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Vol 13, Num 2 l June 2015

Ethics and Professional Compensation

► In This Issue:

Disallowance of a Claim Under § 506 “Does Not” Foreclose Allowance Under § 502

ABI

John F. Theil
Stuart Maue
St. Louis

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. Both claims had previously been found unreasonable under § 506.

Background
The debtor borrowed money from Wells Fargo to purchase an office building. After defaulting on its loan, the debtor tried to fend off foreclosure by filing a chapter 11 bankruptcy case. The debtor was unsuccessful in its attempts to sell the property, and Wells Fargo ultimately obtained relief from the automatic stay to have the trustee under the deed of trust post the subject property for foreclosure.
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Ethical Considerations When Doing Deals with International Constituent Groups

ABI

Troy T. Taylor
Algon Group
Atlanta

ABI

Richard Cano
Algon Group
Atlanta

In the U.S. and in most developed countries, adherence to ethical standards is the accepted business practice. This is not the case in many developing markets, however. Consequently, ethical dilemmas can arise between conflicting standards. It is therefore important to educate clients and their stakeholders about the long-term financial benefits of avoiding ethical pitfalls in their international business dealings.

When ethical questions arise in international deals or deals involving foreign constituents, they can initially appear to be of secondary importance. Ethical issues, however, can present various short- and long-term consequences that should be at the front of the client’s decision-making process. There are several recurring, interconnected themes that routinely arise that should be addressed with clients: (1) the long-term business and financial benefits of acting ethically; (2) the importance of transparency and disclosure; and (3) the value of protecting minority shareholders.

Proactively educating clients on the specific benefits of ethical behavior is much more effective than taking an ad hoc approach. Emphasizing the financial benefits of ethical behavior is much more effective than appealing to a client’s moral conscience. Consequently, a significant amount of time and attention should be devoted to the education process, and this process should begin at outset of the engagement.
» Read More

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