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UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS In re INTERNATIONAL GOSPEL PARTY BOOSTING JESUS GROUPS, INC., Debtor. -------------------------WILLIAM K. HARRINGTON, UNITED STATES TRUSTEE, Appellant, v. DAVID M. NICKLESS, Appellee. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

CIVIL ACTION NO. 12-11475-DPW BANKRUPTCY COURT NO. 10-19012-HJB

MEMORANDUM AND ORDER February 20, 2013 This is an appeal challenging a bankruptcy court order awarding fees and expenses to David M. Nickless, attorney for the Debtor, for services performed after the appointment of a Chapter 11 trustee to administer the bankruptcy estate. I. BACKGROUND International Gospel Party Boosting Jesus Groups ("IGP" or "the Debtor"), a Massachusetts non-profit organization represented by Nickless, filed the underlying Chapter 11 case on August 19, 2010. On October 15, 2010, the bankruptcy court

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approved the appointment of a Chapter 11 Trustee to administer the bankruptcy estate. The Debtor's sole asset was a piece of real property on Massachusetts Avenue in Boston. The bankruptcy court authorized

the Trustee to sell the property, over objection made by Nickless on behalf of IGP. The property was sold in July 2011 for

$1,326,001, which satisfied all secured and unsecured claims, as well as administrative costs, and left a surplus of about $285,000. In September 2011, the Trustee moved to dissolve the Debtor or to convert the case to Chapter 7 liquidation proceedings. Nickless, again on behalf of IGP, opposed the Trustee's motion. On November 7, 2011, the bankruptcy court denied the Trustee's motion. Instead, the court ordered the Trustee to hold in escrow

funds necessary to satisfy the only remaining claim in the bankruptcy--by Jeff Ross, a real estate broker who had appealed the denial of a commission for his involvement in the property sale1--and to return the surplus funds to the Debtor. The court

also "authorized the Debtor to pay any earned but unpaid fees to Debtor's counsel and that, as all creditors and interested

I affirmed the bankruptcy court's denial of the Ross claim in In re Int'l Gospel Party Boosting Jesus Groups, Inc., No. 12-10545-DPW, 2012 WL 3292855 (D. Mass. Aug. 10, 2012). Ross took a further appeal to the First Circuit. That appeal was dismissed on Ross' motion last week. Ross v. Butler (In re Int'l Gospel Party Boosting Jesus Groups, Inc.), No. 12-2087 (1st Cir. Feb. 12, 2013). -2-

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parties will have been paid in full, the normal and usual requirement that Debtor's counsel file with the court a Fee Application and Narrative is waived." Earlier, on October 20, 2011, the Massachusetts Attorney General had brought suit in state Superior Court against IGP's directors for diverting the organization's assets for personal use. On October 28, the state court had enjoined the Trustee

from distributing to IGP any surplus funds it might have been entitled to receive upon dismissal of the bankruptcy, and ordered the Trustee to hold those surplus funds in escrow while the Attorney General pursued her claims against the directors. Thus unable to be paid from surplus funds returned to the Debtor, Nickless filed a fee application with the bankruptcy court in January 2012. Without objection, the court ordered the

bankruptcy estate to pay Nickless the fees and expenses incurred prior to the appointment of the Chapter 11 Trustee. appointment fees are not at issue in this appeal. In dispute, however, are $10,345.45 in fees and expenses Nickless incurred after appointment of the Chapter 11 Trustee. The bankruptcy court concluded that making the requested award from the estate would be inconsistent with 11 U.S.C.

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