Comments on: Court allows attorney fees recovery in bankruptcy http://www.scotusblog.com/wp/court-allows-attorney-fees-recovery-in-bankruptcy/ The Supreme Court of the United States blog Thu, 26 Jun 2008 21:56:34 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: MalibuProf http://www.scotusblog.com/wp/court-allows-attorney-fees-recovery-in-bankruptcy/comment-page-1/#comment-11021 MalibuProf Sat, 24 Mar 2007 05:04:58 +0000 http://www.scotusblog.com/wp/uncategorized/court-allows-attorney-fees-recovery-in-bankruptcy/#comment-11021 The issue whether postpetition attorneys' fees can be added to prepetition unsecured claims in bankruptcy actually was not reached by the Court. The Ninth Circuit had a rule (the Phobian rule) that allowed such fees to be added to claims (assuming the agreement of the parties provided for fees) but only where the issues that caused the fees to be incurred were not bankruptcy law issues. Both Travelers and PG&E agreed that the Phobian rule lacked support in the Bankruptcy Code. The Court agreed, rejecting the Ninth Circuit's Phobian rule, and holding that allowance of fees does not depend on whether the issues that caused the fees to be incurred were bankruptcy law issues. But the Court did not decide the next logical question: whether the fees would be allowed. The Court explicitly did not reach the question whether certain provisions of the Bankruptcy Code barred allowance of postpetition fees altogether, with respect to prepetition unsecured claims. (For example, the Code allows postpetition interest for oversecured creditors, to the extent of their oversecurity. PG&E argued that, by implication, postpetition interest was not allowable on unsecured claims.) There is more that could be said, but that's probably enough for a comment. Mark S. Scarberry Pepperdine Univ. School of Law The issue whether postpetition attorneys’ fees can be added to prepetition unsecured claims in bankruptcy actually was not reached by the Court. The Ninth Circuit had a rule (the Phobian rule) that allowed such fees to be added to claims (assuming the agreement of the parties provided for fees) but only where the issues that caused the fees to be incurred were not bankruptcy law issues. Both Travelers and PG&E agreed that the Phobian rule lacked support in the Bankruptcy Code. The Court agreed, rejecting the Ninth Circuit’s Phobian rule, and holding that allowance of fees does not depend on whether the issues that caused the fees to be incurred were bankruptcy law issues. But the Court did not decide the next logical question: whether the fees would be allowed. The Court explicitly did not reach the question whether certain provisions of the Bankruptcy Code barred allowance of postpetition fees altogether, with respect to prepetition unsecured claims. (For example, the Code allows postpetition interest for oversecured creditors, to the extent of their oversecurity. PG&E argued that, by implication, postpetition interest was not allowable on unsecured claims.)

There is more that could be said, but that’s probably enough for a comment.

Mark S. Scarberry
Pepperdine Univ. School of Law

]]> By: Taylor Reynolds http://www.scotusblog.com/wp/court-allows-attorney-fees-recovery-in-bankruptcy/comment-page-1/#comment-11020 Taylor Reynolds Tue, 20 Mar 2007 14:09:00 +0000 http://www.scotusblog.com/wp/uncategorized/court-allows-attorney-fees-recovery-in-bankruptcy/#comment-11020 Another week, another unanimous reversal of the Ninth Circuit. This is getting embarrassing. Another week, another unanimous reversal of the Ninth Circuit. This is getting embarrassing.

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