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Office of the United States Trustee 

1100 Commerce Street, Room 976 

Dallas, Texas 75242 

(214) 767-8967 

Meredyth A. Kippes 

for the United States Trustee 

meredyth.kippes@usdoj.gov 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

In re:

CAREMAX INC., et al., 

Debtor. 

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Case No. 24-80093-mvl11 

(Jointly Administered) 

Chapter 11 

 

United States Trustee’s Limited Objection to Emergency Application for Entry of Interim 

and Final Orders Authorizing Employment and Retention of Stretto, Inc. as Claims, 

Noticing, and Solicitation Agent Effective as of the Petition Date 

[related to docket no. 12] 

TO THE HONORABLE MICHELLE V. LARSON, 

UNITED STATES BANKRUPTCY JUDGE: 

 The United States Trustee for Region 6 objects to Debtors’ Emergency Application for 

Entry of Interim and Final Orders Authorizing Employment and Retention of Stretto, Inc. as 

Claims, Noticing, and Solicitation Agent Effective as of the Petition Date (the “Application,” 

Docket Entry No. 12) and respectfully shows as follows: 

Summary 

 The Debtors seek to employ Stretto, Inc. (“Stretto”) as their claims agent, noticing and 

solicitation agent. The United States Trustee does not object to the scope of employment but 

objects to the exclusion of Stretto from final fee application requirements. Stretto should be 

required to file a final fee application, separating its activities under 28 U.S.C. § 157(b)(2) (the 

“Clerk Duties”) from its other, non-Clerk Duties. 

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Background 

1. On November 17, 2024 (“Petition Date”), CarMax, Inc., along with its subsidiaries 

(collectively, “Debtors”), filed voluntary chapter 11 petitions in the United States Bankruptcy 

Court for the Northern District of Texas. 

2. On November 19, 2024, the Court entered an order granting joint administration of 

all Debtors’ cases under case no. 24-80093. [docket no. 67]. 

3. On December 4, 2024, the United States Trustee appointed the official committee 

of unsecured creditors (“Committee”). [docket no. 154]. 

4. The Debtors’ section 341 meeting of creditors is currently scheduled for 

December 18, 2024. 

5. Paragraph 19 of the Application sets forth the proposed scope of Stretto’s Claims 

and Noticing Agent services: 

a. assist the Debtors with the preparation and distribution of all required notices and 

documents in accordance with the Bankruptcy Code and the Bankruptcy Rules in 

the form and manner directed by the Debtors and/or the Court, including: (i) 

notice of the commencement of these Chapter 11 Cases and the initial meeting of 

creditors under Bankruptcy Code section 341(a); (ii) notice of any claims bar 

date; (iii) notice of any proposed sale of the Debtors’ assets; (iv) notices of 

objections to claims and objections to transfers of claims; (v) notices of any 

hearings on a disclosure statement and confirmation of any plan or plans of 

reorganization, including under Bankruptcy Rule 3017(d); (vi) notice of the 

effective date of any plan; and (vii) all other notices, orders, pleadings, 

publications and other documents as the Debtors, Court, or Clerk may deem 

necessary or appropriate for an orderly administration of these Chapter 11 Cases; 

b. maintain an official copy of the Debtors’ schedules of assets and liabilities and 

statements of financial affairs (collectively, the “Schedules”), listing the Debtors’ 

known creditors and the amounts owed thereto; 

c. maintain (i) a list of all potential creditors, equity holders and other parties in 

interest and (ii) a “core” mailing list consisting of all parties described in 

Bankruptcy Rule 2002(i), (j), and (k) and those parties that have filed a notice of 

appearance pursuant to Bankruptcy Rule 9010, and update and make said lists 

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available upon request by a party-in-interest or the Clerk; 

d. to the extent applicable, furnish a notice to all potential creditors of the last date 

for filing proofs of claim and a form for filing a proof of claim, after such notice 

and form are approved by the Court, and notify said potential creditors of the 

existence, amount and classification of their respective claims as set forth in the 

Schedules, which may be effected by inclusion of such information (or the lack 

thereof, in cases where the Schedules indicate no debt due to the subject party) on 

a customized proof of claim form provided to potential creditors; 

e. maintain a post office box or address for receiving claims and returned mail, and 

process all mail received; 

f. f. for all notices, motions, orders or other pleadings or documents served, prepare 

and file or cause to be filed with the Clerk no more frequently than every seven 

(7) days an affidavit or certificate of service that includes: (i) either a copy of the 

notice served or the docket number(s) and title(s) of the pleading(s) served; (ii) a 

list of persons to whom it was mailed (in alphabetical order) with their addresses; 

(iii) the manner of service; and (iv) the date served; 

g. receive and process all proofs of claim, including those received by the Clerk, 

check said processing for accuracy and maintain the original proofs of claim in a 

secure area; 

h. provide an electronic interface for filing proofs of claim; 

i. maintain the official claims register for each Debtor (collectively, the “Claims 

Registers”) on behalf of the Clerk; upon the Clerk’s request, provide the Clerk 

with certified, duplicate unofficial Claims Registers; and specify in the Claims 

Registers the following information for each claim docketed: (i) the claim number 

assigned; (ii) the date received; (iii) the name and address of the claimant and 

agent, if applicable, who filed the claim; (iv) address for payment, if different 

from the notice address; (v) the amount asserted; (vi) the asserted classification(s) 

of the claim (e.g., secured, unsecured, priority, etc.); (vii) the applicable Debtor; 

and (viii) any disposition of the claim; 

j. provide public access to the Claims Registers, including complete proofs of claim 

with attachments, if any, without charge; 

k. record all transfers of claims and provide any notices of such transfers as required 

by Bankruptcy Rule 3001(e); 

l. implement reasonable security measures designed to ensure the completeness and 

integrity of the Claims Registers and the safekeeping of any proofs of claim; 

m. relocate, by messenger or overnight delivery, all of the court-filed proofs of claim 

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to the offices of Stretto not less than weekly; 

n. monitor the Court’s docket for all notices of appearance, address changes, and 

claims-related pleadings and orders filed and make necessary notations on and/or 

changes to the claims register and any service or mailing lists, including to 

identify and eliminate duplicative names and addresses from such lists; 

o. assist in the dissemination of information to the public and respond to requests for 

administrative information regarding these Chapter 11 Cases as directed by the 

Debtors or the Court, including through the use of a case website and/or call 

center; 

p. provide docket updates via email to parties who subscribe for such service on the 

Debtors’ case website; 

q. comply with applicable federal, state, municipal, and local statutes, ordinances, 

rules, regulations, orders, and other requirements in connection with the services 

rendered pursuant to the Engagement Letter; 

r. if these Chapter 11 Cases are converted to cases under chapter 7 of the 

Bankruptcy Code, contact the Clerk within three (3) days of notice to Stretto of 

entry of the order converting the cases; 

s. thirty (30) days prior to the close of these Chapter 11 Cases, to the extent 

practicable, request that the Debtors submit to the Court a proposed order 

dismissing Stretto as claims, noticing, and solicitation agent and terminating its 

services in such capacity upon completion of its duties and responsibilities and 

upon the closing of these Chapter 11 Cases; 

t. within seven (7) days of notice to Stretto of entry of an order closing these 

Chapter 11 Cases, provide to the Court the final version of the Claims Registers 

as of the date immediately before the close of the cases; and 

u. at the close of these Chapter 11 Cases: (i) box and transport all original 

documents, in proper format, as provided by the Clerk, any location requested by 

the Clerk; and (ii) docket a completed SF-135 Form indicating the accession and 

location numbers of the archived claims. 

6. Paragraph 20 of the Application sets forth Stretto’s Solicitation Agent services:

a. assist the Debtors with, among other things, plan-solicitation services including: (i) 

balloting; (ii) distribution of applicable solicitation materials; (iii) tabulation and 

calculation of votes; (iv) determining with respect to each ballot cast, its timeliness 

and its compliance with the Bankruptcy Code, Bankruptcy Rules, and procedures 

ordered by the Court; (v) preparing an official ballot certification and testifying, if 

necessary, in support of the ballot tabulation results; and (vi) in connection with the 

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foregoing services, process requests for documents from parties in interest, 

including, if applicable, brokerage firms, bank back-offices and institutional 

holders; 

b. if requested, assist with the preparation of the Debtors’ Schedules and gather data 

in conjunction therewith; 

c. provide a confidential data room, if requested; 

d. coordinate publication of certain notices in periodicals and other media; 

e. manage and coordinate any distributions pursuant to a chapter 11 plan; and 

f. provide such other claims, noticing, processing, solicitation, balloting, and other 

administrative services described in the Engagement Letter, that may be requested 

from time to time by the Debtors, the Court, or the Clerk. 

7. Stretto seeks for its fees to be treated as an administrative expense claim under 11 

U.S.C. § 503(b)(1)(A). Stretto will bill the state monthly for the prior month and will provide its 

invoices to the United States Trustee, Debtors’ counsel, committee counsel, and to any party that 

specifically requests the invoices. Application, ¶ 21. “If any dispute arises relating to the 

Engagement Letter or monthly invoices, the parties shall meet and confer in an attempt to resolve 

the dispute. If resolution is not achieved, the parties may seek resolution of the matter from the 

Court.” Application, ¶ 22.

Argument and Authority 

8. Stretto, as the Applicant, bears the burden of establishing that its employment terms 

are reasonable. In re Troung, 259 B.R. 264, 268 (Bankr. D. N.J. 2001). Stretto is overseen by 

attorneys and financial professionals, and its services implicate legal compliance. Here, the 

monthly fee procedures without a mechanism for holdback and final Court review are improper 

under the facts of this case.

9. “Except as otherwise provided in [section 327], the trustee, with the court’s 

approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other 

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professionals persons, that do not hold or represent an interest adverse to the estate, and that are 

disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under this 

title.” 11 U.S.C. § 327(a).

10. The Court has broad discretion when examining fee and employment application. 

See, e.g., Arens v. Broughton (In re Prudhomme), 43 F.3d 1000, 1003 (5th Cir. 1995).

11. Section 330(a)(1) provides that, after notice and a hearing, the Court may award a 

professional person “reasonable compensation for actual, necessary services rendered by [the 

professional]” and reimbursement of actual, necessary expenses.

12. In determining the reasonableness of such fees, the court should consider “the 

nature, the extent, and the value of such services, taking into account all relevant factors, 

including”

a. The time spent on such services; 

b. The rates charged for such services; 

c. Whether the services were necessary to or beneficial to the administration of the 

bankruptcy case; 

d. Whether the services were performed within a reasonable period of time 

commensurate with the complexity, importance and nature of the task; 

e. Whether the professional is board certified or has otherwise demonstrated 

experience in the bankruptcy field; and 

f. Whether the compensation is reasonable based on the customary compensation 

charged by comparable skilled practitioners. 11 U.S.C. § 330(a)(3). 

13. Certain of the services contemplated to be provided by Stretto are administrative 

functions of the Clerk of the Court. Others, such as the Solicitation Services and noticing of all of 

the Debtors’ notices and pleading, are the type of professional services that are provided by 

debtor’s counsel (the “Attorney Adjacent Services”) – and thus subject to fee application – in cases 

that do not have a claim and noticing agent. Accordingly, allowing Stretto not to file a fee 

application for the Attorney Adjacent Services when similar services performed by debtor’s 

counsel would be subject to fee application in other cases holds the fees for Stretto’s Attorney 

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Adjacent Services to a different standard than if the same services were performed by Debtors’ 

counsel.

14. Currently, Stretto contemplates that any issue with its monthly fees must be raised 

in court. Stretto does not propose a holdback as is generally contemplated with regard to interim 

fee procedures for other professionals. It is unclear who carries the burden to file the request for 

hearing before the Court if there is a dispute concerning Stretto’s fees. The Court should mirror 

the fee procedures for other professionals and require that Stretto hold back a portion of its monthly 

fee pending objection and review. 

15. By requesting that Stretto be excused from the requirement to file a fee application, 

the Debtors are seeking to take away from this Court’s authority to review Stretto’s fees for its 

Attorney Adjacent Services reasonableness. In re Mirant Corp., 354 B.R. 113, 128 (Bankr. N.D. 

Tex. 2006). The best measure of a professional’s contribution to a plan process is the value of their 

contribution to the case. In re Mirant Corp., 354 B.R. at 129. In the present case, the Stretto’s 

fees for its Attorney Adjacent Services will be the best measure of the reasonableness of those 

fees.

16. Because Stretto’s work is more tailored in nature than other professionals, the 

United States Trustee requests that Stretto file a final fee application only in the present case.

Wherefore, the United States Trustee requests that the Court enter an order sustaining this 

limited objection and granting to the United States Trustee such other and further relief as is just 

and proper. 

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DATED: December 11, 2024 Respectfully submitted, 

LISA L. LAMBERT 

UNITED STATES TRUSTEE 

 /s/ Meredyth A. Kippes 

 Meredyth A. Kippes 

 Trial Attorney 

 Texas State Bar No. 24007882 

 Office of the United States Trustee 

1100 Commerce Street, Room 976 

Dallas, Texas 75242 

(214) 767-1079 

meredyth.kippes@usdoj.gov 

 

Certificate of Service 

 The undersigned counsel certifies that copies of the foregoing document were served on 

December 11, 2024 via ECF to those parties requesting service via ECF in this case and to the 

parties listed below via electronic mail. 

 /s/ Meredyth A. Kippes 

 Meredyth A. Kippes 

CareMax, Inc. 

1000 NW 57 Court, Suite 400 

Miami, Florida 33126 

Attn: Paul Rundell, Chief Restructuring Officer 

prundell@alvarezandmarsal.com 

SIDLEY AUSTIN LLP 

Thomas R. Califano (24122825) 

Juliana L. Hoffman (24106103) 

2021 McKinney Avenue, Suite 2000 

Dallas, Texas 75201 

tom.califano@sidley.com 

jhoffman@sidley.com 

SIDLEY AUSTIN LLP 

Stephen E. Hessler 

Anthony R. Grossi 

Jason L. Hufendick 

787 Seventh Avenue 

New York, New York 10019 

shessler@sidley.com 

agrossi@sidley.com 

jhufendick@sidley.com 

Boris I. Mankovetskiy 

Sill Cummis & Gross P.C. 

The Legal Center, One Riverfront Plaza 

Newark, NJ 07102 

bmankovetskiy@sillscummis.com 

Robert J. Feinstein 

Pachulski Stang Ziehl & Jones LLP 

780 Third Avenue, 34th Floor 

New York, NY 10017 

rfeinstein@pszjlaw.com 

Bradford J. Sandler 

Pachulski Stang Ziehl & Jones LLP 

780 Third Avenue, 34th Floor 

New York, NY 10017 

bsandler@pszjlaw.com 

Michael D. Warner 

Pachulski Stang Ziehl & Jones LLP 

735 Plaza Blvd., Suite 200 

Coppell, TX 75019 

Michael D. Warner 

Pachulski Stang Ziehl & Jones LLP 

700 Louisiana Street, Suite 4500 

Houston, TX 77002 

mwarner@pszjlaw.com 

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