Increasing Debtor’s Profit or Revenue Isn’t Required to Establish an ‘Admin’ Claim
An administrative creditor isn’t a ‘guarantor’ of the success of the project, Delaware’s Bankruptcy Judge Goldblatt says.
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Circuits Are Now Split on the Constitutionality of the 2018 Increase in U.S. Trustee Fees
The Second Circuit split with the Fourth and Fifth Circuits by holding that the increase in fees for the U.S. Trustee system was unconstitutional because it was not imposed simultaneously in the two states with bankruptcy administrators.
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Bankruptcy Code
Bankruptcy Rule
Another Circuit Upholds the 2018 Increase in U.S. Trustee Fees
Dissenters in the Fourth and Fifth Circuits evidently believe that the dual U.S. Trustee/Bankruptcy Administrator system is unconstitutional.
A District Court Rules that the U.S. Trustee Fee Increase Isn’t Retroactive
California district judge sides with the dissenter in the Fifth Circuit in saying that the parallel systems of U.S. Trustees and Bankruptcy Administrators violates the Bankruptcy Clause of the Constitution.
Third Circuit Resurrects an ‘Admin’ Claim When the Stalking Horse Had No Breakup Fee
The Third Circuit found loopholes in the purchase agreement permitting the buyer to assert an administrative claim, even though the breakup fee was disallowed.
McKinsey Forgoes $8 Million in Bankruptcy Fees Under Government Settlement
McKinsey & Co. agreed to forgo roughly $8 million in fees from advising a bankrupt Colorado coal miner after reaching a settlement with Justice Department watchdogs over concerns about the firm’s disclosure of possible conflicts of interest, WSJ Pro Bankruptcy reported. Under the deal announced yesterday, McKinsey agreed to withdraw an application to work as an adviser to Westmoreland Coal Co. on its 2018 bankruptcy filing. McKinsey also agreed to broaden the scope of disclosures made in future bankruptcy cases, including the names of confidential clients. In return, the Justice Department agreed to drop an objection it filed in the Westmoreland case alleging that McKinsey’s disclosures were at odds with the law. “This settlement ensures that McKinsey is held accountable for its conduct in this case,” said Cliff White, director of the U.S. Trustee Program. The deal won’t become final unless it wins approval from Judge David Jones of the U.S. Bankruptcy Court in Houston, who has been overseeing the Westmoreland case and long-running litigation related to McKinsey’s disclosure practices. The settlement was reached with the help of Judge Marvin Isgur, another Houston-based bankruptcy judge, who served as a mediator between McKinsey and the Justice Department. McKinsey didn’t admit wrongdoing as part of the settlement. It isn’t clear how the settlement will affect ongoing litigation against McKinsey in the Westmoreland case brought by Jay Alix, the retired founder of rival corporate turnaround firm AlixPartners LLP. A trial on Alix’s claims that McKinsey flouted disclosure laws was set to resume next month after being halted over the coronavirus pandemic. Alix, whose claims aren’t covered by the Justice Department settlement, has targeted McKinsey over its roles in a number of large bankruptcy cases, especially in how it disclosed information about the billions of dollars it invests on behalf of current and former employees. In addition to the fees McKinsey agreed to walk away from in the Westmoreland case, court papers show the firm has paid some $32.5 million in settlements related to its past bankruptcy disclosure practices, including a separate $15 million settlement in 2019 with the U.S. Trustee. McKinsey also didn’t admit any wrongdoing under that agreement.
