In the context of five firms’ fee applications exceeding $5.7 million, the U.S. Bankruptcy Court for the Northern District of Texas in Amarillo thoughtfully reviewed the cases applying the Fifth Circuit’s Pro-Snax[1] decision that fees may be awarded under Bankruptcy Code § 330(a)[2] when the services “resulted in an identifiable, tangible, and material benefit” to the estate. The court rejected the idea that success must be proven as a condition of a fee award.
In re Kimberly Nifong Mitchell, Case No. 11-08880-8-ATS (Bankr. E.D.N.C. Sept. 20, 2013), is a chapter 11 case involving the law firm of Oliver, Friesen, Cheek PLLC (OFC) and Bankruptcy Code §§ 503(b)(1)(A) and 507(a)(2). OFC was disqualified due to an undisclosed potential conflict of interest between two of its clients.
Legal proceedings where courts have been required to determine the classification of electricity as either a “good” or a “service” under § 503(b)(9) of the Bankruptcy Code have been the subject of recent “charged” debates.
Numerous bankruptcy court decisions have considered whether electricity is a good under 11 U.S.C. § 503(b)(9).[1] One of the most recent decisions, In re NE Opco Inc.,[2] bucks a recent trend in cases that have held that electricity is a good under § 503(b)(9).[3] Moreover, in ruling that electricity is not a good for this purpose, the NE Opco court adopted a fresh approach to the issue based on the notion of meaningful delay between identification to the contract and consumption.
Section 503(b)[1] of the Bankruptcy Code sets out the nine types of administrative expenses in a bankruptcy proceeding that receive a priority distribution under § 507(a)(2). Section 503(b) derives from § 64a of the Bankruptcy Act of 1898, which entitled the costs and expenses of administration of a bankruptcy estate to priority over dividends paid to creditors.[2] Section 503(b)(9) grants a seller of goods an administrative expense for the value of any goods that the debtor received within 20 days before the petition date, if the goods were sold to the debtor in the ordinary course of the debtor’s business.[3]
Section 503(b)(9) of the Bankruptcy Code creates an administrative expense for “the value of any goods received by the debtor” within 20 days preceding bankruptcy. While there is little case law analyzing the appropriate measure of “value” under this section, courts that have addressed the question recognize that the purchase price reflected in the invoice or contract, pursuant to which the goods were delivered to the debtor, is prima facie evidence of value but that it can be rebutted by other evidence.
Seemingly straightforward on its face, certain aspects of the Bankruptcy Code’s “new value” defense[1] have proven frustratingly unclear for practitioners around the country. Illustrative of this frustration is the elusive answer to perhaps the simplest question: When does it apply?
Many have reviewed the U.S. Supreme Court’s Till Opinion (Till v. SCS Credit Corp.) and walked away shaking their heads in confusion. The underlying case involved a higher-risk borrower who had purchased a used truck and shortly thereafter filed for bankruptcy under chapter 13. The parties asked the Court to choose the best method to determine a cramdown interest rate. It is important to realize that the Court was not addressing an all-inclusive list of methodologies available to financial practitioners, but was choosing from four methodologies previously used by various bankruptcy courts.
In In re Rowe,[1] the court considered the propriety of deviating from the percentage compensation set forth in Bankruptcy Code § 326(a) based on the chapter 7 trustee’s failure to perform as required. This case illustrates the effort needed to reconcile the tension between recognizing the trustee’s fee as a “commission” calculated by the formula set forth in § 326(a) and the court’s directive to award “reasonable” compensation to trustees and other professionals.
Bitcoins. Litecoins. Dogecoins. Even, at one point, “Coinye West.” Like it or not, it’s hard to deny that bitcoin and cryptocurrencies like it have been quite the talk of the financial world recently. Between Feb. 1, 2013, and Feb. 1, 2014, bitcoin prices have risen from about $20 per coin to a high of more than $1,200 and then fallen back down into the $500 to $600 range.
