Washington – The U.S. Trustee Program (USTP) has issued new guidelines for the payment of attorneys’ fees and expenses in large Chapter 11 bankruptcy cases, aimed at enhancing disclosure and transparency in the compensation process and ensuring that attorneys’ fees are based on market rates.
The guidelines, which will go into effect on Nov. 1, 2013, were developed by the USTP to address concerns that bankruptcy attorneys’ costs are rising too rapidly and putting a burden on creditors and employees of debtor companies.
“The costs of bankruptcy fall on the creditors and employees of the debtor companies,” said Acting Associate Attorney General Tony West. “At a time when both the public and the most sophisticated participants in the bankruptcy process say bankruptcy attorneys’ costs are rising too rapidly, these guidelines are designed to ensure that statutory requirements limiting bankruptcy fees to market rates – not premium rates – are followed.”
The guidelines require a showing that the rates charged reflect market rates outside of bankruptcy, and provide for the use of budgets and staffing plans, disclosure of rate increases, and submission of billing records in an open, searchable electronic format.
The updated guidelines apply to attorneys’ fees and expenses in cases filed on or after Nov. 1, 2013, that meet the large case threshold of $50 million in assets and $50 million in liabilities.
USTP Director Clifford J. White III said the guidelines were developed in phases, with the first phase governing the USTP’s review of fees and expenses requested by attorneys in chapter 11 cases with $50 million or more in assets and $50 million or more in liabilities.
The guidelines were revised after two public comment periods and a public meeting, and USTP attorneys will vigorously enforce them, defending them in bankruptcy court and through appeals as appropriate.
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Key Facts
- State: Federal
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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