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The Bankruptcy StrategistFeaturesBankruptcyLitigation

Sixth Circuit Adds Results-Based Contingency to Fee Payment Approval

By Charles M. Tatelbaum and Corey D. Cohen
November 01, 2022

A recent decision from the U.S. Court of Appeals for the Sixth Circuit may be creating a tsunami of concern to those attorneys and law firms that regularly represent bankruptcy trustees. The decision, in essence, takes an hourly fee arrangement between the trustee and the trustee's attorneys and adds a results-based contingency to the approval of any fee payment authorization by the bankruptcy court.

The case of In re Village Apothecary, 21-1555 (6th Cir. Aug. 16, 2022), addresses whether a bankruptcy court may consider "results obtained" when determining whether fees are reasonable under Section 330(a)(3) of the Bankruptcy Code. Ultimately, the Sixth Circuit decided yes it could.

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