2006 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

CHAPTER 11 OPERATIONS

By Hon. Randolph J. Haines

In larger cases debtors' counsel frequently request that at least a substantial portion of their fees be paid on a monthly basis. Such a procedure has been utilized in the Ninth Circuit for many years under the authority of In re Knudsen Corp., 84 B.R. 668 (9^th Cir. BAP 1988). Such procedures have also been used for many years in several other districts, but apparently without reported authority. Recently, the Bankruptcy Courts for the District of Delaware and for the Western District of Pennsylvania have provided such reported authority. In re Mariner Post-Acute Network, Inc., 257 B.R. 723 (Bankr. D. Del. 2000); In re Pittsburgh Corning Corp., 255

B.R. 162 (Bankr. W.D. Pa. 2000). These opinions contain a good compilation many of the various procedures that have been used in many districts, and in some cases local rules or U.S. Trustee Guidelines.

The general procedure is for professionals to submit bills to the debtor and other parties in interest on a monthly basis. Parties have 10 days within which to object to all or any portion of such bills. In the absence of any objection, the debtor is authorized to pay 75% or 80% of the bill. The balance is sought pursuant to a quarterly fee application, to which normal fee app procedures apply.

IV. RECLAMATION RIGHTS

Pre-BAPCPA, Code § 546(c) preserved credit sellers' 10-day reclamation rights under Uniform Commercial Code § 2-702. It did so by limiting the trustee's avoiding powers under §§ 544(a), 545, 547 and 549 to the extent of the right of a seller, who has sold goods to the debtor in

adequate protection payments consisting of interest on lender's prepetition debt); In re Clinton Street Food Corp., 170 B.R. 216 (S.D.N.Y. 1994).

⁵²In re Ellingsen MacLean Oil Co., 834 F.2d 599, 604-05 (6th Cir. 1987), cert. denied, 488 U.S. 817 (1988) (waiver protected by § 364(e)); In re FCX, Inc., 54 B.R. 833 (Bankr. E.D. N.C. 1985)(waiver not protected by § 364(e)).

⇐ Back To Index | Next Page ⇒