Benchnotes

• Published in: American Bankruptcy Institute journal 2018-05, Vol.37 (5), p.6-79
• Main Authors: Hage, Paul R, Kaufman, Aaron M, Clisham, Patrick A
• Format: Article
• Language: English
• Subjects: Arbitration; Bankruptcy; Bankruptcy laws; Bankruptcy reorganization; Compensation; Federal court decisions; Fees & charges; Injunctions; Law firms; Liability; Limited liability companies; Litigation; State court decisions; Statutes of limitations; Trustees
• ISSN: 1931-7522

The LLC was awaiting the receipt of an $876,000 settlement check from an unrelated matter. Because the law firms that negotiated that settlement on the LLC's behalf had not yet received their $320,000 in legal fees, they filed a state court lawsuit against the LLC in order to secure payment. The second approach declines to presume 326(a) percentages as reasonable because the "bankruptcy court has discretion to award reasonable compensation only for actual and necessary services," and thus might award an amount less than that contemplated by 326(a) where appropriate.6 The Fifth Circuit adopted the first approach, finding that the percentage amounts listed in 326 are presumptively reasonable and should be awarded to a trustee absent extraordinary circumstances. [...]i]n removing Chapter 7 trustees from 330(a)(3) and directing courts to treat the trustee's compensation as a commission, Congress made [it] clear that a trustee's compensation should be determined on the basis of a percentage, rather than on a factor-based assessment of the trustee's services. If creditors wanted more information, the court stated that they could have objected to the plan and asked the bankruptcy court to require a more fulsome description. Since no one objected, the court concluded, neither Browning nor the bankruptcy court required the debtor to provide more information than it did. Co., - B.R. -,2018 WL 625101 (D. Hawaii 2018) (on appeal, district court upheld bankruptcy court ruling that creditor was not automatically entitled to assert claim under 11 U.S.C. 502(d) after creditor's repayment of fraudulent transfer; bankruptcy court did not err in disallowing the asserted 502(d) claim in reliance on its prior judgment in adversary proceeding giving rise to avoidance obligation; in prior adversary, bankruptcy court found that stock repurchase agreement giving rise to avoidance action was illegal, therefore creditor had no legitimate restitution claim; district court determined that court's ruling on trustee's claim objection, which included alternative requests for subordination without requiring filing of separate adversary proceeding, was harmless error because creditor did not suffer any prejudices as a result); and * Arrow smith v. U.S. (In re Health Diagnostic Lab.