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2007 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

RECENT BANKRUPTCY DEVELOPMENTS

APPELLATE DECISIONS RELATED TO BANKRUPTCY
By William L. Norton III

mechanism - abandonment under § 554 - for a creditor to acquire property of the estate and that, if the trustee is guilty of malfeasance, the proper remedy is removal under § 324.)

330 Professional Compensation

In re Williams, 357 B.R. 434, 2007 WL 51188 (6th Cir. BAP Jan. 9, 2007) (Bankruptcy court erred when it denied fee application of debtor's counsel without conducting lodestar analysis. When debtor's counsel requested fees above presumptive fee for Chapter 7 case, bankruptcy court denied request based on a funding that the services performed were in the range of a routine case. Lodestar analysis, however, requires analysis of the reasonable rate and the lawyer's reasonable hours.)

In re Eliapo, 468 F.3d 592 (9th Cir. Nov. 13, 2006) (Bankruptcy Court erred in failing to offer Chapter 13 debtor's attorney an opportunity to object when the Court sua sponte reduced the amount sought in an attorney's fee application. Bankruptcy Rule 2017 applies to Chapter 13 fee applications and requires notice and a hearing consistent with § 102(1)(A). The Court's local rule that establishes presumptively appropriate debtors attorney fees for routine services in a Chapter 13 case is not inconsistent with § 330 requirements for evaluating reasonable compensation. The presumptive fee framework under review is optional, and its availability saves attorney and court time preparing and reviewing fee applications, encourages efficient representation, and speeds payments to attorneys.)

362(a)(1) Automatic Stay -- Legal Action

In re Kreisler, 478 F.3d 209 (4th Cir. Feb. 26, 2007) (Ejectment action against non-debtor wholly owned subsidiary of Chapter 11 debtor did not violate automatic stay. Action was not against the debtor under § 362(a)(1) because the tenant had not filed a bankruptcy petition. Debtor and tenant argued that "unusual circumstances" caused the stay to apply to the non-debtor tenant, but the court disagreed, finding that there was no identity between the debtor and tenant and a judgment against the tenant would not effectively operate as a judgment against the debtor. Action was not against property of the estate under § 362(a)(3) because the debtor had no interest in the leased premises despite its ownership of the tenant. Additionally, even though the ejectment action will likely cause the debtor's interest in the tenant to lose value, the stay nonetheless did not apply.)

AC and S, Inc. v. Travelers Casualty and Surety Co., 435 F.3d 252 (3rd Cir. Jan 19, 2006) (Arbitration award which diminished the estate of the debtor violated the automatic stay pursuant to § 362 and was thus void ab initio. Arbitration initiated by the debtor against its insuror should have been suspended by the arbitration panel when the insuror raised defenses that would effectively terminate the debtor's insurance coverage and thus threaten the assets of the

 

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