Committee to Hold Joint Meeting with Consumer Bankruptcy Committee at 2004 WLC
“Court Oversight of Creditor Professional Fees in Consumer Bankruptcy Cases: Urban Myth or Developing Practice Area”
The Professional Compensation and Consumer Bankruptcy Committees will hold a joint meeting on Friday, Dec. 3, at the 2004 Winter Leadership Conference. The meeting will include a discussion of issues relating to the allowance of creditor’s professional fees in chapter 7 and chapter 13 cases. In light of the increasing frequency of contracts that provide for attorney or “collection fees” in the world of consumer finance and the growing trend toward “nationalization” of consumer creditor practice in consumer bankruptcy cases, this is a topic of increasing importance to both debtor and creditor counsel. In addition, a review of “Waiver and Disclosure Issues in Bankruptcy Proceedings: Fleming, Jore, 11 U.S.C. §329 and Beyond,” will be discussed, as well as important developments in the “Area of Disclosure by Court-appointed Counsel in Bankruptcy Proceedings,” which will focus on the obligations of debtor’s counsel in consumer cases under 11 U.S.C. §329 and the developing impact of the recent Decisions of Fleming and Jore in business proceedings.
Bankruptcy Retention and Compensation Issues for Financial Advisors and Investment Bankers
Richard A. Chesley, Jones Day, Chicago
Ten Fundamentals of Bankruptcy Retention and Compensation
- File the application promptly.
- Fully disclose all actual and potential conflicts of interest.
- Fully explain the nature and extent of your services, their importance to the bankruptcy case, and your role in the case (non-duplication of effort) and expertise.
- This may not be Delaware or New York—be prepared for the retention hearing.
- Carefully review the declaration and retention order.
- Timely file all interim and final fee applications.
- Follow interim compensation orders.
- Explain how services were reasonably likely to benefit the estate.
- Remember the Johnson factors.
- Supplement, supplement, supplement wherever necessary.
Presented at the 2004 Investment Banking Program
Workouts, Restructurings and M&A Transaction Alternatives: The Dealmaker’s Perspective
Paul Steven Singerman and Adam D. Marshall; Berger Singerman, P.A., Business Reorganization Team, Miami
The Farmland Industries Decisions: Impact on the Retention and Payment of Investment Bankers in Chapter 11 Cases
Investment bankers and other financial advisors are retained and employed by chapter 11 debtors and statutorily appointed committees to assist in the maximization of the value of the estates’ assets by providing financial advisory services, marketing and sale efforts and debt and equity financing initiatives. Investment bankers, as professionals, must be retained pursuant to applicable provisions of the Bankruptcy Code and all terms of the proposed retention are subject to court approval. Court approval of fees and expenses is also required. Typically, fees and expenses for professionals retained by the trustee, the debtor or a committee are afforded administrative expense status and are paid from general estate funds.
Recently, however, the bankruptcy court presiding over the Farmlands Industries, Inc. et al cases held that certain fees of professionals were payable out of a specific creditor constituency’s recovery and not out of general estate funds. In re Farmland Industries, Inc., 286 B.R. 895 (Bankr. W.D. Mo. 2002; hereinafter the Farmland Opinion). The bankruptcy court was affirmed on appeal by the Bankruptcy Appellate Panel for the Eighth Circuit. In re Farmland Industries, Inc., 296 B.R. 188 (8th Cir. BAP 2003; hereinafter, the BAP Opinion). This paper will briefly address the background, circumstances and ramifications of the Farmland decisions.
In the Farmland cases, there were two competing creditor constituencies—general unsecured creditors (GUCs) and bondholders. It is unclear from the opinions the precise allocation of debt as between the GUCs and the bondholders. As will be illustrated below, the outcome turned on the existence of competing creditor constituencies.
Presented at the 2004 Investment Banking Program