Several bankruptcy courts have recently reaffirmed the good faith requirement in all chapter 11 bankruptcy cases.[1] Most notably, the chapter 11 petitions of both the National Rifle Association (NRA) and Stream TV Networks, Inc.[2] were recently dismissed pursuant to 11 U.S.C. § 1112(b) after the courts found that the petitions were filed in bad faith.[3]
The U.S. Bankruptcy Court for the Northern District of Georgia recently issued an opinion detailing the reimbursement limitations under the Bankruptcy Code for services provided by a trustee’s law firm in a chapter 7 case. In In re McConnell,[1] the court denied the trustee’s request for attorneys’ fees and expenses because such services were either part of the trustee’s statutory duties under 11 U.S.C. § 704(a) or such services were not necessary or beneficial to the estate.[2]
Hon. Christopher S. Sontchi approved the retention application of debtors’ counsel over the objection of the U.S. Trustee, finding that counsel (1) complied with the requirements for retention of professionals under § 327 of the Bankruptcy Code and (2) did not violate its conflict waiver with the debtors’ pre-petition ABL lender.[1]
Background
How are subchapter V trustees compensated? The answer under the Code depends on whether the trustee is a standing or nonstanding subchapter V trustee. In reality, though, the answer should be the same in all cases, because, while 28 U.S.C. § 586(b) authorizes the appointment of “standing” trustees in subchapter V, so far all subchapter V cases have involved case-by-case, or nonstanding, trustees. No standing trustees have been appointed to date.[1]
As ABI President Hon.
A California bankruptcy court has held that the right to seek attorneys’ fees for violations of the Civil Rights Act applies to fees incurred protecting a civil rights judgment in a bankruptcy proceeding. In the case of In re Harris,[1] the bankruptcy court granted the creditor’s request for attorneys’ fees and costs incurred in the bankruptcy case because such fees and costs were for work performed while protecting and enforcing the creditor’s pre-petition civil rights judgment.
Recently, in Rivers v. Aufrecht (In re Galloway),[1] the U.S. Court of Appeals for the Fifth Circuit spared an attorney from sanctions and disgorgement directives, reversing the bankruptcy court after consideration of the totality of the facts in the case.