estate. The Trustee has determined that $2,000.00 of the $88,060.66 was related to marketing expenses for the sale of the real estate owned by DWC. Accordingly, the DWC estate’s proportionate share of the expense reimbursement is $2,000.00.
(c) G&E Real Estate Management Services, Inc.: G&E Real Estate Management Services, Inc. d/b/a Newmark Grubb Knight Frank (“G&E”) served as the Trustee’s property manager. All fees and expenses for G&E were paid by each respective estate that incurred such fees and expenses with the exception of an insurance premium reimbursement of $69,628.00 paid on September 21, 2017 by the ITT estate. The Trustee has determined that DWC estate’s proportionate share of the insurance premium reimbursement is $32,496.00.
(d) CorsumIT, LLC: Many of the fees and expenses incurred or to be incurred by CorsumIT, LLC (“CorsumIT”) are clearly identifiable as being owed by a particular estate and have or will be paid by the estate incurring such fees and expenses. However, certain fees and expenses in connection with the storage5 and destruction of pallets of electronic assets are not clearly identifiable as being owed by a particular estate. In particular, CorsumIT is handling the destruction of the pallets of electronic assets that were previously stored at Hanzo Logistics, Inc.
(“Hanzo”).6 In addition, certain pallets of electronic assets that were previously stored by Electronic Strategies, Inc. (“Electronic Strategies”) are now being stored by CorsumIT. Such pallets are estimated to be stored by CorsumIT through December 31, 2022. The ITT estate has and will continue paying all fees and
5 CorsumIT is currently storing certain pallets at a storage facility in Carmel, Indiana, and is being reimbursed by the ITT estate for the costs associated with the storage.
6 All pallets have been either destroyed or moved to a different storage facility, and therefore, as of the end of July 2021, Hanzo is no longer storing any pallets.
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expenses of CorsumIT in connection with the storage and destruction of these pallets. Pursuant to the Proposed Reconciliation, the DWC estate is reimbursing the ITT estate for its proportionate share of the fees and expenses previously paid by the ITT estate. In addition, the DWC estate is reimbursing the ITT estate in advance for the estimated future fees and expenses that will be incurred by CorsumIT in connection with the storage and destruction of these pallets. The Trustee determined DWC estate’s proportionate share based on the number of pallets containing electronic assets solely belonging to the DWC estate. Further explanation of the method of reconciliation is contained in the Proposed
Reconciliation. The Trustee estimates the total fees and expenses of CorsumIT related to the storage and destruction of pallets to be $334,725.00, with the DWC estate’s proportionate share being $27,901.30 ($25,696.30 for the fixed fee for destruction and $2,205.00 for estimated expense reimbursement for storage).
(e) Electronic Strategies, Inc.: Many of the fees and expenses incurred or to be incurred by Electronic Strategies, Inc. are clearly identifiable as being owed by a particular estate and have or will be paid by the estate incurring such fees and expenses. However, certain past fees in connection with the storage of pallets of electronic assets were not clearly identifiable as being owed by a particular estate and were paid by the ITT estate. The ITT estate has paid Electronic Strategies a total of $2,642,462.84, which includes, in addition to fees for IT related services, expenses incurred in connection with the storage of pallets. Electronic Strategies, is no longer storing pallets, and all such pallets have either been destroyed
pursuant to Court order or are currently being stored by CorsumIT. In order to determine the DWC estate’s proportionate share of the past fees paid to Electronic Strategies in connection with the storage of pallets, the Trustee looked at the time period of when Electronic Strategies stored pallets containing electronic assets solely belonging to the DWC estate, which was July 2017 to November 2018.
Further explanation of the method of reconciliation is contained in the Proposed Reconciliation. However, the Trustee has determined that the DWC estate’s proportionate share of the past fees associated with the storage of pallets to be
$9,562.50.
(f) Hanzo Logistics, Inc.: All of the fees associated with Hanzo are in connection with the storage of pallets of electronic assets. Such fees are not clearly
identifiable as being owed by a particular estate and have been and will continue to be paid by the ITT estate. Hanzo is no longer storing pallets, and all such pallets have either been destroyed pursuant to Court order or are currently being stored by CorsumIT. Accordingly, the Trustee does not anticipate any additional fees for Hanzo after July 2021. In order to determine the DWC estate’s
proportionate share of the fees paid or to be paid to Hanzo, the Trustee looked at the time period of when Hanzo Logistic stored pallets containing electronic assets solely belonging to the DWC estate, which was July 2017 through July 2021.
Further explanation of the method of reconciliation is contained in the Proposed Reconciliation. However, the Trustee has determined that the DWC estate’s proportionate share of the fees owed to Hanzo Logistic to be $18,875.00.
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(g) Tax Payments: With the exception of certain tax payments that were clearly identifiable as being owed by the DWC estate, the ITT estate has paid all other tax payments in the amount of $325,688.44 (“Prior Tax Payments”).7 BGBC has advised that the DWC estate’s proportionate share of the Prior Tax Payments is
$456.00. In addition, the Trustee estimates an additional $5,554,636.00 in tax payments that will be due in the future in connection with consolidated state tax returns previously filed or to be filed (“Future Tax Payments”).8 BGBC has advised that the DWC estate’s proportionate share of the estimated Future Tax Payments is $5,726.00. The ITT estate will pay all Future Tax Payments, with the DWC estate reimbursing the ITT estate in advance for its proportionate share in the amount of $5,726.00.
(h) Other Miscellaneous Expenses: The Proposed Reconciliation also includes certain other miscellaneous expenses that at the time paid were either a joint expense not clearly identifiable as being owed by a particular estate or mistakenly thought to be an expense of the ITT estate. The Trustee has identified two
expenses paid by the ITT estate that were expenses of the DWC estate—
$12,631.70 paid to Eversource and $12,007.50 paid to Clean Harbors
Environmental Services, Inc. In addition, the Trustee has identified two joint expenses paid by the ITT estate ($289,709.00 paid to International Sureties, Ltd.
and $98,785.00 paid to Marsh USA, Inc.) and has determine that DWC estate’s proportionate share of such expenses, as reflected in the Proposed Reconciliation.
Reconciliation Based on DWC’s Historic Share of Company Revenues (1.498%) 23. The fees and expenses incurred by the professionals listed below relate to matters involving tax and/or other financial matters related to all three estates. All such fees and
expenses have been paid by the ITT estate. Similar to the proposed reconciliation of the D&T Settlement, BGBC has recommended that the fees and expenses incurred by the professionals listed below should be reconciled based on DWC’s historic share of company revenue, or 1.498%:
(a) BGBC Partners, LLC: Total fees and expenses through July 2021 is
$2,651,012.31 ($2,578,735.75 in fees and $72,276.56 in expenses), with all such fees and expenses being paid or to be paid by the ITT estate. The DWC estate’s
7 While there has been a total of $325,688.44 in Prior Tax Payments, the ITT estate has received a total of
$5,274,924.48 in tax refunds. BGBC has advised that such previously received tax refunds are solely attributed to revenue of ITT, and therefore, are assets of the ITT estate.
8 While it is estimated that a total of $5,554,636 in Future Tax Payments will be due on consolidated state tax returns previously filed or to be filed, BGBC has also advised that it anticipates that the ITT estate will receive a total of
$1,293,028 in future tax refunds on account of certain consolidated state tax returns. BGBC has advised that such future tax refunds will solely be attributed to revenue of ITT, and therefore, will be assets of the ITT estate.
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proportionate share of these fees and expenses is $39,712.16 ($38,629.46 in fees and $1,082.70 in expenses). Beginning August 1, 2021, all fees and expenses for BGBC will be solely attributed to the ITT estate, as the DWC estate has
substantially been administered and there are no other significant revenues expected to be generated by the DWC estate. Accordingly, the ITT estate will pay all of BGBC’s fees and expenses incurred on or after August 1, 2021, unless there is an unexpected significant revenue generated by the DWC estate.
(b) Robins Kaplan LLP: In addition to being employed as the Trustee’s counsel in connection with the D&O litigation, Robins Kaplan LLP (“Robins Kaplan”) was employed as the Trustee’s litigation counsel in connection with claims against the Affiliated Debtors’ accounting firm relating to certain tax matters. Robins Kaplan previously completed its representation of the Trustee in connection with these matters and was paid by the ITT estate a total of $152,857.36 for its fees and expenses. The DWC estate’s proportionate share of these fees and expenses is
$2,289.80.
(c) McKool Smith, P.C.: In addition to being employed as the Trustee’s counsel in connection with the PEAKS Adversary Proceeding, McKool Smith, P.C.
(“McKool”) was employed as the Trustee’s litigation counsel in connection with the claims against Deloitte & Touche LLP that were ultimately resolved pursuant to the D&T Settlement. McKool previously completed its representation of the Trustee in connection with the D&T Settlement and was paid by the ITT estate a total of $1,613,725.92 for its fees and expenses. The DWC estate’s proportionate share of these fees and expenses is $24,023.81.
(d) McClintock & Associates, P.C.: McClintock & Associates, P.C.
(“McClintock”) was employed as the Trustee’s accountants in connection with the audit of federal student financial assistance program. McClintock previously completed its representation of the Trustee in connection with these matters and was paid by the ITT estate a total of $115,000.00 for its fees. The DWC estate’s proportionate share of these fees is $1,722.70.
Reconciliation of Fees & Expenses for Claims and Noticing Agent
24. Omni Agent Solutions f/k/a Rust Consulting/Omni Bankruptcy (“Omni”) is employed as the Trustee’s claims and noticing agent and has been paid a total of $753,050.71 by the ITT estate for fees and expenses through July 2021. The Trustee is proposing to reconcile Omni’s previously paid fees and expenses based on the number of creditors listed on the creditor matrix for each estate. The number of creditors on the creditor matrix for the DWC estate is approximately 4.335% of the total creditors listed on the creditor matrices for all three estates.
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Accordingly, the DWC estate’s proportionate share of fees and expenses previously paid to Omni is $32,644.75 (4.335% of $753,050.71). The Trustee is proposing to prorate Omni’s fees and expenses starting August 1, 2021, with the DWC estate paying its proportionate share at 4.335% of the total fees and expenses; provided however, each estate will pay its own fees and expenses associated with the mailing of the final reports and any other fees and expenses identified as being specifically incurred by a specific estate.
25. Other than the expenses listed in the Proposed Reconciliation, the Trustee has not identified any expenses previously paid or anticipated to be paid by the ITT estate which relate to matters involving the DWC estate. However, for purposes of further explanation, the Trustee asserts that the DWC estate is not responsible for the following expenses paid or to be paid by the ITT estate:
(a) Fees & Expenses Related to Benefit Plans: ITT was the sole plan sponsor for all benefit plans, and therefore, any claims related to benefit plans are against the ITT estate only. Accordingly, any fees and expenses incurred in connection with the benefit plans have been and will continue to be paid by the ITT estate.
(b) Costs of Postpetition Financing: All costs associated with the postpetition financing are solely attributed to the ITT estate because the DWC estate did not receive a benefit from the postpetition financing. Even after the DWC estate transferred funds to the ITT estate, the DWC estate had sufficient funds to pay its expenses on an ongoing basis and did not utilize any of the funds obtained
through the postpetition financing.
(c) Potential Federal Taxes for 2020 and Later: BGBC has advised that it does not anticipate any federal taxes being due and owing for the year 2020 or later.
However, in the event it is determined that any federal taxes are due and owing for the year 2020 or later, BGBC has advised that such taxes are solely attributed to revenue of ITT, and therefore, are expenses solely attributed to the ITT estate.
IV. RELIEF REQUESTED
26. The Trustee requests entry of an order, pursuant to sections 105 and 503(b) of the Bankruptcy Code: (a) approving the Trustee’s Proposed Reconciliation as outlined in Exhibit 1;
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(b) directing that the ITT estate transfer a total of $172,270.00 on account of the DWC
Allocation Claim and authorizing the Trustee to pay such amount to the DWC estate from the ITT estate; (c) granting the ITT estate an administrative expense claim against the DWC estate in the total amount of $541,503.98 on account of the ITT Admin Claim and authorizing the Trustee to pay such amount to the ITT estate from the DWC estate; (d) approving the Trustee’s proposed proration of Omni’s fees and expenses incurred on or after July 1, 2021 and authorizing the Trustee to pay 4.335% of Omni’s fees and expenses on or after July 1, 2021 from the DWC estate, with the exception of any fees or expenses associated with the mailing of the final reports and any other fees and expenses identified as being specifically incurred by a specific estate, all which shall be paid solely by the estate incurring such fees and expenses; and (e) reserving all rights of the Trustee to seek further reconciliation of assets and/or expenses of the Affiliated Debtors’ bankruptcy estates that may later be identified.
V. GROUNDS FOR GRANTING RELIEF
27. Section 105(a) of the Bankruptcy Code provides that “[t]he Court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”
28. In these cases, it was anticipated that the Affiliated Debtors’ estates would have certain claims against each other related to the use of Cash Collateral and the postpetition financing. As stated above, the Cash Use & Postpetition Financing Orders allowed for the Trustee to seek further orders from this Court to reconcile the expenses paid or to be paid between the Affiliated Debtors’ estates. This was intended not only to alleviate the immediate need to pay certain expenses of the ITT estate when it did not have sufficient funds, but also for purposes of ease in connection with the administration of the Affiliated Debtors’ estates as it
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related to joint expenses or expenses that at the time were not clearly identifiable as being owed by a particular estate.
29. Pursuant to section 503(b)(1)(A) of the Bankruptcy Code, after notice and a hearing, the Court can allow administrative expenses for “the actual, necessary costs and expenses of preserving the estate.” A claim is entitled to administrative status when such claim (a) arises form a postpetition transaction with the estate, and (b) the consideration for such payment is supplied to and benefited the estate. See Matter of Jartran, Inc., 732 F.2d 584, 586 (7th Cir. 1984.).
30. Here, the ITT Admin Claim relates to actual, necessary costs and expenses paid by the ITT estate that were in connection with preserving the DWC estate, and therefore, benefited the DWC estate. Accordingly, the ITT estate is entitled to an administrative expense claim in the DWC estate, pursuant to section 503(b)(1)(A) of the Bankruptcy Code, in the amount of $541,503.98.
31. Further, based on the Trustee’s Proposed Reconciliation, the ITT estate is holding an asset that was jointly pursued by the Affiliated Debtors, which the DWC estate is entitled to a portion of based on the DWC Allocation Claim. Accordingly, the ITT estate should be directed to transfer $172,270.00 to the DWC estate on account of the DWC Allocation Claim.
VI. NOTICE
32. Pursuant to the Notice, Case Management and Administrative Procedures (the
“Case Management Procedures”) approved by the Court on October 4, 2016 [Doc 220], the Trustee will serve a copy of this motion on the following (as defined in the Case Management Procedures): (a) the Core Group; (b) the Request for Notice List; and (c) the Appearance List.
NOTICE IS GIVEN, that pursuant to the Case Management Procedures, any objection to this motion must be in writing and filed with the Bankruptcy Clerk by no later than 4:00 p.m.
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(prevailing Eastern time) on September 8, 2021. Parties not represented by an attorney may deliver any written objection to this motion as follows: (a) by U.S. mail, courier,
overnight/express mail at Clerk, United States Bankruptcy Court, Re: In re ITT Educational Services, Inc., et al., 116 U.S. Courthouse, 46 East Ohio Street, Indianapolis, IN 46204; or (b) by publicly accessible drop box available at the Indianapolis Division located at the New York Street and Pennsylvania Street entrance.
The objecting party must also serve a copy of the written objection upon the Trustee’s counsel, at Counsel for Trustee Deborah J. Caruso, Rubin & Levin, P.C., 135 N. Pennsylvania Street, Suite 1400, Indianapolis, IN 46204 ([email protected]). If an objection is NOT timely filed, the requested relief may be granted without a hearing.
NOTICE IS FURTHER GIVEN that in the event an objection to this motion is timely filed, a hearing on this motion and such objection will be conducted on September 15, 2021 at 1:30 p.m. (prevailing Eastern Time), in Room 325 of the United States Courthouse, 46 East Ohio Street, Indianapolis, IN 46204. Interested parties may also participate at the hearing by conference call by calling 1-888-273-3658, passcode 6349352#.
WHEREFORE, the Trustee respectfully requests entry of an order granting the relief requested herein and granting the Trustee all other just and proper relief.
Respectfully submitted, RUBIN & LEVIN, P.C.
By: /s/ Meredith R. Theisen Meredith R. Theisen
Deborah J. Caruso (Atty. No. 4273-49) Meredith R. Theisen (Atty. No. 28804-49) RUBIN & LEVIN, P.C.
135 N. Pennsylvania Street, Suite 1400 Indianapolis, Indiana 46204
Tel: (317) 634-0300 Fax: (317) 263-9411
Email: [email protected] [email protected]
Attorneys for Deborah J. Caruso, Trustee
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CERTIFICATE OF SERVICE
I hereby certify that on August 26, 2021, a copy of the foregoing Trustee’s Motion for Authority to Reconcile Certain Postpetition Claims of the Affiliated Debtors’ Bankruptcy Estates was filed electronically. Pursuant to Section IV.C.3(a) of the Case Management Procedures, notice of this filing will be sent to the following parties through the Court’s Electronic Case Filing System. Parties may access this filing through the Court’s system.
John Joseph Allman [email protected], [email protected] Richard Allyn [email protected]
Robert N Amkraut [email protected]
Scott S. Anders [email protected], [email protected] Reuel D Ash [email protected], [email protected]
Todd Allan Atkinson [email protected] George Bach [email protected]
Kay Dee Baird [email protected], [email protected];[email protected] Christopher E. Baker [email protected], [email protected]
James David Ballinger [email protected], [email protected] Joseph E. Bant [email protected]
William J. Barrett [email protected], [email protected] Ashley Flynn Bartram [email protected]
Alex M Beeman [email protected], [email protected] Thomas M Beeman [email protected]
Richard James Bernard [email protected]
Thomas Berndt [email protected], [email protected] John J Berry [email protected], [email protected] Brandon Craig Bickle [email protected]
Jill B. Bienstock [email protected]
Michael Blumenthal [email protected] David J. Bodle [email protected], [email protected] Robert A. Breidenbach [email protected]
Wendy D Brewer [email protected], [email protected]
Kayla D. Britton [email protected], [email protected] Robert Bernard Bruner [email protected]
Jason R Burke [email protected], [email protected] Erin Busch [email protected]
John Cannizzaro [email protected], [email protected] Kevin M. Capuzzi [email protected],
[email protected];[email protected] James E. Carlberg [email protected],
[email protected];[email protected] Steven Dean Carpenter [email protected]
Deborah Caruso [email protected], [email protected];csprague@rubin- levin.net;[email protected]
Deborah J. Caruso [email protected], [email protected];[email protected]
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Joshua W. Casselman [email protected], angie@rubin- levin.net;[email protected]
Ben T. Caughey [email protected] Sonia A. Chae [email protected]
John Andrew Chanin [email protected], [email protected] Courtney Elaine Chilcote [email protected],
[email protected];[email protected] Dale C Christensen [email protected] Eboney Delane Cobb [email protected] Tiffany Cobb [email protected]
Michael Edward Collins [email protected]
Michael Anthony Collyard [email protected], [email protected] Eileen Connor [email protected]
Lawrence D. Coppel [email protected]
Heather M. Crockett [email protected], [email protected] J Russell Cunningham [email protected], [email protected]
Erica Dausch [email protected]
Melissa J. DeGroff [email protected], [email protected] Dustin R. DeNeal [email protected],
[email protected];[email protected]
Laura A DuVall [email protected], [email protected] Annette England [email protected]
Charles Anthony Ercole [email protected], [email protected] Carolyn Meredith Fast [email protected]
Elaine Victoria Fenna [email protected] Andrew W Ferich [email protected]
Scott Patrick Fisher [email protected], [email protected] John David Folds [email protected], [email protected] Jennifer N Fountain [email protected], [email protected]
Sarah Lynn Fowler [email protected], [email protected],[email protected] Lauren Freeman [email protected] Robert W. Fuller [email protected],
[email protected],[email protected] Carlos Galliani [email protected]
Jonathan William Garlough [email protected], [email protected];[email protected] Lisa Giandomenico [email protected]
Lea Pauley Goff [email protected], [email protected] John C Goodchild [email protected]
Douglas Gooding [email protected]
John Andrew Goodridge [email protected], [email protected];[email protected] Michael Wayne Grant [email protected]
Richard Grayson Grant [email protected], [email protected] Alan Mark Grochal [email protected]
Elizabeth N. Hahn [email protected], [email protected] Gregory Forrest Hahn [email protected], [email protected]
17
Julian Ari Hammond [email protected], [email protected] Wallace M Handler [email protected], [email protected]
William J. Hanlon [email protected] Adam Craig Harris [email protected]
Jeffrey M. Hawkinson [email protected], [email protected] Michael J. Hebenstreit [email protected],
[email protected];[email protected] Amanda Marie Hendren [email protected] Claude Michael Higgins [email protected]
Michael W. Hile [email protected], [email protected] Sean M Hirschten [email protected]
Robert M. Hirsh [email protected]
John C. Hoard [email protected], jkrichbaum@rubin- levin.net;[email protected];[email protected]
Curt Derek Hochbein [email protected], [email protected] Jeffrey A Hokanson [email protected],
[email protected],[email protected] Steven Howard Holinstat [email protected] Diana Hooley [email protected]
Thomas Ross Hooper [email protected]
George Wade Hopper [email protected], [email protected] Andrew E. Houha [email protected]
Andrew W. Hull [email protected], [email protected] James C Jacobsen [email protected], [email protected]
Christine K. Jacobson [email protected],
[email protected],[email protected] Jay Jaffe [email protected], [email protected] David Januszewski [email protected]
Benjamin F Johns [email protected], [email protected] Russell Ray Johnson [email protected]
Kenneth C. Jones [email protected]
Anthony R. Jost [email protected], [email protected];[email protected] David J. Jurkiewicz [email protected],
[email protected];[email protected];[email protected] Aaron Kappler [email protected]
Timothy Q. Karcher [email protected]
Steven Joseph Kasyjanski [email protected], [email protected] Alan Katz [email protected]
Richard B. Kaufman [email protected] Carly Kessler [email protected]
John M. Ketcham [email protected], [email protected] Taejin Kim [email protected]
Edward M King [email protected], [email protected];[email protected] Roy F. Kiplinger [email protected], [email protected] Jackson Taylor Kirklin [email protected], [email protected] James A. Knauer [email protected], [email protected]
18
Kevin Dale Koons [email protected], [email protected] Harris J. Koroglu [email protected], [email protected] Lawrence Joel Kotler [email protected]
Robert R Kracht [email protected]
Andrew L. Kraemer [email protected], [email protected] David R. Krebs [email protected], [email protected]
Jerrold Scott Kulback [email protected] Jay R LaBarge [email protected]
Darryl S Laddin [email protected]
Michael J. Langlois [email protected], [email protected] Vilda Samuel Laurin [email protected]
Jordan A Lavinsky [email protected] Todd Evan Leatherman [email protected]
David S Lefere [email protected], [email protected] Anthony Darrell Lehman [email protected]
Martha R. Lehman [email protected],
[email protected];[email protected];[email protected] Gary H Leibowitz [email protected],
[email protected];[email protected] Donald D Levenhagen [email protected]
Elizabeth Marie Little [email protected], [email protected] Edward J LoBello [email protected]
Melinda Hoover MacAnally [email protected], [email protected];[email protected]
John A. Majors [email protected], [email protected] Steven A. Malcoun [email protected]
John Marshall [email protected] Jonathan Marshall [email protected]
Thomas Marvin Martin [email protected] Jeff J. Marwil [email protected]
Charles Edward Massey [email protected], [email protected] Ann Wilkinson Matthews [email protected]
Rachel Jaffe Mauceri [email protected]
Sarah Thomas Mayhew [email protected], [email protected] Michael K. McCrory [email protected], [email protected]
Maureen Elin McOwen [email protected] Harley K Means [email protected],
[email protected];[email protected];[email protected] Toby Merrill [email protected], [email protected] Robert W. Miller [email protected]
Sherry Millman [email protected]
Jason Milstone [email protected]
Thomas E Mixdorf [email protected], [email protected] James P Moloy [email protected],
[email protected];[email protected] Ronald J. Moore [email protected]
19 Hal F Morris [email protected]
Michael David Morris [email protected]
Kevin Alonzo Morrissey [email protected], soliver@lewis- kappes.com;[email protected];[email protected]
Whitney L Mosby [email protected], [email protected] C Daniel Motsinger [email protected],
[email protected];[email protected]
Lee Duck Moylan [email protected], [email protected]
Joseph L. Mulvey [email protected], [email protected] Abraham Murphy [email protected]
Justin Scott Murray [email protected]
Alissa M. Nann [email protected], [email protected] Henry Seiji Newman [email protected]
Kevin M. Newman [email protected], [email protected] Cassandra A. Nielsen [email protected],
[email protected],[email protected];[email protected] Ryan Charles Nixon [email protected]
Isaac Nutovic [email protected]
Michael O'Donnell [email protected]
Gregory Ostendorf [email protected], [email protected] Weston Erick Overturf [email protected],
[email protected];[email protected]
Pamela A. Paige [email protected], [email protected] Kenneth Pasquale [email protected]
Eric Pendergraft [email protected], [email protected];[email protected] Danielle Ann Pham [email protected]
Anthony Pirraglia [email protected]
Jack A Raisner [email protected], [email protected] Jonathan Hjalmer Reischl [email protected]
Michael Rella [email protected]
Caroline Ellona Richardson [email protected], [email protected];[email protected] James Leigh Richmond [email protected] John M. Rogers [email protected], jkrichbaum@rubin-
levin.net;[email protected];[email protected];[email protected] Melissa M. Root [email protected], [email protected]
David A. Rosenthal [email protected]
James E Rossow [email protected], mralph@rubin- levin.net;[email protected]
Rene Sara Roupinian [email protected], [email protected];jenny-- [email protected];[email protected]
Victoria Fay Roytenberg [email protected], [email protected] Steven Eric Runyan [email protected]
Karl T Ryan [email protected], [email protected] Joseph Michael Sanders [email protected]
Thomas C Scherer [email protected], [email protected]
20
James R. Schrier [email protected], [email protected];[email protected] Ronald James Schutz [email protected]
H. Jeffrey Schwartz [email protected] Courtney Michelle Scott [email protected]
Joseph E Shickich [email protected], [email protected] Mary Alexandra Shipley [email protected]
William Shotzbarger [email protected]
Randall R Shouse [email protected], [email protected] William E Smith [email protected], [email protected]
Lauren C. Sorrell [email protected],
[email protected];[email protected];[email protected];shammersley@kdlegal.
com Berry Dan Spears [email protected] Catherine L. Steege [email protected],
[email protected];[email protected];[email protected] LaChelle D Stepp [email protected], [email protected] Jason V Stitt [email protected]
Sharon Stolte [email protected]
Jesse Ellsworth Summers [email protected], [email protected]
Matthew G. Summers [email protected], [email protected] Jonathan David Sundheimer [email protected]
Nathan L Swehla [email protected]
Nancy K. Swift [email protected], [email protected] Andrew W.J. Tarr [email protected],
[email protected],[email protected] Eric Jay Taube [email protected],
[email protected];[email protected]
Meredith R. Theisen [email protected], [email protected];mcruser@rubin- levin.net
Meredith R. Theisen [email protected],
[email protected];[email protected];[email protected] Jessica L Titler [email protected]
David Tocco [email protected], [email protected]
Todd Christian Toral [email protected], [email protected] Ronald M. Tucker [email protected], [email protected],[email protected] Christopher Turner [email protected], [email protected]
Michael Tye [email protected]
U.S. Trustee [email protected]
Lauren Valkenaar [email protected] Sally E Veghte [email protected], [email protected] Rachel Claire Verbeke [email protected]
Aimee Vidaurri [email protected] Amy L VonDielingen [email protected] Amy E Vulpio [email protected]
Carolyn Graff Wade [email protected] Christopher D Wagner [email protected]
21 Louis Hanner Watson [email protected] Jeffrey R. Waxman [email protected], [email protected];[email protected]
Philip A. Whistler [email protected], [email protected] Bradley Winston [email protected], [email protected] Brandon Michael Wise [email protected]
Cathleen Dianne Wyatt [email protected], [email protected]
James T Young [email protected], [email protected];[email protected] James E. Zoccola [email protected]
I further certify that on August 26, 2021, pursuant to Section IV.C.3(c) of the Case Management Procedures, a copy of the foregoing Trustee’s Motion for Authority to Reconcile Certain Postpetition Claims of the Affiliated Debtors’ Bankruptcy Estates was emailed to the following:
CEC Red Run, LLC: Alan M. Grochal at [email protected] SWRE Deal V Building, LLC: Paul Weiser at [email protected]
Tarrant County/Dallas County: Elizabeth Weller at [email protected] Northwest Natural Gas Company: Ashlee Minty at [email protected] Solar Drive Business, LLC: Chris W. Halling at [email protected] Market-Turk Company: Jordan A. Lavinsky at [email protected]
Taxing Authority for Harris County, Texas: John P. Dillman at [email protected] Texas Comptroller of Public Accounts: Rachel Obaldo at [email protected]
Clear Creek Independent School District: Carl O. Sandin at [email protected]
Synchrony Bank: Recovery Management Systems Corporation at [email protected] Bexar County: Don Stecker at [email protected]
SWRE Deal V Building, LLC: Nancy K. Swift at [email protected] TN Dept. of Revenue: Michael Willey at [email protected]
Florida Department of Education: Jason Borntreger at [email protected] Last Second Media, Inc.: T. Todd Egland at [email protected]
Hung Duong: Kevin Schwin at [email protected]
Travis County: Kay D. Brock at [email protected]
Able Building Maintenance: Scott D. Fink at [email protected] Marathon Ventures, LLC: Daniel M. Karger at [email protected]
Oklahoma County Treasurer: Tammy Jones at [email protected] JM Partners LLC: John Marshall at [email protected]
/s/ Meredith R. Theisen Meredith R. Theisen
G:\WP80\TRUSTEE\Caruso\ITT Educational - 86723901\Drafts\reconciliation motion.docx
EXHIBIT 1
[Proposed Reconciliation]
Amount Retained by
ITT Estate Amount Attributed to
ITT/ESI Estates Amount Attributed to DWC Estate Deloitte & Touche LLP Settlement1 $ 11,500,000.00 $ 11,327,730.00 $ 172,270.00
TOTAL $ 11,500,000.00 $ 11,327,730.00 $ 172,270.00
Amount Paid or To Be
Paid by ITT Estate Amount Attributed to
ITT/ESI Estates Amount Attributed to DWC Estate Fees of Rubin & Levin, P.C. - General Counsel
(Employment Order [Doc 309])2 $ 5,488,560.50 $ 5,239,690.56 $ 248,869.94 Expenses of Rubin & Levin, P.C. - General Counsel
(Employment Order [Doc 309])3 $ 102,260.46 $ 96,258.63 $ 6,001.83 Expenses of A&G Realty Partners, LLC - Broker
(Employment Orders [Docs 361 & 1796])4 $ 88,060.66 $ 86,060.66 $ 2,000.00 Fees of BGBC Partners, LLP - Accountants & Financial
Advisors (Employment Order [Doc 407])5 $ 2,578,735.75 $ 2,540,106.29 $ 38,629.46 Expenses of BGBC Partners, LLP - Accountants & Financial
Advisors (Employment Order [Doc 407])6 $ 72,276.56 $ 71,193.86 $ 1,082.70
Fees & Expenses of Robins Kaplan LLP - Litigation Counsel
for Certain Tax Claims (Employment Order [Doc 2095])7 $ 152,857.36 $ 150,567.56 $ 2,289.80 Fees & Expenses of McKool Smith, P.C. - Litigation
Counsel for Deloitte Claims (Employment Order [Doc
2964])8 $ 1,613,725.92 $ 1,589,702.11 $ 24,023.81
PROPOSED RECONCILIATION BETWEEN BANKRUPTCY ESTATES
ASSETS RETAINED BY ITT BANKRUPTCY ESTATE
EXPENSES PAID OR TO BE PAID BY ITT BANKRUPTCY ESTATE
Assets Settlements
Expenses
Professional Fees & Expenses
PROPOSED RECONCILIATION BETWEEN BANKRUPTCY ESTATES
Fees of McClintock & Associates, P.C. - Accountants for Audit of Federal Student Financial Assistance Programs
(Employment Order [Doc 449])9 $ 115,000.00 $ 113,277.30 $ 1,722.70 Omni Agent Solutions f/k/a Rust Consulting/Omni
Bankruptcy - Claims and Noticing Agent (Employment
Order [Doc 213])10 $ 753,050.71 $ 720,405.96 $ 32,644.75 G&E Real Estate Management Services, Inc. d/b/a
Newmark Grubb Knight Frank - Property Manager
(Employment Order [Doc 362])11 $ 69,628.00 $ 37,132.00 $ 32,496.00 Fixed Fee for Destruction of Assets to CorsumIT, LLC - IT
Consultant (Employment Order [Doc 4186])12 $ 322,305.00 $ 296,608.70 $ 25,696.30 Est. Expense Reimbursement for Carmel Storage Cost to
CorsumIT, LLC - IT Consultant (Employment Order [Doc
4186])13 $ 12,420.00 $ 10,215.00 $ 2,205.00 Fees & Expenses to Electronic Strategies, Inc. - IT
Consultant (Employment Order [Doc 1114])14 $ 2,642,462.84 $ 2,632,900.34 $ 9,562.50
Previously Paid Tax Payments15 $ 325,688.44 $ 325,232.44 $ 456.00 Est. Tax Payments Due on Consolidated State Tax Returns
Previously Filed or to be Filed16 $ 5,554,636.00 $ 5,548,910.00 $ 5,726.00
International Sureites, Ltd. $ 289,709.00 $ 245,488.38 $ 44,220.62 Marsh USA, Inc. $ 98,785.00 $ 78,076.00 $ 20,709.00 Eversource $ 12,631.70 $ - $ 12,631.70 Clean Harbors Environmental Services, Inc. $ 12,007.50 $ - $ 12,007.50 Hanzo Logistics, Inc.17 $ 210,836.50 $ 191,961.50 $ 18,875.00 TOTAL $ 20,515,637.90 $ 19,973,787.29 $ 541,850.61 Tax Payments
Other Miscellanous Expenses
PROPOSED RECONCILIATION BETWEEN BANKRUPTCY ESTATES
Amount Owed by ITT Estate to DWC Estate: $ 172,270.00 Amount Owed by DWC Estate to ITT Estate: $ 541,850.61
1The proration betweenestates determined by DWC's share of 2015 company revenues, which was 1.498%.
2Includes fees incurred and paid in full through February 2021. Rubin & Levin, P.C. analyzed its time records in order to determine the DWC Estate's proportionate share of fees previously paid by the ITT Estate. Beginning March 1, 2021, Rubin & Levin, P.C. has billed the DWC Estate separately.
5The proration between estates determined by DWC's share of 2015 company revenues, which was 1.498%. Includes fees incurred through July 2021 in the total amount of $2,578,735.75, with a total of $2,525,994.75 previously paid or to be paid pursuant to interim fee orders and/or notices of invoice. As a result of this reconcilation, the remaining balance of $52,741.00 for BGBC's fees through July 2021 will be paid by the ITT Estate in the future pursuant to an interim fee order, with the DWC Estate reimbursing the ITT Estate in advance for its proportionate share of the $52,741.00 (i.e., $790.06). Beginning August 1, 2021, all fees for BGBC Partners, LLC will be solely attributed to the ITT Estate, as the DWC Estate has substantially been administered and there are no other significant revenues expected to be generated by the DWC Estate.
Accordingly, the ITT Estate will pay all of BGBC Partners, LLP's fees incurred on or after August 1, 2021, unless there is an unexpected signficiant revenue generated by the DWC Estate.
3Includes expenses incurred and paid in full through February 2021. Rubin & Levin, P.C. analyzed its time records in order to determine the DWC Estate's proportionate share of expenses previously paid by the ITT Estate. Beginning March 1, 2021, Rubin & Levin, P.C. has billed the DWC Estate separately.
4A&G Realty Partners, LLC's fees and expenses were approved pursuant to the Final Order [Doc 3188] entered on January 30, 2019, and therefore, will not file a final fee application for the fees and expenses associated with the DWC Estate.
6The proration between estates determined by DWC's share of 2015 company revenues, which was 1.498%. Includes expenses incurred and paid in full through July 2021 pursuant to interim fee orders and/or notices of invoice. Beginning August 1, 2021, all expenses for BGBC Partners, LLC will be solely attributed to the ITT Estate, as the DWC Estate has substantially been administered and there are no other significant revenues expected to be generated by the DWC Estate. Accordingly, the ITT Estate will pay all of BGBC Partners, LLP's expenses incurred on or after August 1, 2021, unless there is an unexpected signficiant revenue generated by the DWC Estate.
PROPOSED RECONCILIATION BETWEEN BANKRUPTCY ESTATES
10Includes fees and expenses incurred and paid in full through July 2021. No other amounts have been paid to Omni Agent Solutions. The proration of Omni Agent Solutions's fees and expenses was determined based on the number of creditors listed on the creditor matrix for each estate. The number of creditors on the creditor matrix for the DWC Estate is approximately 4.335% of the total creditors listed on the creditor matrices for all three estates. Accordingly, the DWC Estate's proportionate share of the fees and expenses paid to Omni Agent Solutions is 4.335%. With the exception of any fees or expenses associated with the mailing of the final reports and any other fees and expenses identified as being specifically incurred by a specific estate, all future fees and expenses for Omni Agent Solutions will be prorated between the estates, with the DWC Estate paying 4.335% of the total fees and expenses. Pursuant to Omni Agent Solutions' Employment Order [Doc 213], it is not required to file a final fee application.
11All fees and expenses for G&E Real Estate Management Services, Inc. were paid by each respective estate that incurred the fees/expenses, with the exception of an insurance premium reimbursement of $69,628.00 paid on September 21, 2017 by the ITT Estate. The DWC Estate's proportionate share of this expense reimbursement is $32,496.00. Pursuant to G&E Real Estate Management Services, Inc.'s Employment Order [Doc 362], it is not required to file a final fee application.
12The proration was determined based on the number of pallets to be destroyed for each estate. The number of pallets for the DWC Estates is 35 at a cost of $734.18 per pallet, or a total of $25,696.30. A total of $161,152.00 of the fixed fee for destruction of assets has been paid by the ITT Estate. As a result of this reconciliation, the ITT Estate will pay the entire fixed fee, with the DWC Estate reimbursing the ITT Estate in advance for its proportionate share of the $161,152.00 (i.e., $12,848.15).
7The proration between estates determined by DWC's share of 2015 company revenues, which was 1.498%. Robins Kaplan LLP's fees and expenses in connection with its services as litigation counsel for certain tax claims were approved pursuant to the Final Order [Doc 2801]
entered on August 15, 2018, and therefore, will not file a final fee application for the fees and expenses associated with the DWC Estate.
8The proration between estates determined by DWC's share of 2015 company revenues, which was 1.498%. McKool Smith, P.C.'s fees and expenses in connection with its services as litigation counsel for the Deloitte Claims were approved pursuant to the Final Order [Doc 3239]
entered on February 20, 2019, and therefore, will not file a final fee application for the fees and expenses associated with the DWC Estate.
9The proration between estates determined by DWC's share of 2015 company revenues, which was 1.498%. McClintock & Associates, P.C.'s fees in connection with its services were approved pursuant to the Final Order [Doc 4420] entered on July 28, 2021, and therefore, will not file a final fee application for the fees associated with the DWC Estate.
PROPOSED RECONCILIATION BETWEEN BANKRUPTCY ESTATES
14The total amount of $2,642,462.84 is the total amount that has been paid by the ITT Estate as of July 1, 2021, which includes fees and
expenses in addition to storage cost. In addition to the $2,642,462.84 paid by the ITT Estate, the DWC Estate has paid Electornic Strategies, Inc.
a total of $153,508.14 for fees and costs solely attributed to the DWC Estate. Accordingly, other than the storage costs paid by the ITT Estate, each estate has paid their respective share of the fees and expenses incurred by Electronic Strategies, Inc. The proration of the storage cost previously paid by the ITT Estate was determined based on the number of pallets stored at Electronic Strategies, Inc. for each estate for the time period of July 2017 to November 2018. It has been determined that the DWC Estate's proportionate share of the storage costs during this time period is $9,562.50. Accordingly, the DWC Estate is responsible for $9,562.50 of the $2,642,462.84 that was previously paid by the ITT Estate.
13The proration was determined based on the number of pallets stored at Carmel Storage for each estate, which has been determined to be 20% for the DWC Estate and 80% for the ITT Estate. CorsumIT, LLC began storing pallets for the DWC Estate in April 2021. The storage fees of
$1,395.00 incurred prior to April 2021 are solely attributed to the ITT Estate. Accordingly, the DWC Estate is responsible for 20% of the remaining estimated total storage fees, or $11,025.00. As result of this reconciliation, the ITT Estate will continue paying this cost, with the DWC Estate reimbursing the ITT Estate in advance for its proportionate share of the total estimated cost.
17The proration was determined based on the number of pallets stored at Hanzo Logistics, Inc. for each estate. Hanzo Logistics, Inc. began storing 25 palletsfor DWC in July 2017, which increased to a total of 35 pallets in December 2018. At a storage cost of $12.50 per pallet, the DWC Estate's proportionate share of the total estimated fees for Hanzo Logistics, Inc. for the time period of July 2017 through July 2021 is
$18,875.00. As a result of this reconciliation, the ITT Estate will pay this cost, with the DWC Estate reimbursing the ITT Estate in advance for its proportionate share of the total estimated cost.
15While there has been a total of $325,688.44 in previously made tax payments, the ITT Estate has received a total of $5,274,924.48 in tax refunds. BGBC has advised that such previously received tax refunds are solely attributed to revenue of ITT, and therefore, are assets of the ITT Estate.
16While it is estimated that a total of $5,554,636 in future tax payments will be due on consolidated state tax returns previously filed or to be filed, BGBC has advised that it antnicipates that the ITT Estate will receive a total of $1,293,028 in future tax refunds on account of certain consolidated state tax returns. BGBC has advised that such future tax refunds are solely attributed to revenue of ITT, and therefore, will be assets of the ITT Estate.