Fees disputed in Ezenia bankruptcy case

The bankrupt Ezenia should not pay certain professionals before all others — especially those it owes money to — urges the bankruptcy trustee in a matter expected to go before the U.S. Bankruptcy court on Tuesday.The Nashua-based software developer wants to be able to pay four firms a maximum of $20,000 a month, capped at $150,000 each (a total of $600,000) without going back to the court.”It is impractical and costly for the debtor to submit individual applications and proposed retention orders for each Ordinary Course Professional as required by Bankruptcy Rule,” explained the company’s attorneys in an Oct. 21 filing.The company – whose stock was trading on the Nasdaq — filed for Chapter 11 protection on Sept. 30. At the time, it had about $2.5 million in assets and about $900,000 in debts, but the largest asset — $2.1 million in prepaid licensing to Microsoft – is considered intangible. The company also has $172,000 in cash.At least $388,000 of the debt relates to severance owed to two former executives, including ex-CEO Koa Nguyen, a founder of the company, who filed suit against Ezenia claiming that he is owed more than $2 million.In Ezenia’s revised filing, the professionals consist of MFA Risk Services, its auditor, Burr Pilger Mayer Inc. for tax services and Bingham McCutchen LLP, attorneys with respect to the company’s trademarks and other intellectual property, and Gray, Gray & Gray LLP, a CPA firm that prepares the company’s tax returns.The trustee objected to the request, noting that all of these professionals are unsecured creditors and are owed money by the estate.Ezenia claimed it did “not believe that any of the Ordinary Course Professionals have an interest materially adverse to the Debtor” but the trustee argued that the professionals “are not disinterested and hold claims adverse to the estate” and putting their pay ahead of others, without court supervision, violates Bankruptcy Code.In a reply filed Nov. 18, Ezenia said it was willing to give the bankruptcy court more of a final say on fees, but argued that the professionals’ work won’t help or hurt their own case, so there was no real conflict, and no violation of the code. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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