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Bankr. W.D.N.C.: In re Kennedy- Reasonable Mortgage Attorney Fee's in Chapter 11

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By Ed Boltz, 3 March, 2024

Summary:

Wilmington Savings, a mortgage creditor of the Debtors, seeks to recover its attorney's fees and expenses pursuant to 11 U.S.C. § 506(b) and Rule 2016(a). Fed. R. Bankr. P Rule 2016(a). In total, Wilmington Savings seeks $70,529.00 in fees and $1,558.85 in expenses. These sums represent work performed by Wilmington Savings' counsel in this protracted Chapter 11 case and in pursuing a state court collection action against a non-debtor guarantor.  The Kennedys dispute this,  but applying the Johnson Factors the bankruptcy court allowed nearly all of the requested fees,  with the primary exception being the disallowance of "Fees on Fees"  for preparing and defending the fee application itself,  extending the Supreme Court decision in BakerBotts to likely preclude such attorneys fees not only under Â§330(b)  but also Â§506(d).

Commentary:

Unfortunately for the Kennedys,  since this case was a Chapter 11, rather than Chapter 13,  the disclosure requirements and deadlines of Rule 3002.1 did not apply.  Further, as a commercial  rather than home mortgage,  the parallel (and stronger) protections NCGS 45-91 also did not apply.  Whether those disclosure requirements and timelines could have been incorporated into the Chapter 11 plan is untested.

For a copy of the opinion, please see:

 

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in_re_kennedy.pdf (351.95 KB)
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