In Re Energy Partners, Ltd.

MEMORANDUM OPINION ON: (1) EMERGENCY APPLICATION OF THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF TUDOR PICKERING HOLT & CO. SECURITIES, INC. AS VALUATION CONSULTANT FOR THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS NUNC PRO TUNC TO JUNE 30, 2009; AND (2) EXPEDITED APPLICATION FOR AN ORDER TO RETAIN AND EMPLOY HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL, INC. AS FINANCIAL ADVISORS TO THE OFFICIAL COMMITTEE OF UNSECURED NOTEHOLDERS OF ENERGY PARTNERS, LTD., ET AL., NUNC PRO TUNC TO THE EFFECTIVE DATE

I. Introduction

Oblivious to recent congressional and public criticism over executives of publicly-held corporations who are paid monumental salaries and bonuses despite running their companies into the ground, two investment banking firms now come into this Court requesting that they be employed under similarly outrageous terms. They do so because two committees in this Chapter 11 case have filed applications to employ these investment banking firms to perform valuation services even though two other independent firms have already performed similar valuations. These investment bankers, who wish to have their fees and expenses paid out of the debtor’s estate, have sworn under oath that they will render services only if they immediately receive a nonrefundable fee aggregating $1.0 million. This Court declines the opportunity to endorse such arrogance. The purse is too perverse.

The committees’ request to hire the most expensive investment bankers at virtually nondisgorgable and astronomically high fees is tantamount to a debtor chartering a private jet to travel to a meeting of creditors. While this hypothetical debtor may well need transportation in order to attend the meeting, just as the committees in the case at bar may legitimately believe they each need an independent valuation consultant, both have requested the most inordinately expensive means by which to achieve their objectives. To approve such a request runs contrary to a fundamental principle of bankruptcy: that a debtor and all professionals associated with the case should act with a measure of frugality in order to preserve the estate’s assets and thereby maximize the chances for a successful reorganization. As one bankruptcy court has noted:

The Court is willing to award fees for diligence, experience, skill and results. The result obtained is a major factor in awarding professional fees. The main goal of Chapter 11 apart from a successful reorganization of a debtor is a maximum distribution to the creditors of the estate. Ultimately, that is the benchmark against which success or failure must be judged. More often than not, a debtor is experiencing serious financial difficulty, if not near a point of total *216 collapse. The bankruptcy estate is distinct from all other nonbankruptcy clients. It is not principally to serve as a fund for payment of professional fees. It is finite, rarely expands over time, possesses limited cash and usually has diminishing prospects despite high expectations. The estate is not a cash cow to be milked to death by professionals seeking compensation for services rendered to the estate which have not produced a benefit commensurate with the fees sought.

In re Chas. A. Stevens & Co., 105 B.R. 866, 871-72 (Bankr.N.D.Ill.1989).

It is noteworthy that excessive and unwarranted expenditures and “spare no expense” attitudes are what frequently land companies in bankruptcy in the first place. To countenance such practices in this case while the debtor entity — indeed, a publicly-held entity — struggles to reorganize in Chapter 11 would undermine the integrity of the bankruptcy process.

On July 16, 2009, the Court made an oral ruling on the record regarding the two applications that had been filed requesting the absurd payment terms. Specifically, the Court issued its ruling on: (1) the “Emergency Application of the Official Committee of Equity Security Holders for Entry of an Order Authorizing the Employment and Retention of Tudor Pickering Holt & Co. Securities, Inc. as Valuation Consultant for the Official Committee of Equity Security Holders Nunc Pro Tunc to June 30, 2009” (the Tudor Pickering Application), [Docket No. 304]; and (2) the “Expedited Application for an Order to Retain and Employ Houlihan Lokey Howard & Zukin Capital, Inc. as Financial Advisors to the Official Committee of Unsecured Noteholders of Energy Partners, Ltd., et al., Nunc Pro Tunc to the Effective Date” (the Houlihan Lokey Application), [Docket No. 309], (collectively, the Applications).

The Court now memorializes its oral findings of fact and conclusions of law with the written findings of fact and conclusions of law set forth herein. 1 To the extent that this Court’s oral findings of fact and conclusions of law conflict, or are inconsistent with, any of the written findings of fact and conclusions of law set forth herein, the latter shall govern. Further, to the extent that these written findings of fact and conclusions of law do not memorialize all of the oral findings of fact and conclusions of law, then those oral findings of fact and conclusions of law not memorialized are incorporated herein as if fully set forth in writing so long as they do not conflict, or are inconsistent, with the written findings of fact and conclusions of law.

The Court makes these findings of fact and conclusions of law pursuant to Federal Bankruptcy Rules 7052 and 9014. 2 To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such. Moreover, to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves its right to make additional find *217 ings of fact and conclusions of law as it deems appropriate or as may be requested by any of the parties.

II. Findings op Fact

On May 1, 2009, Energy Partners, Ltd. (the Debtor), a publicly-held entity in the oil and gas industry, filed a voluntary Chapter 11 petition on behalf of itself and its affiliated entities. 3 [Docket No. 1.] Eleven days thereafter, the Debtor filed an Expedited Application for Order Pursuant to 11 U.S.C. §§ 327(a) and 328(a) Authorizing Employment and Retention of Parkman Whaling LLC as Financial Ad-visors for the Debtors, Nunc Pro Tunc to the Petition Date (the Application to Employ Parkman Whaling). [Docket No. 122.] In its Order granting the Application to Employ Parkman Whaling, the Court expressly approved the terms of the engagement letter between the Debtor and Parkman Whaling. The amount of monthly compensation that this Court approved is $75,000.00, plus expenses. 4 The professional services that Parkman Whaling LLC (Parkman Whaling) has provided include, among other things, developing an enterprise valuation of the Debtor.

On May 27, 2009, the Court issued an Order Granting Motion to Establish Procedure for Monthly and Interim Compensation and Reimbursement of Expenses for Case Professionals (the Procedure for Professionals Order). [Docket No. 173.] Pursuant to the Procedure for Professionals Order, all professionals retained by the estate in these jointly administered cases may seek interim compensation on a monthly basis, subject to (a) a 20% hold-back of monthly fees incurred, (b) any party-in-interest’s right to object to the compensation sought, and (c) the obligation to file quarterly fee applications. [Docket No. 173, pp. 2-3.] The Procedures for Professionals Order operates in conjunction with the Agreed Final Order (I) Authorizing the Debtors’ Use of Cash Collateral and (II) Granting Adequate Protection issued by this Court on June 11, 2009 (the Cash Collateral Order). [Docket No. 220.] The Cash Collateral Order contains a budget, which is set forth on Exhibit A attached to the Cash Collateral Order, which must be strictly complied with (the Budget). This Budget provides that for the period July 13, 2009 through July 31, 2009, the maximum amount of cash collateral that may be used to pay consultants— a category which includes investment banking firms — is $84,000.00. [Docket No. 220, Ex. A]

The Office of the United States Trustee has appointed an Official Committee of Unsecured Noteholders (the Unsecured Noteholders’ Committee), 5 [Docket No. 193], and an Official Committee of Equity Security Holders (the Equity Holders’ Committee) 6 [Docket No. 268],

On May 15, 2009, the Debtor filed its initial Disclosure Statement. [Docket No. *218 134.] Birch Run Capital, LLC (Birch Run) thereafter filed its Objection to this Disclosure Statement. [Docket No. 209.] Birch Run owns stock in the Debtor and is a party-in-interest, which will apparently participate in the plan confirmation process. [Docket No. 222, p. 84.] Among other things, Birch Run objects to Parkman Whaling’s valuation of the Debtor and has argued that since Parkman Whaling’s March 31, 2009 valuation, the spot price of oil has increased and forward price curves for both oil and natural gas have increased significantly; therefore, according to Birch Run, Parkman Whaling’s valuation is too low and out-dated. [Docket No. 209, ¶ 3-5.]

On June 11, 2009, the Debtor filed its Second Amended Joint Plan of Reorganization (the Second Amended Plan), [Docket No. 223], and its Second Amended Disclosure Statement (the Second Amended Disclosure Statement), [Docket No. 222], Under the Second Amended Plan, Class 9-EPL Other Equity Interests will be “can-celled” and equity holders with interests in that class will “not receive or retain any property or interest in property on account of their EPL Other Equity Interests.” [Docket No. 223, pp. 22-23.]

This Court has approved the Second Amended Disclosure Statement and has set the confirmation hearing for July 29, 2009. [Docket No. 231.] The Second Amended Disclosure Statement references two valuation reports for the Debtor’s assets: (1) the Parkman Whaling report; and (2) the Birch Run report. Parkman Whaling’s enterprise valuation of the Debt- or ranges “from $576 million to $671 million, with a midpoint of $624 million.” [Docket No. 222, p. 77.] Parkman Whaling has also concluded that no residual value is available for the eligible equity interests. [Docket No. 222, p. 76.] Parkman Whaling has listed in its appraisal of the Debtor a “realizable value for the New EPL [i.e. the Reorganized Debtor] Common Stock of $499 million.” [Docket No. 222, p. 77.] Although the Debtor vehemently disagrees with the Birch Run valuation, [Docket No. 222, pp. 89-90], Birch Run’s alternative valuation analysis is included in the Second Amended Disclosure Statement pursuant to a ruling from this Court. [Docket No. 222, pp. 84-89.] According to Birch Run’s valuation report, “the current EPL Common Shares are estimated to be worth in excess of $212 million” whereas “Parkman Whaling estimates the current value of these interests at zero ($0).” [Docket No. 222, p. 88.] The Debtor states in the Second Amended Disclosure Statement that “the closing share price for EPL Common Stock Interests on June 8, 2009 was $0.12 per share, for a total market capitalization of approximately $3.85 million or an amount approximately $208 million less than the equity value asserted by Birch Run.” [Docket No. 222, pp. 89-90.] Thus, these two reports reflect a clear and distinct disagreement over the value of the Debtor’s common stock.

On July 13, 2009, the Equity Holders’ Committee filed the Tudor Pickering Application. [Docket No. 304.] The proposed fee terms in the Tudor Pickering Application are as follows: (a) a nonrefundable advisory fee of $500,000.00 payable pursuant to the Court’s Procedure for Professionals Order; (b) a nonrefundable expert witness fee of $25,000.00 per day, payable each day that a Tudor Pickering Holt & Co. Securities, Inc. (Tudor Pickering) employee is requested, and made available, for the purpose of deposition or testimony; (c) a nonrefundable extended assignment fee of $100,000.00 per month, payable beginning September 1, 2009, and each month thereafter; and (d) any out-of- *219 pocket expenses. 7 [Docket No. 304, ¶ 13.] According to the Tudor Pickering Application, the services Tudor Pickering will render to the Equity Holders’ Committee include, but are not limited to, the following: (a) analyzing the Debtor’s assets and liabilities, the valuation of the Debtor’s businesses and objecting to the plan of reorganization; 0^) attending meetings and negotiating with representatives of the Debtor and creditors; (c) assisting in the review, analysis, and negotiation of the plan of reorganization; (d) appearing before this Court and other courts and protecting the Equity Holders’ Committee’s interests; and (e) performing all other necessary valuation services in this case. [Docket No. 304, ¶ 11.] The engagement letter for Tudor Pickering is attached to the Application to Employ Tudor Pickering. [Docket No. 304-3.]

On July 14, 2009, the Unsecured Note-holders’ Committee filed the Houlihan Lo-key Application. [Docket No. 309.] The fee terms proposed in the Houlihan Lokey Application are as follows: (a) a nonrefundable initial fee of $500,000.00; (b) a nonrefundable additional fee of $100,000.00 for August 1, 2009 through August 15, 2009; (c) a nonrefundable additional fee of $100,000.00 for August 16, 2009 through August 31, 2009; and (d) any out-of-pocket business expenses. [Docket No. 309, ¶ 16.] According to the Houlihan Lokey Application and that firm’s engagement letter, the services Houlihan Lokey Howard & Zukin Capital, Inc. (Houlihan Lokey) will render to the Unsecured Noteholders’ Committee include, but are not limited to, the following: (a) evaluating the Debtor’s debt capacity and enterprise valuation; (b) analyzing the Debtor’s business plans and forecasts; (c) evaluating the Debtor’s assets and liabilities; (d) analyzing and reviewing the Debtor’s financial and operating statements; (e) assessing the financial issues and options concerning the Debtor’s Chapter 11 plan of reorganization or liquidation; (f) providing financial analyses; (g) negotiating with the Debtor and third parties; and (h) providing testimony in court and in depositions. [Docket No. 309, ¶ 15.] The engagement letter between Houlihan Lokey and the Unsecured Noteholders’ Committee is attached to the Houlihan Lokey Application as “Exhibit B.” [Docket No. 309, pp. 30-37.]

On July 14, 2009, Bank of America, N.A., as agent for itself and on behalf of the Prepetition Secured Lenders, (the Agent) filed its objections to the Applications. [Docket Nos. 310 & 311.] The Agent’s objections are four-fold: (1) the proposed fees are too high; (2) the proposed fees are nonrefundable; (3) the proposed fees are to be paid from the Debt- or’s cash collateral on which the Agent has a lien; and (4) the amount of cash collateral that would have to be used to pay the fees would violate the limitations set forth in the Budget for paying consultants.

On July 15, 2009, the Official Committee of Unsecured Creditors (the Unsecured *220 Creditors’ Committee) 8 also filed objections to the Applications. [Docket Nos. 315 & 316.] The Unsecured Creditors’ Committee essentially objects that the proposed fees are too high and nonrefundable.

On July 15, 2009, this Court held a hearing on, among other things, the Applications. In support of the Houlihan Lokey Application, the Court heard testimony from Adam Lee Dunayer (Dunayer), a manager at Houlihan Lokey. In support of the Tudor Pickering Application, the Court heard testimony from two witnesses: (1) Donald Randolph Waesche (Waesche), a shareholder of the Debtor and chairman of the Equity Holders’ Committee; and (2) Lance Gilliland (Gilliland), an investment banker and partner at Tudor Pickering.

Tom A. Howley (Howley), counsel for the Unsecured Noteholders’ Committee, proffered the testimony of Dunayer in support of the Houlihan Lokey Application. Dunayer gave no testimony regarding Houlihan Lokey’s hourly rates and made no comparison of fees Houlihan Lokey charges for similar projects within similar time frames. Dunayer merely listed other matters where Houlihan Lokey has been retained. [Tape recording of July 15, 2009 hearing at 11:11 a.m.] The proffered testimony indicated that the engagement letter “was the culmination of robust negotiations between the Unsecured Noteholders’ Committee and Houlihan Lokey” and that the proposed fees were “vigorously negotiated.” [Tape recording of July 15, 2009 hearing at 11:12 a.m.] Additionally, the testimony indicated that section “328(a) is a prerequisite for Houlihan to swoop in here and provide this service.” [Tape recording of July 15, 2009 hearing at 11:13 a.m.]

Howley represented to this Court that in March 2009, the Unsecured Noteholders’ Committee considered hiring an investment banking firm but at that time decided not to do so. However, Howley stated that in the wake of the Equity Holders’ Committee seeking to engage an investment banker, the Unsecured Noteholders’ Committee concluded that it had no choice but to engage its own investment banker in order to be ready to rebut any appraisal testimony that the Equity Holders’ Committee might adduce from its own investment banker.

Additionally, Howley stated that the Unsecured Noteholders’ Committee has already decided to vote for the Second Amended Plan but disagrees with the existing competing valuations and strongly disputes that there is equity in the Debtor. Specifically, Howley represented to the Court the following:

The [Unsecured] Noteholders’ Committee has really been conscious of costs since the beginning of its formation ... given the amount at stake here. The Noteholders collectively are owed $450,000,000.00 and could have easily justified the retention of a financial ad-visor dating back to March of this year, but the [Unsecured] Noteholders’ Committee, conscious of cost, declined at that point to hire a financial advisor. The primary driver of this application is the recent formation of the Equity Committee and their announced intention to hire a valuation consultant and, at a minimum, engage in discussions about valuation and the potential for litigation over valuation.... We need approval today, your Honor, to hire a financial advisor. Everyday between now and confirmation hearing is critical to get prepared to *221 engage in negotiations or potential litigation if we have to over the plan confirmation. And we need that financial ad-visor hired pursuant to 328(a). I think it’s critical in this type of project for this financial advisory firm to swoop in here and get ready.... They’re going to have to take people off existing projects and devote themselves full-time to this project. In order to do that, Judge, they need the assurance that they are going to get paid at the end of the day and that’s where 328(a) comes in and that’s where it is regularly used to provide that assurance.

[Tape recording of July 15, 2009 hearing at 12:07 p.m.]

Howley further represented that:

The lack of objection from the [Unsecured] Noteholders’ [Committee] should not be construed as any, any message that there is equity value here. We strongly dispute that. There has also been some references here today that the noteholders, you know, are simply on board with Parkman Whaling’s valuation. That’s not correct either, your Honor. What we’re on board with is the plan and the treatment afforded the noteholders. That’s separate and apart from the valuation that Parkman has put out there. We are not on board with Parkman Whaling’s valuation at this point. That’s why we’re hiring our own expert to independently conduct a valuation. But just in summary, your Honor, we are not objecting to Tudor Pickering, but that should not be misconstrued that we in any way recognize that there is equity value here.

[Tape recording of July 15, 2009 hearing at 12:11 p.m.]

With respect to the Tudor Pickering Application, Waesche testified that the Equity Holders’ Committee had investigated “a dozen” investment banking firms and negotiated seriously with three to four firms. The fees at the other firms which the Equity Holders’ Committee investigated ranged from hourly rates to a $1.0 million flat fee. The Equity Holders’ Committee chose Tudor Pickering because of that firm’s “attractive fee level” and its “concentration in oil and gas.” [Tape recording of July 15, 2009 hearing at 11:52 a.m.] When the Debtor’s counsel asked Waesche why the Equity Holders’ Committee is not satisfied to use the higher valuation from Birch Run in the plan confirmation process, Waesche testified that Birch Run was not an oil and gas “expert” or “in the business of valuation.” [Tape recording of July 15, 2009 hearing at 11:56 a.m.] Waesche testified that the Equity Holders’ Committee wants a “reputable valuation” of the Debtor.

Gilliland testified that Tudor Pickering has been in existence for approximately six years and has operated as an investment banking firm with a focus on the energy industry for approximately two and a half years. [Tape recording of July 15, 2009 hearing at 12:03 p.m.] He stated unequivocally that the terms in the engagement letter are typical in the industry and the proposed fees are even lower than some of the other fee arrangements that Tudor Pickering has negotiated in similar situations.

At the close of the hearing on July 15, 2009, the Court took the matter under advisement.

On July 16, 2009, the Court held a hearing and announced its ruling denying the Tudor Pickering Application and the Houl-ihan Lokey Application. This Memorandum Opinion memorializes that oral ruling.

III. CREDIBILITY OF WITNESSES

At the hearing held on July 15, 2009, the Court heard testimony from three witnesses: (1) Dunayer; (2) Waesche; and (3) *222 Gilliland. The Court finds most of their testimony to be conclusory, scant, and self-serving on certain key points.

IV. Conclusions op Law

A. Jurisdiction and Venue

The Court has jurisdiction over these contested matters pursuant to 28 U.S.C. §§ 1334(b), 157(a), and 157(b)(1). These contested matters are core proceedings pursuant to 28 U.S.C. §§ 157(b)(2)(A), (M), and (0). Additionally, these matters are core proceedings under the general “catchall” language of 28 U.S.C. § 157(b)(2). See In re Southmark Corp., 163 F.3d 925, 930 (5th Cir.1999) (“[A] proceeding is core under section 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case.”); In re Ginther Trusts, No. 06-3556, 2006 WL 3805670, at *19 (Bankr.S.D.Tex. Dec.22, 2006) (holding that a matter may constitute a core proceeding under 28 U.S.C. § 157(b)(2) “even though the laundry list of core proceedings under § 157(b)(2) does not specifically name this particular circumstance”). Venue is proper pursuant to 28 U.S.C. § 1408(1).

B. Brief Summary of the Dispute at Bar

Two valuation reports concerning the Debtor already exist: (1) the Parkman Whaling report; and (2) the Birch Run report. 9 It is not uncommon to have competing valuations of the Debtor in Chapter 11 cases. Birch Run disagrees with Parkman Whaling’s valuation of the Debtor’s assets. Birch Run argues that the Parkman Whaling valuation, which was prepared on March 31, 2009, is out-dated and too low given that the spot price of oil has increased and the forward price curves for both oil and natural gas have increased significantly. Birch Run’s report indicates that the Debtor’s equity value is approximately $212 million whereas Parkman Whaling’s report values the equity at zero. The Debtor strongly disagrees with the Birch Run valuation and, as of July 15, 2009, believes that there is no equity value. The Birch Run report, if accurate, would allow the Class 9-EPL Other Equity Interests to be paid rather than be “can-celled” and “not receive or retain any property or interest in property on account of their EPL Other Equity Interests.” [Docket No. 223, p. 23.]

The Equity Holders’ Committee, believing that there is equity in the Debtor but dissatisfied with the credentials of those who prepared the Birch Run valuation, filed the Tudor Pickering Application requesting permission to employ Tudor Pickering to conduct an independent valuation. Meanwhile, counsel for the Unsecured Noteholders’ Committee, Howley, represented to this Court that the Unsecured Noteholders’ Committee, which believes there is no equity, is convinced it must retain Houlihan Lokey in order to obtain an appraisal that will rebut the anticipated valuation that Tudor Pickering will produce. Thus, just as the Equity Holders’ Committee mistrusts the Birch Run report even though that report espouses a position (i.e. the Debtor has equity) that supports this particular committee’s goals, the Unsecured Noteholders’ Committee is dissatisfied with the Parkman Whaling report even though that report espouses a position (i.e. there is no equity) that supports that committee’s objective.

The Agent and the Unsecured Creditors’ Committee have lodged objections to the *223 Applications. If the Court approves the Applications, then Tudor Pickering and Houlihan Lokey will, among other things, generate two more valuation reports. These two investment banking firms have made it clear that they will only agree to be employed in this case for huge, guaranteed fees under § 328(a) even though, at the time the Applications were filed, the Procedure for Professionals Order and the Cash Collateral Order, which contains the Budget, were already in place governing the retention, compensation levels, and actual payment of compensation of professionals in this case. 10

C. Whether Houlihan Lokey and Tudor Pickering Should be Employed Pursuant to 11 U.S.C. § 328

Section 328 was added to the Bankruptcy Code in 1978. Prior to 1978, some professionals refused to work for bankruptcy estates because their compensation could potentially be changed by a bankruptcy judge after the professionals had completed the work. 11 Nat’l Gypsum Co., 123 F.3d 861, 862 (5th Cir.1997). Now, however, § 328 protects professionals from such uncertainties by allowing them to obtain prior approval of their compensation plan from the bankruptcy court. Id. at 863. Once a bankruptcy court approves a professional’s compensation under § 328, only extremely limited circumstances warrant altering that compensation. Specifically, § 328(a) states:

[t]he trustee, or a committee appointed under section 1102 of this title, with the court’s approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.

11 U.S.C. § 328(a) (emphasis added). Section “328(a) is the provision which iterates terms under which a trustee, debtor in possession or committee can employ a professional. It is not itself a separate source of employment approval. If such terms and conditions are not reasonable, the bankruptcy judge may exercise his discretion, and deny the employment under 11 U.S.C. § 1103(a).” Unsecured Creditors’ Comm., Houlihan, Lokey, Howard & Zukin Fin. Advisors, Inc. v. Joel Pelofsky, United States Trustee (In re Thermadyne Holdings Corp., et al), 283 B.R. 749, 755 n. 9 (8th Cir.BAP2002).

Section 1103(a) states:

(a) At a scheduled meeting of a committee appointed under section 1102 of this title, at which a majority of the members of such committee are present, and with the court’s approval, such committee may select and authorize the employment by such committee of one or more *224 attorneys, accountants, or other agents, to represent or perform services for such committee.

11 U.S.C. § 1103(a) (emphasis added). The Court concludes that the term “other agents” includes professionals such as investment banking firms. See In re Farmland Indus., Inc., 286 B.R. 895, 897 n. 3 (Bankr.W.D.Mo.2002), aff'd, 296 B.R. 188 (8th Cir.BAP2003), aff'd, 397 F.3d 647 (8th Cir.2005) (“There is no debate that employment of a financial advisor is authorized under § 1103, or that Houlihan Lokey was not properly employed pursuant to that section.”); see In re Thermadyne Holdings Corp., 283 B.R. at 755 (discussing how the bankruptcy court exercised its discretion under § 1103(a) in denying the employment arrangement of Houlihan Lokey). Thus, here, the Unsecured Noteholders’ Committee and the Equity Holders’ Committee may certainly seek to obtain this Court’s approval of Houlihan Lokey and Tudor Pickering, respectively, to provide services and counsel to them in this case.

The parties who file the applications to employ — here, the Unsecured Noteholders’ Committee and the Equity Holders’ Committee — -have the burden to prove that the investment bankers should be retained. See In re Interwest Bus. Equip., Inc., 23 F.3d 311, 318 (10th Cir. 1994) (“An applicant under § 327(a) has the burden of establishing by application and accompanying affidavit that its chosen professional is qualified.”); see also In re Metricom, Inc., 275 B.R. 364, 371 (Bankr. N.D.Cal.2002) (holding that the proponent of the application has the burden to prove that the indemnity terms of employment are reasonable as required by § 328(a)). Thus, these two committees had the burden at the July 15, 2009 hearing to prove by a preponderance of evidence that Houli-han Lokey and Tudor Pickering should be employed under § 328(a).

This Court does not take § 328(a) applications lightly because “[o]nee the bankruptcy court has approved a rate or means of payment, such as a contingent fee, the court cannot on the submission of the final fee application instead approve a ‘reasonable’ fee under § 330(a), unless the bankruptcy court finds that the original arrangement was improvident due to unanticipated circumstances as required by § 328(a).” In re Tex. Sec., Inc., 218 F.3d 443, 445-46 (5th Cir.2000) (citing In re Nat’l Gypsum Co., 123 F.3d at 862-63); XO Commc’ns, Inc., 323 B.R. 330, 339 (Bankr.S.D.N.Y.2005) (“Under section 328(a), a [bankruptcy] court may not revisit its prior determination as to the reasonableness of an agreement previously approved unless it determines that the terms and conditions proved to be improvident at the time approved in light of then-unforeseen circumstances.”); In re High Voltage Eng’g Corp., 311 B.R. 320, 332 (Bankr. D.Mass.2004) (“Once a fee arrangement is approved under § 328, the ability of the bankruptcy court, as well as creditors and parties in interest, to review the amount of compensation payable to the professional is circumscribed.”). Section 328(a) requires that subsequent developments rendering the fee arrangement improvident must be unforeseeable, not merely unanticipated, and therefore granting any requested modification to the fee agreement is very unlikely. See Daniels v. Barron, et al. (In re Barron), 325 F.3d 690, 693-94 (5th Cir.2003); XO Commc’ns, Inc., 323 B.R. at 339 (“A finding of improvidence pursuant to section 328 is a difficult determination to make and therefore, courts rarely disturb the original terms and conditions of a professional’s employment.”); In re Amberjack Interests, 326 B.R. 379, *225 387 (Bankr.S.D.Tex.2005) (noting the Fifth Circuit’s stringent interpretation of § 328).

Indeed, the Fifth Circuit has interpreted § 328 as follows:

We have interpreted § 328 to limit the power of the bankruptcy court to alter the compensation of professionals: “[t]he court must therefore set the compensation award either according to § 328 or § 330. If prior approval is given to a certain compensation, § 328 controls and the court starts with that approved compensation, modifying it only for developments unforeseen when originally approved."

In re Tex. Sec., Inc., 218 F.3d 443, 445 (5th Cir.2000) (quoting In the Matter of Nat’l Gypsum Co., 123 F.3d 861, 862-63 (5th Cir.1997)) (emphasis added).

Therefore, this Court, in its duties as a gatekeeper, 12 must have a sufficiently strong record when deciding whether to approve a professional under § 328(a). See In re High Voltage Eng’g Corp., 311 B.R. at 333 (holding that a committee seeking to retain the professional must present evidence not conclusory statements). Unfortunately for the two investment banking firms now seeking employment in this case, the Court has a woefully insufficient record.

1. Factors Governing Whether Professionals Should be Employed Pursuant to § 328(a)

In High Voltage Engineering Corp., the Bankruptcy Court for the District of Massachusetts drew two conclusions from the growing body of case law construing § 328(a). First, “a bankruptcy court has an obligation to determine the reasonableness of terms and conditions before authorizing the employment of professionals un *226 der § 328(a) and may eliminate, modify, or impose additional terms and conditions to satisfy the requirement of reasonableness.” Id. at 333. Second, “once approved, the terms and conditions cannot be modified without a finding they were improvident.” Id. Therefore, “the trustee or committee seeking the employment of professionals under § 328(a) must establish that the terms and conditions of employment are reasonable, and evidence, not conclusory statements, is required to satisfy that burden.” Id. (emphasis added).

In that same case, the court also set forth a non-exclusive list of factors, established by the Bankruptcy Court for the District of Delaware in Insilco Technologies, Inc., which should be considered when determining whether to approve employment subject to § 328(a):

(1) whether terms of an ■ engagement agreement reflect normal business terms in the marketplace; (2) the relationship between the Debtor and the professionals, i.e., whether the parties involved are sophisticated business entities with equal bargaining power who engaged in an arms-length negotiation; (3) whether the retention, as proposed, is in the best interests of the estate; (4) whether there is creditor opposition to the retention and retainer provisions; and (5) whether, given the size, circumstances and posture of the case, the amount of the retainer is itself reasonable, including whether the retainer provides the appropriate level of “risk minimization,” especially in light of the existence of any other “risk-minimizing” devices, such as an administrative order and/or a carve-out.

In re High Voltage Eng’g Corp., 311 B.R. at 333 (quoting In re Insilco Techs., Inc., 291 B.R. 628, 633 (Bankr.D.Del.2003)).

The Court will apply the nonexclusive list of factors to determine whether to approve the Applications subject to § 328(a). In re High Voltage Eng’g Corp., 311 B.R. at 333 (quoting In re Insilco Techs., Inc., 291 B.R. 628, 633 (Bankr. D.Del.2003)). “This list is not intended to be exhaustive, nor will every factor necessarily be of equal weight, depending upon the circumstances.” In re Insilco Techs., Inc., 291 B.R. at 634.

a. Whether the terms of an engagement agreement reflect normal business terms in the marketplace

First, Houlihan Lokey and Tudor Pickering contend that the terms of their respective engagement agreements are standard in the marketplace.

In In re Metricom, Inc., the bankruptcy court rejected a § 328 application to employ Houlihan Lokey where the record was insufficient as to the amount of its fee and the terms under which it would be paid. 275 B.R. 364, 372 (Bankr.N.D.Cal.2002). Specifically, the court stated that there was “no evidence that the Bondholders’ Committee could not have obtained comparable services for the same price from another financial advisor without having to agree to the subject provisions” in the engagement letter. Id. The Metricom court also expressed concerns that Houli-han Lokey was demanding certain special terms of employment that had not been demanded by other professionals already employed to perform the same services in that case. The court determined that “no matter how ‘standard’ such protections may be for Houlihan, they are not the norm in this Chapter 11 case.” Id.

This Court is faced with a substantially similar factual scenario to Metricom. First, this Court has virtually no evidence that the committees in the case at bar could not have obtained comparable services without paying the excessive fees demanded by Houlihan Lokey and Tudor *227 Pickering. Second, one other investment banking firm — i.e. Parkman Whaling — has already been retained to provide similar valuation services in the case at bar without demanding such a high premium; Parkman Whaling has received $75,000.00 per month, which is substantially lower than the fees demanded by Houlihan Lo-key and Tudor Pickering. It is entirely legitimate to ask why Houlihan Lokey and Tudor Pickering are unwilling to work under the same or similar terms as Parkman Whaling. Neither Houlihan Lokey nor Tudor Pickering adduced sufficient testimony at the July 15, 2009 hearing to convince this Court that they should be treated so differently' — indeed, so much more favorably — than Parkman Whaling. Stated differently, Parkman Whaling is as capable and competent an organization as Houlihan Lokey and Tudor Pickering, and to approve the far more exorbitant terms demanded by Houlihan Lokey and Tudor Pickering would suggest that these two firms somehow provide services that are superior in quality than those provided by Parkman Whaling. There is nothing in the record to suggest that this is true.

Moreover, Gilliland testified in coneluso-ry fashion that the terms in Tudor Pickering’s engagement letter are typical in the industry and lower than other engagements that Tudor Pickering has accepted in similar situations. While this may be true, the Court has no specific testimony or evidence that this representation is in fact accurate. And, indeed, Parkman Whaling has performed substantially similar services at a fraction of the rate demanded by Tudor Pickering. In United Artists Theatre Co., et al. v. Walton, the Third Circuit stated that no matter how common in the market-place Houlihan Pokey’s employment arrangements are, “[the Third Circuit’s] approach is ‘market driven,’ not ‘market-determined,’ especially in the realm of bankruptcy where courts play a special supervisory role.” 315 F.3d 217, 230 (3d Cir.2003). This Court also does not take a “market-determined” approach regarding the investment bankers’ proposed compensation. Stated differently, the amount of compensation that Houlihan Lokey and Tudor Pickering believe to be standard in the industry does not, in and of itself, render the compensation reasonable under § 328. Rather, the Court needs specific evidence in the record to determine whether the proposed compensation is reasonable under § 328. For example, the committees’ respective counsel needed to adduce testimony about the specific compensat