vol 18, num 2 | MAY 2020
 
 
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Ethics & Professional
Compensation
 
AN ABI COMMITTEE NEWSLETTER
 
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Specific Expenses, Specific Collateral, Specific Benefit: Ninth Circuit BAP Addresses Surcharge Standards
Jeff Merritt
 
Jeff Merritt
Emory University School of Law
Atlanta
 
In order for a trustee to surcharge expenses under § 506(c), he “must prove that [his] expenses were reasonable, necessary, and provided a quantifiable benefit” to the secured creditors property. The trustee must show some benefit sufficient for surcharge under this objective test, identify the specific expenses, tie them to specific collateral, and provide evidence of a benefit that considers the use of the U.S. Department of Agriculture’s (USDA) cash collateral. The Ninth Circuit Bankruptcy Appellate Panel (BAP) recently held that the trustee had not met this burden in USDA v. Hopper (In re Colusa Regional Medical Center). In vacating and remanding the U.S. Bankruptcy Court for the Eastern District of California’s ruling, the BAP held that the lower court applied the wrong legal standard by analyzing the benefit to the USDA at a global level instead of looking at requested expenses and how they were reasonable, necessary and provided quantifiable benefits.
 
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Bankruptcy Court Overrules Chapter 13 Debtors’ Objection to Mortgage Creditor’s Claim that Included Pre-Petition Attorney’s Fees
Lauren T. Maxwell
 
Lauren T. Maxwell
U.S. Bankruptcy Court (D. S.C.)
Spartanburg
 
According to the U.S. Bankruptcy Court for the Western District of Oklahoma, if pre-petition attorney’s fees are included in the mortgage creditor’s proof of claim, contemporaneous time records are required to establish the reasonableness of those fees.

In Fanning, state court foreclosure proceedings were initiated the month before the debtors filed for chapter 13 relief. Pursuant to Rule 3001, the creditor filed a timely proof of claim asserting an interest secured by a first mortgage on the debtors’ residence. In addition to principal and interest, the creditor’s proof of claim included $1,400 for attorneys’ fees incurred in the foreclosure action. On the claim, the attorneys’ fees were stated in separate increments of $1,000 and $400, which were incurred on different dates.

 
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NNN 400 Capital Center: Reconsidering Fee‑Shifting
Sarah Primrose
 
Sarah Primrose
King & Spalding LLP
Atlanta
 
Lucy Gauthier
 
Lucy Gauthier
King & Spalding LLP
Atlanta
 
 
Courts rarely grant motions for reconsideration, but the U.S. Bankruptcy Court for the District of Delaware did just that in the context of fee-shifting sanctions in In re NNN 400 Capital Center 16, LLC. While the court ultimately upheld the sanctions, it provided a thorough analysis of a court’s ability to shift fees.

Preliminarily, the court expressed concern regarding the accuracy of disclosures made by plaintiffs’ counsel, Rubin & Rubin (“the Rubins”). At the court’s behest, the defendants in the underlying action filed a motion for an order to show cause. Following the full briefing on the show-cause motion and a hearing, the court sanctioned the Rubins — shifting the defendants’ attorneys’ fees and costs in bringing the show-cause motion onto the Rubins pursuant to the court’s inherent authority. Subsequently, the Rubins moved for the court to reconsider its order imposing the fee-shifting sanction. The Rubins’ co-counsel, Cozen O’Connor, moved separately for the court to reconsider its order to the extent it denied Cozen’s fees related to defending against the show-cause motion.

 
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Announcing ABI’s COVID-19 Resources Page!
COVID-19/Coronavirus Bankruptcy Industry News
Check out our brand-new COVID-19 Resources Page! Developed for both bankruptcy professionals and the public alike, the page houses links to essential information and analysis regarding the financial distress being inflicted by the COVID-19 pandemic. The site features exclusive ABI content on the crisis, recommended member analysis, industry sector news, charts and more.
 
COVID-19 Resources
 
 
 
Ethics and Professional Compensation Committee Leadership for 2020
The Ethics and Professional Compensation Committee is proud to announce our new leaders for 2020!

You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.

The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.

Alexandra Schnapp
 
Alexandra CC Schnapp, Co-Chair
U.S. Bankruptcy Court (N.D. Ga.)
Atlanta
 
 
Gregory M. Taube
 
Gregory M. Taube
Co-Chair

Nelson Mullins Riley & Scarborough, LLP
Atlanta
 
 
Adam Herring
 
Adam D. Herring
Communications Manager

Federal Government Attorney
Washington, D.C.
 
 
Timothy James Anzenberger
 
Timothy James Anzenberger
Education Director

Adams and Reese LLP
Ridgeland, Miss.
 
 
Sarah Primrose
 
Sarah Primrose
Newsletter Editor

King & Spalding
Atlanta
 
 
B. Summer Chandler
 
B. Summer Chandler
Special Projects Leader

Concordia, University School of Law
Boise, Idaho
 
 
 
 
 
 
40 Under Forty
 
 
 
First Day Motions
 
 
 
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