UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION - DETROIT

IN THE MATTER OF:

CHAPTER 13
Duane M. Nichols, CASE NO. 07-45695-PJS
Schelly M. Nichols, JUDGE PHILLIP J. SHEFFERLY
DEBTORS.
_______________________________________/

TRUSTEE’S MOTION TO COMPEL THAV & RYKE P.L.L.C. TO DISGORGE

ATTORNEY’S FEES

NOW COMES the Chapter 13 Standing Trustee in this matter, David Wm. Ruskin, and
moves this Honorable Court to compel Thave & Ryke P.L.L.C. to disgorge attorney’s fees, and in
support thereof states as follows:

1. The debtors voluntarily sought Chapter 13 relief on March 23, 2007 and the debtor’s
Chapter 13 Plan was confirmed on July 11, 2007.

2. According to the Statement of Attorney for Debtor Pursuant to Federal Rule of

Bankruptcy Procedure 2016(b) signed by Jeffrey Thav dated March 23, 2007, the debtors paid Mr.
Thav a retainer prior to the commencement of this case, the sum of $210.00 in addition to the filing
fee.
3. At the time this case was filed, based upon the debtors’ Schedule I, Mr. Nichols was
employed as a roofer and Mrs. Nichols was employed in customer service for Spirit Airlines earning
joint net income of $4,652.82.

4. The debtors’ Plan as confirmed provided for a 60 month Plan yielding a 100%
dividend plus 7% interest to unsecured creditors.

5. On February 27, 2008, the debtors filed their First Motion to Modify Their
Confirmed Chapter 13 Plan requesting relief in the form of a decrease in Plan payments to $1,632.00
per month, a decrease in the dividend from 100% plus 7% interest to 5% and an excusal of Plan
payments in the amount of $5,850.00. The debtors state as their basis for the Plan Modification that
Mrs. Nichols lost her job shortly after confirmation and further that the debtors’ child support ceased
at approximately the same time. The debtors’ proposed modified Plan further states that the debtor
received unemployment compensation and was able to make her Plan payments until December of
2007 when the unemployment benefits ceased.

6. The Trustee filed objections to the proposed modified Plan as the assertions made in
the debtors’ proposed modified Plan appear to be false based upon correspondence received from the
debtors’ employer which indicated that Mrs. Nichols was no longer employed with her current
employer as of June 8, 2007, over a month before this case w as confirmed. As a result, the Trustee
objected as the debtors obtained confirmation of the Chapter 13 Plan under false pretenses as the
debtors had failed to disclose the debtor’s current employment status at the time of confirmation. If
the debtors had truthfully disclosed the debtor’s employment status, the debtors’ Plan would have
failed to comply with 11 U.S.C. Section 1325(a)(6) and confirmation may have been denied.

7. At the hearing on the proposed modified Plan on April 8, 2008, the debtors disclosed
to the Court that the debtors informed their counsel at the time of confirmation that Mrs. Nichols was
unemployed. Instead of disclosing these pertinent facts to the Trustee and the Court at the time of
confirmation, counsel opted for non-disclosure and obtained confirmation of the debtors’ Chapter 13
Plan under false pretenses. The disclosure of these facts to debtors’ counsel is further evidenced by
the debtors’ statement made in the debtors’ Affidavit dated April 17, 2008 and filed with this Court
on April 22, 2008.

8. Pursuant to 11 U.S.C. Section 329, if compensation paid to an attorney exceeds the

reasonable value of such services, the Court may cancel any such agreement or order the return of
such payment to the extent that such fees would have been property of the estate or were paid by or
on behalf of the debtor under a Chapter 13 case. Furthermore, pursuant to 11 U.S.C. Section 327 and
11 U.S.C. Section 330, any fees charged by or paid to counsel must be reasonable and must
constitute compensation for services which are beneficial to the debtor, creditors or the estate. In this
case, Thav & Ryke received a pre-petition retainer of $210.00 and fees upon obtaining confirmation
of $2,790.00 for a total fee of $3,000.00.

9. Based upon the facts and circumstances of this case and the serious nondisclosure by
debtors’ counsel, the compensation paid to debtors’ counsel exceeds reasonable value of such
services and, as a result, the Trustee contends that such fees should be disgorged to the Chapter 13
Trustee for distribution to creditors as such funds are property of the estate. Furthermore, this Court
has the authority to order the return of such payment pursuant to 11 U.S.C. Section 329.

10. The Trustee further asserts that these funds should be paid to the Chapter 13 Trustee
for distribution to creditors as the debtors are seeking a Plan modification to excuse Plan payments
totaling $5,850.00 when the delinquency resulted from the debtor’s loss of employment which was
known by debtors’ counsel at or prior to confirmation.

11. 11 U.S.C. Section 105 gives this Court authority to enter such Orders as may be
necessary to avoid an abuse of the bankruptcy process. In this case, permitting Thav & Ryke to
obtain the funds previously paid to them in the amount of $3,000.00 would constitute an abuse of
both the letter and the spirit of the United States Bankruptcy Code and would in effect condone
nondisclosure by debtors’ counsel.

12. The Trustee requests that this Court enter an Order Compelling Thav & Ryke to
disgorge and refund to the Chapter 13 Trustee the sum of $3,000.00 representing funds paid to
debtors’ counsel to date with such disgorgement being required no later than 15 days after the date of
the entry of this Order.

WHEREFORE, the Chapter 13 Standing Trustee prays that this Honorable Court compel
Thav & Ryke to disgorge and refund the sum of $3,000.00 forthwith to the Chapter 13 Trustee, and
grant any further and other relief as this Court deems equitable and just.

OFFICE OF THE CHAPTER 13 STANDING TRUSTEE-DETROIT

David Wm. Ruskin, Chapter 13 Standing Trustee

Dated: April 23, 2008 __________/s/ Lisa K. Mullen______________

DAVID WM. RUSKIN (P26803)
LISA K. MULLEN (P55478)
THOMAS D. DECARLO (P65330)
1100 Travelers Tower
26555 Evergreen Road
Southfield, MI 48076-4251
Telephone (248) 352-7755
 UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION - DETROIT
IN THE MATTER OF:
CHAPTER 13
Duane M. Nichols, CASE NO. 07-45695-PJS
Schelly M. Nichols, JUDGE PHILLIP J. SHEFFERLY
DEBTORS.
_______________________________________/

ORDER TO COMPEL THAV & RYKE P.L.L.C. TO DISGORGE

ATTORNEY’S FEES

This matter came on for hearing upon a Motion filed by the Chapter 13 Standing Trustee
pursuant to L.B.R. 9014-1 (E.D.M.), the Motion having been properly served and a Notice of the
Motion having be en provided in accordance with local bankruptcy rules, the r equisite time for
objections having passed, a response to the Mot ion was not tim ely served, and ba sed upon the
records of the Court herein, the Court determines that the Relief requested is warranted and the
Court being otherwise sufficiently advised in the premises;

IT IS HEREBY ORDERED that Thav & Ryke disgorge the sum of $3,000.00 to the
Chapter 13 Trustee, David Wm. Ruskin;

IT IS FURTHER ORDERED that Thav & Ryke shall disgorge the sum of $3,000.00 to
the Chapter 13 Trustee within fifteen (15) days of the service of this Order;

IT IS FURTHER ORDERED that the Court will retain jurisdiction to enter such further
orders as may be appropriate;

EXHIBIT "A"