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Bankruptcy Commercial Law Litigation

Professional Fees May Not Be Capped by Standard Carve-Out Provisions

Secured creditors and debtor-in-possession (DIP) lenders that rely on standard carve-out provisions to limit the impact of bankruptcy professional fees on their collateral would be well-advised to take notice of a U.S. Bankruptcy Court decision from earlier this year.

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Secured creditors and debtor-in-possession (DIP) lenders that rely on standard carve-out provisions to limit the impact of bankruptcy professional fees on their collateral would be well-advised to take notice of a U.S. Bankruptcy Court decision from earlier this year. Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware (the Court) issued an opinion in In re Molycorp, Inc. (Case No. 15-11357) on Jan. 5, 2017 that serves as both a cautionary tale and an instruction manual.

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