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Chapter 11 Debtors Counsel Must Obtain Court Approval of Bid Procedures Before Auctioning Assets According to Latest ABI Quick Poll

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Contact: John Hartgen

            

703-739-0800

            

jhartgen@abiworld.org

 

CHAPTER 11
DEBTOR’S COUNSEL MUST OBTAIN COURT APPROVAL OF BID PROCEDURES
BEFORE AUCTIONING ASSETS, ACCORDING TO LATEST
w:st='on'>ABI QUICK POLL

March 28, 2008, Alexandria,
Va. — Chapter 11 debtor’s counsel must obtain
court approval of bid procedures prior to auctioning assets or risk
having fees related to the auction disallowed, according to a majority
of respondents in a recent
w:st='on'>ABI Quick Poll. Fifty-two percent of
respondents thought that bid procedures by a chapter 11 debtor’s
counsel must be approved prior to an asset auction, or the
counsel’s fees related to that auction should be disgorged.
Thirty-six percent “strongly agreed” and 16 percent
“somewhat agreed” that the chapter 11 debtor counsel should
receive court approval of bid procedures prior to an asset auction.

Forty-three percent of
respondents, however, thought that chapter 11 debtor’s counsel
should not have to obtain court approval of bid procedures before an
asset auction. Twenty-seven percent “disagreed strongly” and

16 percent “somewhat disagreed” that chapter 11 debtor
counsel must obtain court approval of bid procedures before an auction
or risk having the fees related to the auction disallowed
color='black'>.

In the case of In re APW
Enclosure Systems, Inc., a bankruptcy court disgorged the fees
requested by the debtor’s counsel in connection with an asset
auction because the counsel did not seek approval of the auction
procedure until after the auction was completed. The court found that
the counsel failed to meet its initial burden of showing that the
services relating to the auction procedure had a reasonable likelihood
of benefitting the estate at the time they were performed.


size='3'>ABI members and members of the public
were welcome to submit their response to the statement: “Chapter
11 debtor’s counsel must obtain court approval of bid procedures
before auction or disgorge fees related to auction. (In re APW
Enclosure Systems, Inc., 49 BCD 8 (Bankr. D. Del 2007)).”


size='3'>ABI’s Quick Poll is posted on
ABI’s home page,
title='blocked::http://www.abiworld.org/'
href='http://www.abiworld.org/'>
color='#0000ff'>www.abiworld.org.
w:st='on'>ABI members and the public are invited to
respond to a question on a timely bankruptcy or insolvency issue. Visit

href='http://www.abiworld.net/quickpoll/'>
color='#0000ff'>http://www.abiworld.net/quickpoll/ to access
the results of previous ABI
Quick Polls.

###


size='3'>ABI is the largest multi-disciplinary,
nonpartisan organization dedicated to research and education on matters
related to insolvency. ABI
was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The
w:st='on'>ABI membership includes nearly 11,700
attorneys, accountants, bankers, judges, professors, lenders, turnaround

specialists and other bankruptcy professionals, providing a forum for
the exchange of ideas and information. For additional information on
ABI, visit www.abiworld.org.
For additional conference information, visit
title='blocked::http://www.abiworld.org/conferences.html'
href='http://www.abiworld.org/conferences.html'>
color='#0000ff'>http://www.abiworld.org/conferences.html.