What Are the Odds?
March 02, 2004
28 U.S.C. ' 157(d) contains the standards for mandatory or permissive withdrawal of the reference from the Bankruptcy Court to the District Court, which…
Secret Liens: Can They Really Have Super-Priority Status?
March 02, 2004
In the restructuring world certain constants exist: The Bankruptcy Code (Code) has not dramatically changed since 1978, a Chapter 7 corporate debtor cannot receive a discharge, and exemptions are defined to the penny. But be wary -- there are unknown pitfalls out there. State governments, to appear responsive to local issues caused by distressed businesses, have increasingly enacted laws that spring "secret liens" or other penalties on debtors. Although bankruptcy practitioners may instinctively deride such laws as subordinate to the federal Code, recent federal opinions disagree.
Critical Ruling on Compensation from Supreme Court
March 02, 2004
The Supreme Court has held that Bankruptcy Code Section 330(a)(1) does not allow a Chapter 7 debtor's attorney to be compensated from the estate unless the attorney is employed by the Trustee with the approval of the Bankruptcy Court. Lamie v. United States Trustee, 2000 WL 110846 (U.S. 2004). This decision conclusively ends the controversy over the 1994 amendments to that Section, and puts Chapter 7 debtors' counsel on notice that, if not retained pursuant to Section 327, they are on their own with respect to fees.
What Should You Know About the Rules of Evidence?
March 02, 2004
In last month's issue, we discussed the fact that bankruptcy lawyers may think they do not have to worry about the rules of evidence ' and we then went on to prove otherwise. The Federal Rules of Evidence apply to most issues that arise in bankruptcy cases, according to Rule 9017 of the Federal rules of Bankruptcy Procedure. We discussed two of the four useful subjects under these rules: attorney-client privilege, and attorney work-product doctrine. Part Two of this article, below, discusses settlement offers and affidavits.
What Leasing Lawyers Should Know About the Rules of Evidence
March 01, 2004
It is an unfortunate consequence of the leasing business that leasing lawyers often become involved in bankruptcy matters. These attorneys, who rarely visit a courtroom, may think they don't need to worry about the rules of evidence. Yet evidentiary rules can provide critical protections. In a typical case or negotiation, lawyers create and circulate tremendous amounts of information ' much of which would be potentially damaging if obtained by other parties. To protect this information, leasing counsel need to be familiar with the rules of evidence and how courts have interpreted these rules. The case law interpreting these rules is not static; rather, it is constantly evolving in ways relevant to counsel who specialize in corporate insolvency. For example, a series of recent cases has explored the boundaries of the attorney-client privilege, examining such questions as, if counsel for a creditors' committee hires a financial expert, is the expert's work protected?
Professional Fees: How to Get a Bankruptcy Judge's Attention
February 09, 2004
How does a bankruptcy professional get the court's attention on fees? Chief Bankruptcy Judge Mary F. Walrath of the District of Delaware answered the question with a detailed 33-page opinion on Dec. 23, 2003. <i>In re Fleming Companies, Inc., et al</i>, 2003 Bankr. LEXIS 1727 (Bankr. D. Del. 2003). Disposing of an objection by the United States Trustee to interim professional fee applications, Judge Walrath said she would "reduce the fees requested by the Debtors' professionals." <i>Id.</i> at 5. Not exactly the kind of attention any lawyer wants.
What Should You Know About the Rules of Evidence?
February 09, 2004
Bankruptcy lawyers who rarely visit a courtroom may think they do not need to worry about the rules of evidence. Yet evidentiary rules can provide critical protections. In a typical case or negotiation, lawyers create and circulate tremendous amounts of information -- much of which would be potentially damaging if obtained by other parties. To protect this information, bankruptcy lawyers need to be familiar with the rules of evidence and how courts have interpreted these rules.
Official Committee Members: Fiduciary Duty Liability
February 09, 2004
Members of official creditors' committees in Chapter 11 cases owe a fiduciary duty to the entire body of unsecured creditors. <i>See Woods v. City National Bank</i>, 312 U.S. 262, 268-69 (1941). As fiduciaries, committee members should have undivided loyalty to those they serve, free of any conflict of interest. <i>Id</i>. The imposition of such a broad duty to unsecured creditors generally might be otherwise unremarkable, except that committee members themselves obviously have significant selfish interests in the outcome of the bankruptcy case.
