Sometimes a Post-Petition Attorneys’ Fee Award Is Just a Valueless Post-Petition Claim

Types : Bylined Articles

To qualify for an administrative-expense claim under § 503(b)(1)(A) of the Bankruptcy Code, a movant must establish that the expense arose from a transaction with the estate, and that such transaction benefited the estate. The U.S. Supreme Court’s Reading exception provides a limited exception to the estate-benefit requirement if the movant is able to establish that the claim arose from the wrongful conduct of a receiver/trustee. On Sept. 29, 2022, the U.S. Bankruptcy Court for the Western District of Oklahoma held that the Reading exception did not apply to a fee-shifting statutory award of attorneys’ fees resulting from post-petition litigation pursued unsuccessfully by a chapter 7 trustee.