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| vol 16, num 4 | December 2018 |
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| Co-Chair Corner |
| The Ethics and Professional Compensation Committee had an active 2018. We strived to continue to provide our members with enlightening and useful substantive information, while also offering enjoyable and valuable social and networking opportunities.
During 2018, our committee offered a wide variety of opportunities for ABI members to learn about timely and interesting issues facing professionals in the bankruptcy arena. The committee strives to use a variety of formats to provide opportunities to our membership, including conference panels, webinars, newsletters and networking events.
- At the Annual Spring Meeting, our committee paired with the Consumer Bankruptcy Committee and presented a panel presentation entitled, “Access to Chapter 13 and Chapter 7 Justice.” The session explored challenges to accessing relief in bankruptcy and discussed efforts being made to address those challenges.
- For the upcoming Winter Leadership Conference, we will join with the Real Estate Committee for a panel discussion entitled, “‘Realty Bites’: Ethical Issues in Real Estate Cases.”
- The committee will have published four newsletters by the end of this year.
- The committee is preparing a webinar for presentation in Winter 2019 entitled, “Trustee Ethics, Duties and Compensation Issues in Chapter 7 and Chapter 11.”
- The Committee is certainly not all work and no play! In 2018, we organized meetings and social events at national and regional ABI conferences to bolster membership, encourage members to become active in the committee, and provide valuable networking opportunities.
Thanks to all of you for your contributions and support of the Ethics and Professional Compensation Committee! If you are a current member of the Committee, we hope you continue your involvement with our committee. If you are not yet a member of our committee, we hope you will join us for 2019! |
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| Caution! Using Appearance Counsel in Consumer Cases Deemed Problematic |
| In In re D’Arata, the bankruptcy court ordered debtor’s counsel to disgorge the fee he received to represent the debtor in a chapter 7 case. The court also discussed and cautioned against the use of appearance counsel.
The debtor paid Mr. Ragues $900 to file a chapter 7 bankruptcy case and to represent him in connection with the case. The debtor communicated with Mr. Ragues online and over the phone, but they never met at the attorney’s office. While the case was a straightforward one, counsel committed a series of blunders from the start.
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| “Time Is Money”: Chapter 7 Fee Application Denied and Trustee Attorneys’ Fees Drastically Reduced as Not Reasonable |
| The chapter 7 trustee, in a July 2018 ruling, was denied compensation for services that were held to be “customary and statutory duties” that provided no further benefit to the bankruptcy estate and were not outside of those normal duties. The chapter 7 trustee’s attorneys were allowed reasonable compensation; however, the court noted that many of the entries provided with the application for compensation were not related to legal services requiring an attorney license and were not allowed.
Procedural Background
A chapter 13 was filed for the debtor, and the debtor paid into the chapter 13 plan for approximately two years. The plan provided for payment of a car, mortgage arrearage and 100 percent dividend to unsecured creditors.
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| Beware the Bankruptcy Conversion in Fee Collections |
| When seeking to collect post-petition fees from a chapter 7 debtor, beware of the conversion. If former counsel files a collection action against a debtor for post-petition fees in state court, failing to stay the action after a conversion to a chapter 13 case will result in a stay violation. The bankruptcy court in the Northern District of Illinois held the debtor’s former counsel liable for actual damages, pursuant to 11 U.S.C. § 362(k), for failing to stay a state court collection action after the debtor converted his case from a chapter 7 bankruptcy to a chapter 13 bankruptcy. |
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