Sibley Speaks to Law360 About SCOTUS Ruling in Baker Botts Fee Case
Patrick Sibley, a member of Pryor Cashman’s Bankruptcy, Reorganization & Creditors’ Rights Group, spoke with Law360 for its story, “Firms’ Fight Against Baker Botts Ruling Looks Futile.”
Law firms are attempting to use contract terms to circumvent the U.S. Supreme Court ruling that forces bankruptcy attorneys to cover the cost of defending their fee requests. However, Andrew Vara, acting U.S. trustee for Delaware, has taken a hard line against this type of fee-shifting. Vara has pending objections challenging the use of this contract language in two Chapter 11 cases involving the developer of the Baha Mar mega-resort and oil and gas piping manufacturer Boomerang Tube.
Vara attacks the premise that a fee defense provision can be agreed to be contractual in a retention agreement. He argues that the agreement is not governed by contracts law and instead must be approved by the court in accordance with the U.S. Bankruptcy Code and other statutes.
The official creditors committee in the Boomerang case has countered that the Baker Botts decision pertains only to Section 330 of the Bankruptcy Code and not 328(a), the section under which it is seeking approval of the retention application. The committee has also argued that the terms it uses in its application are in line with other practice areas and “commonly found in engagement letters outside of bankruptcy.”
According to Sibley: “I think the trustee’s position that you can't contract around the law makes a lot of sense. You can't contract around the Supreme Court's interpretation of the code, and a judge certainly can't enter an order that's not allowed under it.”
To read the article, which appeared in the August 28, 2015 edition of Law360, please click here.
