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Attack on Attorneys’ Fees

in the oregon case of In re Hill, yet another bankruptcy court takes a crack at interpreting section 330 of the code dealing with Attorneys’ Fees. here the court defies precedent (even in its own district) and holds that unused advance fees paid by a chapter 7 debtor to its attorney in advance of filing become property of the bankruptcy estate and must be distributed to creditors by the trustee. in other words, despite the fact that the debtor wanted to pay its attorney in advance for what it knew would be post-filing litigation, and despite the fact that those fees were in fact to be used for that purpose, a bankruptcy court went ahead and decided to take the funds away from the attorney.

read my take on this trend here — granted i wrote this article a few years ago, but the message is still relevant.

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