As reported by Valerie P. Morrison and Dylan G. Trache of Nelson Mullins Riley and Scarborough LLP (Washington, D.C.) in the ABI Bankruptcy Brief, the Supreme Court yesterday heard oral argument in the case of Baker Botts LLP, et al. v. Asarco LLC.
The issue before the Court is whether bankruptcy judges have discretion under Sect. 330(a) of the Bankruptcy Code to award compensation for fees and costs incurred by counsel to defend their fee applications in bankruptcy court. Based largely on a textual analysis of Sect. 330 of the Bankruptcy Code, the Fifth Circuit held that bankruptcy judges do not have such discretion, and established a per se rule prohibiting such awards. ASARCO, L.L.C. v. Jordan Hyden Womble Culbreth & Holzer, P.C. (In re ASARCO, L.L.C.), 751 F.3d 291 (5th Cir. 2014).
By contrast, the Ninth Circuit held in In re Smith, 317 F.3d 918, 929 (9th Cir. 2002), that bankruptcy courts do have discretion to award defense fees in appropriate circumstances. At the oral argument yesterday, the Court appeared to be divided as to whether fees incurred defending objections to fee applications are compensable.