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[1] Hon. Jeff Bohm of the U.S. Bankruptcy Court for the Southern District of Texas recently issued an opinion holding that an undersecured creditor is entitled to post-petition attorneys’ fees as part of its secured claim where (1) the creditor holds a bifurcated claim based on pre-petition agreements that allow the creditor to recover its reasonable attorneys’ fees, and (2) the creditor has made the § 1111(b)(2) election.[2]

Background

In In re Cummings,[1] the chapter 12 debtors, who successfully confirmed their chapter 12 plan of reorganization, objected to their attorneys’ application for compensation and reimbursement of expenses. The bankruptcy court found that the nature of the services, the time spent and the rates charged by counsel were all reasonable in light of the circumstances of the case. Accordingly, the court granted the application for compensation.

An April ruling by Hon. Mary Jo Heston of the U.S. Bankruptcy Court for the Western District of Washington in Tacoma addressed a fairly complicated and nuanced administrative expense request, ultimately adopting the view — contrary to at least two circuits — that substantial contribution claims are allowable in chapter 7 bankruptcy cases. In re Maust Transport Inc., Ch. 7 Case No. 14-40595 [Docket No. 167] (Bankr. W.D. Wash. April 3, 2018).

The Background

Many lawyers may have dealt with a challenging neighbor in their personal lives, but it is fair to say that few have dealt with a difficult neighbor challenging their retentions in their professional lives. However, the U.S.

A cautionary tale in the failure to have written fee agreements and maintain good records of client interactions is evidenced in a recent court decision out of the U.S. Bankruptcy Court for the District of Massachusetts. All attorneys, not just the bankruptcy practitioner, should take a glance at the following case to be reminded of the seriousness of not abiding by practices upholding the highest degree of ethical standards.

In In re Tuscany Energy,[1] the U.S. Bankruptcy Court for the Southern District of Florida recently addressed the issue of whether a pre-petition retainer paid to a debtor’s attorney from an account encumbered by a security interest remains subject to the creditor’s lien. Corporate debtors must be represented by counsel in bankruptcy, and attorneys typically require a retainer. Because many debtors have creditors with blanket liens encumbering all assets, this situation arises frequently.

In a recent ruling by the U.S. Bankruptcy Court for the Eastern District of New York, the court ordered the disgorgement of fees paid to the debtors’ counsel, finding that while “no counsel can guarantee success of a case when it is undertaken … the fee allowed must be reasonable for the services actually rendered as they were rendered”.