Bankruptcy

9th Circuit BAP - Following US Supreme Court Opinion In Travelers, Unsecured Creditors Can Recover Post-Petition Attorneys Fees

By Scott Riddle

In a prior post, I discussed the Supreme Court case Travelers Casualty & Surety v. Pacific Gas & Electric (05-1429), (opinion available here) wherein the Supreme Court reversed the Ninth Circuit and held that the Bankruptcy Code does not forbid a claim for attorneys fees where such fees are provided for in a contract, even where the fees were generated in litigating Bankruptcy issues.

Left open was the question of whether unsecured creditors could recover, as part of their unsecured claims, post-petition attorney's fees incurred during the bankruptcy case.  The 9th Circuit BAP has recently answer the question with a "yes," in the case of In re SNTL Corp., BAP No. 06-1350-MoDK, 2007 WL 4625246 (9th Cir. BAP December 19, 2007) (pdf. available here).

Bob Eisenbach has written a thorough analysis of the SNTL on the Business Bankruptcy Blog, so please head over there to read his summary and comments.  

The bottom line of these cases is that unsecured creditors will (and probably should) include attorneys fees as part of their claim, at least until the other Circuit Courts rule on the issue.

Full post as published by Georgia Bankruptcy Blog on January 15, 2008 (boomark / email).