Secured Cr. claiming high post petition atty's fees
Posted: Fri May 11, 2012 4:03 pm
Under the Meritor v. Salazar Test (82 B.R. 538) there are four elements under section 506(b) that must be met in order to recover attorney's fees when bringing a motion to lift the automatic stay (you'll have to see if this applies to other postpetition attorney fees which I believe it does): 1) it is an allowed secured claim; 2) the creditor is "oversecured"; 3) the fees are "reasonable" under the circumstances; and 4) the fees are provided for under the agreement.
The U.S. Supreme Court held in the Travelers v. PGE case (549 U.S. 443, 127) that nothing precluded an undersecured creditor from filing an unsecured claim for postpetition attorney fees.
The creditor might try to rely on US v. Ron Pair Enterprises to support its request for fees. However, that case, involves an "oversecured" creditor. Even if the creditor attorney fees are reasonable, an award of fees still does not meet the Meritor v. Salazar Test (82 B.R. 538) if the property is undersecured.
Link Schrader, Attorney
Law Office of Link W. Schrader
The post was migrated from Yahoo.