Question: What gets an attorney’s fee application allowed—or rejected—in bankruptcy?

Short answer: The services, (i) must be “necessary,” and (ii) must require legal expertise.

Two Recent Opinions

Two recent opinions address this question:

An insolvency moratorium first introduced during the COVID-19 pandemic applies to nearly all Russian legal entities, individuals, and sole entrepreneurs, and bans the commencement of insolvency proceedings against Russian obligors.

“Subchapter V is supposed to be a fast process toward plan confirmation, but I don’t see that happening!”

–Comment of a Bankruptcy Judge (as I recall the comment)

It’s true: (i) Subchapter V is supposed to go quickly, but (ii) it often doesn’t.

Here’s why it doesn’t: debtor attorneys often fail to push their cases forward.

Illustration

A bankruptcy court opinion, in a Subchapter V case, illustrates the problem.

Dale G. Higer is an attorney and a long-time Commissioner for the State of Idaho on the Uniform Law Commission. His newest role is Chair of the Commission’s newly-formed Study Committee on Assignments for Benefit of Creditors.

What follows is Mr. Higer’s report on the Commission and on the work of the newly formed Study Committee.

Uniform Law Commission

It’s time for a uniform law on the subject of assignment for benefit of creditors.

Description

Assignment for benefit of creditors laws are commonly known by the acrostic “ABC Laws”–for obvious reasons.

Such laws are a tool for owners of a distressed business in shutting the business down.

Here’s what happens in an ABC: debtor’s assets are transferred to an assignee, who then liquidates those assets and distributes proceeds to creditors.

Various Tools

The sun has set. Yes it has.

The $7,500,000 eligibility limit for Subchapter V expired yesterday (March 28, 2022), without action by Congress to extend it.

Actually, the Subchapter V sun was set to set on March 27—but that’s a Sunday. So let’s give the benefit of the doubt and say it expired on Monday, instead.

Either way, the heightened debt limit is gone.

Hopefully, Congress can pass the heightened limit anew, after its expiration. Then, perhaps, we can be in a no-harm, no-foul mode, with no ill-effects to anyone. But that remains to be seen.

It begins with an awkward mouthful. Outside a bankruptcy brief, is “unimpairment” even a word? (No, per Merriam-Webster.) Inside Chapter 11, it’s much more: a trend.

Want to refinance your bonds cheaply? Are you an otherwise sound and solvent business, forced into bankruptcy by a massive fire (PG&E), persistent low commodity pricing (Ultra Petroleum), or a pandemic (Hertz, whose airport rental business was shuttered in 2020 by COVID-19)?

Or would you just prefer to boost your stock value by lowering your coupon?

Here’s a vindication for the Small Business Administration’s discrimination against bankruptcy debtors:

How much precedential value does an 1885 opinion of the U.S. Supreme Court deserve on a bankruptcy discharge issue?

That’s a central question in the Petition for a Writ of Certiorari before the U.S. Supreme Court in Bartenwerfer v. Buckly, Case No. 21-908 (“Distributed for Conference of 4/29/2022”).

Facts of the Case [Fn. 1]

A Petition for certiorari is before the U.S. Supreme Court in Speech & Language Center, LLC, and Chryssoula Marinos-Arsenis v. Horizon Blue Cross Blue Shield of New Jersey

Petition’s Question

The Question presented in the Petition is this: