Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Over-Secured Lenders and Requests for Payment of Attorneys' Fees and Other Charges
The United States Court of Appeals for the Fifth Circuit recently reaffirmed the long-established rule that an over-secured lender's legal and other fees are subject to court approval as reasonable under section 506(b) of the Bankruptcy Code. See Wells Fargo Bank, N.A. v. 804 Congress, L.L.C. (In re 804 Congress, L.L.C. , No. 12-50382, 2014 U.S. App. LEXIS 11819 (5th Cir. June 23, 2014). This rule is embodied in the plain language of section 506(b), which provides that an over-secured creditor may recover “'fees, costs, or charges provided for under the agreement ' under which such claim arose' ' but only to the extent that the fees, costs, or charges are reasonable.” Id. at *8.
While the rule is relatively clear, many consensual reorganization plans provide for payment of secured lenders' and other stakeholders' fees that, while subject to reasonableness review, often times are not actually reviewed in any meaningful detail by a bankruptcy court. Indeed, if a plan is consensual and no one objects, there arguably is no need. But 804 Congress is a reminder that the standard nonetheless is there, and that the burden is on the professional to establish reasonableness when the amount of the fees is being challenged. Accordingly, a professional not prepared to affirmatively prove reasonableness proceeds at his or her peril.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.
Disconnect Between In-House and Outside Counsel
'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.