test folder

2021 Stroock Bankruptcy Guide

Issue link: https://mbozikis.ufcontent.com/i/1422521

Contents of this Issue

Navigation

Page 104 of 319

39 Courts are often called upon to decide whether specific services are compensable under Section 330 of the Bankruptcy Code. In Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015), the Supreme Court held that estate professionals are not entitled, pursuant to such Section, to fees for defending their fee applications. The Court noted that unlike fees for preparing fee applications, which are compensable under the language of Section 330(a)(6), there is no similar provision allowing for compensation for time spent defending fee applications. The Court pointed to the American Rule, which provides that litigants pay their own attorney's fees, unless a statute or contract provides otherwise, and found that Congress had not expressly departed from that Rule in drafting the Bankruptcy Code. A trustee or professional may seek interim payments of its compensation pursuant to Section 331 of the Bankruptcy Code. Bankruptcy courts often authorize detailed procedures to govern the payment of interim compensation during a bankruptcy case as part of their local rules. Moreover, courts will reduce the amount of compensation awarded pursuant to Section 330 by the amount of any interim compensation awarded under Section 331. 11 U.S.C. § 330(a)(5). The Bankruptcy Code also provides various methods by which the bankruptcy estate is permitted to compensate and reimburse professionals employed by parties other than the debtor-in- possession, trustee, or an official committee. In particular, Section 503(b) of the Bankruptcy Code provides for the allowance, as an administrative expense, of the actual and necessary expenses of a creditor, including reasonable compensation for professional services rendered by a creditor's attorney, where a "substantial contribution" to a Chapter 11 case has been made. 11 U.S.C. § 503(b)(3)(D)–(b)(4); see also Lebron v. Mechem Fin. Inc., 27 F.3d 937, 943 (3d Cir. 1994). The reimbursement of fees and expenses pursuant to Sections 503(b)(3)(D) and 503(b)(4) of the Bankruptcy Code is designed to encourage meaningful participation by creditors and other parties-in-interest in a debtor's reorganization. See id. Although the Bankruptcy Code does not

Articles in this issue

view archives of test folder - 2021 Stroock Bankruptcy Guide