Bankruptcy fees

Article written by Stephen J. Lubbun

Edited by Andrew Ross Sorkin

On September 20, 2010

The Backlash on Bankruptcy Fees

 

    The author discusses whether the fees set to handle chapter 11 bankruptcy are to high and what or who decides to much is to much. The author states we do not know how much it should cost because it depends on large and complex the companies are.

He goes on and says that if congress adopts fee caps or judges deem the expense to high "big law" will not do Chapter 11's because the creditors will not have the limitations the debtors would have and it would not be profitable for them. The debtors would then switch to different methods that collected the fees before getting to bankruptcy court such as prepackaged cases and prearranged sales to avoid the caps.

The author says this would make the process muddy which is not in the best interest of the public or the unsecured bondholders who might get 20 to 40 percent back in a chapter 11 bankruptcy.