Bankruptcy Judge Mary F. Walrath in Delaware categorically barred lawyers from circumventing the Supreme Court’s opinion in Baker Botts LLP v. ASARCO LLC by refusing to approve a retention application requiring the debtor to compensate committee professionals for successfully defending their fees, according to an analysis by Bill Rochelle in ABI’s Rochelle Daily Wire. In June, the Supreme Court held 6-3 in ASARCO that debtors’ counsel in bankruptcy cases cannot be paid for successfully defending their fee requests. In Delaware, the reorganization of Boomerang Tube LLC became a test case to decide whether lawyers could sidestep ASARCO by incorporating the reimbursement of defense costs into a retention agreement approved up front by a bankruptcy judge. In a footnote at the very end of her opinion, Judge Walrath in substance said that no form of artful drafting, even by the debtor’s lawyers, will pass muster because using estate funds to pay fee defense costs “are not reasonable terms of employment of professionals.” To read the full analysis, sign up for complimentary access to ABI’s Rochelle Daily Wire.
