Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Estate Professionals Can Be Compensated for Services Performed Before Entry of a Retention Order, Even Without Nunc Pro Tunc Orders

By Sheryl P. Giugliano
July 01, 2020

Bankruptcy professionals in the Eastern District of New York should be relieved by Judge Grossman's recent decision holding that although nunc pro tunc orders approving a professional's retention are now considered "inappropriate" in light of the Supreme Court's decision in Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S.Ct. 696 (2020), there is nothing in the Bankruptcy Code, Bankruptcy Rules, or applicable case law preventing an award of compensation before a retention order is entered. In re Benitez, 19-70230 (REG), 2020 WL 1272258 (Bankr. E.D.N.Y. Mar. 13, 2020). Note that estate professionals must at some point be retained, and as mentioned below, sooner rather than later remains best practice.

Nunc Pro Tunc Orders Were a Common Practice In Bankruptcy

In bankruptcy matters, it was common practice to seek authority to retain professionals nunc pro tunc to the date the case was filed. This is because estate professionals may not be compensated under Bankruptcy Code Section 330 unless they are retained under Bankruptcy Code Section 327, which until recently was generally interpreted to mean that estate professionals could not be compensated for work performed prior the entry of (or the effective date of) a retention order. The inevitable delay in a bankruptcy case of obtaining entry of such retention orders, notwithstanding that estate professionals render essential services from day one, seemingly necessitated entry of nunc pro tunc orders.

The Supreme Court's Holding in Acevedo Effectively Eliminated Nunc Pro Tunc Retention Orders

On Feb. 24, 2020, the U.S. Supreme Court held, among other things, that "[f]ederal courts may issue nunc pro tunc orders, or 'now for then' orders, … to 'reflect[] the reality' of what has already occurred. … 'Such a decree presupposes a decree allowed, or ordered, but not yet entered, through inadvertence of the court.' … Put colorfully, '[n]unc pro tunc orders are not some Orwellian vehicle for revisionist history — creating 'facts' that never occurred in fact.' … Put plainly, the court 'cannot make the record what it is not.'" Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S.Ct. 696, 701 (2020).

In light of the Supreme Court's holding in Acevedo, many bankruptcy practitioners were concerned about how their retention applications would be treated, whether they would be able to obtain approval for compensation and reimbursement of expenses for services rendered and expenses incurred post-filing but before entry of a retention order, and mechanically how to resolve those issues.

This premium content is locked for Entertainment Law & Finance subscribers only

  • 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

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers Image

There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Transfer Tax Implications on Real Property Leases Image

The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.