The Association of Insolvency and Restructuring Advisors (AIRA) released its new “Standards for Distressed Business Valuation,” which went into effect on March 1, 2014,[1] and will provide the best practices for valuation professionals.

In Ruffini v. Norton Law Group PLLC,[1] the bankruptcy court permitted the debtors’ estate to recover pre-petition legal fees under § 548 of the Bankruptcy Code and §§ 271-273 of New York Debtor Creditor Law as fraudulent conveyances. In its decision, the court was careful to state that there is no bright-line test for determining whether pre-petition legal fees are avoidable as constructively fraudulent transfers in bankruptcy.

Under Bankruptcy Code § 329(a) and Federal Rule of Bankruptcy Procedure 2016(b), debtor’s counsel must file a compensation disclosure (a Rule 2016(b) Statement) that details legal fees charged and unpaid balances due. The local rules of the Bankruptcy Court for the Northern District of California also prescribe a “Rights and Responsibilities Statement of Chapter 13 Debtors and Their Attorneys” (the Rights and Responsibilities Statement) that details the fee arrangements between debtor and counsel.

[1]The common belief that all student loans are protected from discharge in bankruptcy is based on a misunderstanding of 11 U.S.C. § 523‌(a)‌(8). Since 1990, bankruptcy courts have been misreading the statute to prevent any student debt that could be construed as providing educational benefits or advantages from discharge.