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Vol 13, Num 3 l June 2015

Ethics and Professional Compensation

► In This Issue:

Reversal of Fortune: In re Premier Healthcare Services Inc. and Disgorgement of Fees


C.R. “Chip” Bowles Jr.
Bingham Greenbaum Doll LLP
Louisville, Ky.

Bankruptcy professionals work in an area that, by its very nature, makes the fee process lengthily transparent, subject to rigorous oversight and, in some cases, highly contentious. Even if fees are awarded, collecting them can be difficult. In a few (thankfully) rare cases, even after fees have been awarded and paid on an interim basis, the bankruptcy case becomes administratively insolvent and the professionals may have to disgorge their previously paid fees. It is with this background that we review a recent case on this potentially painful topic, with a pleasing pro-professional outcome.

The facts of Premier Healthcare are straightforward. The debtors, operators of related health care businesses, filed chapter 11 cases in September 2013.
 » Read More

Are Attorneys’ Fees Incurred in Defending Preference Action Recoverable Against the Estate? One Court Says “Yes”


Edward E. Neiger
New York


Kara E. Casteel
St. Paul, Minn.

In a recent decision, the U.S. Bankruptcy Court for the Northern District of California granted an adversary proceeding for the defendant’s motion for allowance and payment of a secured claim for attorneys’ fees incurred defending the adversary proceeding. While this may be just an isolated case, the decision could mark the start of a new wave of defendants prophylactically crafting contracts with attorneys’ fees provisions related to adversary proceedings, and attempting to enforce them.

Case Background
On Jan. 6, 2012, an involuntary chapter 7 petition was filed against Mac-Go Corp. (Mac-Go). An order for relief was entered on Feb. 12, 2012, and a trustee was duly appointed to administer the estate. As part of his duties, the trustee filed an adversary proceeding against defendant First National Bank (FNB). The trustee sought the recovery of payments made to FNB pursuant to Bankruptcy Code §§ 547, 548 and 549.

Prior to the petition date, the debtor operated a wholesale auto parts and oil business at several locations. As part of its business, Mac-Go obtained a loan with FNB, and also guaranteed two loans FNB had made to the owners of Mac-Go. The payments at issue in the trial of the adversary proceeding were the payments made by Mac-Go to satisfy its guarantee obligation.
» Read More

Free Webinar Announced: Practical Impact of Preference Actions

Hosted by the Young and New Members & Bankruptcy Litigation Committees. The ABI Commission Report proposes some significant changes to the Bankruptcy Code, and the preferential transfer statute in Section 547 is no exception.  This webinar explores the rationale behind the recommendations, such as the good faith belief for filing a demand letter or preference complaint, the increase in the statutory minimum to bring a preference action, and more.  Most importantly, the panel will assess the practical effects and foreseeable impact of implementing these recommendations.  This webinar is a must-attend for attorneys who regularly represent creditors, liquidating trustees, and panel trustees in preference actions.

Register today!
This webinar is free thanks to the generous support of these sponsors:

New and Improved! ABI's Committee Website has Moved

You may have noticed a few changes to the committee site over the last week, including a new location. The committees' webpages have now been integrated into the main ABI website. To access these new pages, simply visit, hover over the "Membership" tab, and click on "Committees." Here, you will be able to access newsletter articles, recent recordings, announcements, listserve activity and contact information for your leadership team.

Not sure of what committees you are a member? Update your profile, select the "Committees" tab and use the check boxes to update your status. While you're here, take a few moments to update your full preferences, including CLE and bar information, contact information, title, and more. Uploading a professional photo is also a great way to make yourself more visible in the directory. Not only will your photo be included in the directory, but ABI staff will also have it available for use with any future article or speaking bylines.

Have comments, questions or concerns? Email us through our new support system:

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