Perils Of The Courtroom

The judge approved my fee application for another $8,000 in a Chapter 13 that was never confirmed, but ambushed me on the statutory rules of conversion.  It wasn’t the fight I had prepared to make over getting paid.

My fee application was an inch thick;  it sliced and diced the work I had done before the debtor conceded that self employment in the real estate world would not  allow him to keep the house. I had written it to answer the nagging judicial voice in my head:  “Ms. Moran, how could it have cost that much?”

Getting paid for the work we do for impecunious clients is perhaps the hardest part of bankruptcy practice.  Our clients enter the fray with few weapons except the Code.  Their opponents are a seasoned trustee and institutional creditors, who are dispassionate and well funded.  The debtor is neither and brings emotional baggage into the courtroom besides.

I would posit that the work that consumer debtor’s counsel does is every bit as complex as that done by Chapter 11 lawyers, against longer odds, yet the bench often underestimates the value of our efforts and sees our end product as a fungible commodity available at a flat fee, regardless.  The Chapter 11 folks get astronomical hourly fees, with little question.  Consumer lawyers have to fight to get more than the no look or presumptive fee.

Fortunately, that wasn’t the setting for yesterday’s confrontation.  The fees were approved without pushback.  It was the issue of whether the funds paid into the Chapter 13 before the case was converted belonged to the debtor or to the Chapter 7 estate that gave the judge pause.

As luck would have it, issues on conversion of a bankruptcy cases from Chapter 13 to Chapter 7 was my topic at last week’s bankruptcy seminar. I could quote, with some stumbling, Section 348 that deals exactly with this issue:  the bankruptcy estate on conversion to 7 consists of the property that constituted the estate at filing which is still in the debtor’s possession at conversion.  The money in the trustee’s hands was post petition earnings, and so it goes back to the debtor, less approved administrative fees according to § 1326.

Bingo, I get paid.  But I was lucky, in that the unexpected resistance came on an issue I was prepared to overcome.  When it isn’t so, be prepared to offer, “Would the court allow me to brief that issue?”

Image courtesy of f_mafra

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  • Good job! I’m doing long form fee apps now on any business cases and I haven’t had a fight on fees yet, but I could certainly envision one with pre-confirmation fees of $8K. I’m glad to see it worked out for you.

  • >issues on conversion of a bankruptcy cases from Chapter 13 to Chapter 7 was my topic at last week’s bankruptcy seminar.<

    The link for "last week’s bankruptcy seminar" goes to your Five Steps To Due Diligence article, and I don't see anything there about conversion to 7. Should that link have gone to a different article?

    • Cathy

      The 5 steps to due diligence also came out of the same 2 day bankruptcy seminar in Sacramento. No point in linking to the announcement of the seminar now that’s it’s past.

      I’ll write on vesting and conversion later. It was a big and difficult topic, perhaps best taken in small bites.