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Chapter 11 attorney fees approved despite not disinterested
This case result was surprising enough that it's worth sharing. Not sure if
against the rules to do so.
Chapter 11 attorney billed about $50k prepetition. This amount was not
disclosed to the Court. The attorney then struggled through the case but
ultimately confirmed it.
U.S. Trustee objected to first and final fee app based on the lack of
disinterestedness under 327(a). Argued Court *must* deny fees.
Judge found 7th Circuit opinion addressing this issue, which he though
persuasive. Basically, it's discretionary and not mandatory to deny fees
because of 328(c). Judge denied all prepetition fees (must be waived
anyways) and also added a 25k reduction for inefficiencies in the case.
Fees voluntarily reduced by another 25k by Counsel.
Of course, this has limited utility because employment was granted under
327, even if erroneously. I imagine this is helpful in rare circumstances
where disqualifying event is discovered after employment is granted.
The post was migrated from Yahoo.