Bankruptcy Litigation Committee
ABI Committee News
Volume 6, Number 6 / October 2009
In This Issue
The Trouble of the $1,000 Billable Hour in Bankruptcy - Limitations of Professional Compensation by the Bankruptcy Court under 11 U.S.C. §328
by: Taejin Kim
Emory University School of Law; Atlanta
Editor's Note: The following article, "The Trouble of the $1,000 Billable Hour in Bankruptcy - Limitations of Professional Compensation by the Bankruptcy Court under 11 U.S.C. §328," won the prize for third place in the First Annual ABI Bankruptcy Law Student Writing Competition. The article examines the court's ability to modify compensation arrangements and reviews the statutory provisions and policy considerations surrounding the issue. The author, Taejin Kim, is a member of the Emory University School of Law class of 2009. In addition to recognition and publication of his article in the Bankruptcy Litigation Committee Newsletter, Mr. Kim received a cash award of $500 and a one-year ABI membership.
The First Annual ABI Bankruptcy Law Student Writing Competition was headed by the Honorable Judith K. Fitzgerald, U.S. Bankruptcy Court for the Western District of Pennsylvania, who is the Special Projects/Task Force Leader for the Bankruptcy Litigation Committee, with assistance from the leadership and members of the Bankruptcy Litigation Committee. Please visit papers.abiworld.org for information regarding the second annual competition, with a submission deadline of March 31, 2010.
On Dec. 26, 2008, the Tribune Company, as the debtor-in-possession (DIP) of the estate, submitted an application for an order authorizing the employment and retention of Chicago-based firm Sidley Austin as its chapter 11 attorney. The application contained terms for, among other things, proposed compensation to Sidley Austin calculated on an hourly basis, with partner billing rates listed at $575 to $1,100 per hour. However, a second supplemental affidavit to the application, filed on Feb. 19, 2009, by James Conlan, co-chair of Sidley’s reorganization and bankruptcy group, contained a curious adjustment. Conlan stated that the highest billing rate charged by any Sidley partner was not to exceed $925 per hour. Did the attorneys at Sidley Austin lower their billing rates in 2009 in response to the downturn in the economy? Had they simply had a change of heart? Or was it something else?
Lien Preservation Does Not Give Trustee All Rights of a Lienholder
by: Elizabeth Filardi
St. John's University School of Law; Jamaica, N.Y.
In Morris v. St. John National Bank, 516 F.3d 1207 (10th Cir. 2008), the Tenth Circuit addressed the issue of whether a bankruptcy trustee who successfully avoids a lien and preserves the in rem security interest for the bankruptcy estate under the powers granted to him or her by the Bankruptcy Code automatically assumes all the rights the original lienholder may have against the debtor. The court, affirming the decisions of the bankruptcy court and Bankruptcy Appellate Panel (BAP), concluded that the trustee did not automatically assume all of the rights that the original lienholder may have against the debtor. Id. at 1212. The court determined that although the Bankruptcy Code does place the trustee in the shoes of the lienholder in certain respects, it does not include a right to contractual promises for future payments. Id. at 1210-11.