A recent decision from the U.S. Bankruptcy Court for the Eastern District of California confirms what many bankruptcy attorneys have long suspected: A debtor’s bad conduct in bankruptcy may serve to defeat a fee waiver for a debtor who otherwise qualifies under the income guidelines. In In re Gjerde, the debtor, Sean Patrick Gjerde, was a disbarred
Bankruptcy courts are vested with the inherent and statutory authority to sanction litigants for acting in bad faith and engaging in otherwise unreasonable or inappropriate conduct.
In In re Halloum,[1] the Ninth Circuit Bankruptcy Appellate Panel reversed an order granting a fee expense award in excess of $116,000 based on the failure of the bankruptcy court to make supporting findings of fact.
On June 15, 2015, in Baker Botts LLP v. ASARCO LLC , the U.S.
Under the recent landmark opinion ASARCO,[1] the Supreme Court noted that the bankruptcy court had awarded ASARCO’s bankruptcy counsel, Baker Botts, L.L.P.
In light of the Third Circuit’s recent decision in In re Prosser,[1] bankruptcy practitioners in the Third Circuit (which includes the highly trafficked District of Delaware) should have a heightened awareness of the line between zealous advocacy and abusive and vexatious conduct.
For consumer debtor attorneys, getting paid has become quite a challenge. A debtor’s attorney must either get paid pre-petition in a chapter 7, diminishing what would otherwise be nonexempt property of the debtor, or get paid out of “projected disposable income” in a chapter 13.
On March 13, 2015, on remand from the Fifth Circuit, the U.S. Bankruptcy Court for the Western District of Texas allowed a trustee’s claim for a foreclosure commission under 11 U.S.C. § 502, but the court denied the mortgagee’s § 502 attorneys’ fees claim.[1] Both claims had previously been found unreasonable under § 506.
[1]Bankruptcy professionals work in an area that, by its very nature, makes the fee process lengthily transparent, subject to rigorous oversight and, in some cases, highly contentious. Even if fees are awarded, collecting them can be difficult. In a few (thankfully) rare cases, even after fees have been awarded and paid on an interim basis, the bankruptcy case becomes administratively insolvent and the professionals may have to disgorge their previously paid fees.[2]
In a recent decision,[1] the U.S. Bankruptcy Court for the Northern District of California granted an adversary proceeding for the defendant’s motion for allowance and payment of a secured claim for attorneys’ fees incurred defending the adversary proceeding. While this may be just an isolated case, the decision could mark the start of a new wave of defendants prophylactically crafting contracts with attorneys’ fees provisions related to adversary proceedings, and attempting to enforce them.
