Firm Shareholder and Chair of the Firm’s Commercial Bankruptcy and Restructuring Practice, Rafael Zahralddin, has been appointed to Co-Chair the American Bar Association Business Bankruptcy Committee Task Force assigned to study and comment upon the United States Trustee Proposed Fee Guidelines. The United States Trustee Program (“USTP”), the part of the Department of Justice which oversees much of the bankruptcy process for the United States Government last changed its Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses filed under 11 U.S.C. § 330 in 1996 (“1996 Guidelines”). The USTP is revising the 1996 guidelines in phases and has drafted new proposed guidelines for reviewing applications for attorney compensation in larger chapter 11 cases (more than $50 million in combined assets and liabilities, aggregated for jointly administered cases) (“Proposed Guidelines”).
The proposed revisions are intended to meet a number of goals, including: making bankruptcy professional fees subject to market forces that would apply outside of bankruptcy, ensuring professional compensation is reasonable and necessary and maintaining the burden of proof of professionals to show their fees are reasonable and necessary, increasing transparency in compensation of estate-paid professionals, increasing client accountability for estate-paid professionals, encouraging the adoption of budgets and staffing plans by clients and their professionals, increasing efficiency, and increasing public confidence in the integrity of the bankruptcy compensation process.
The Task Force will examine the feasibility and impact of these proposals, specifically on costs on the bankruptcy process and important ethical considerations such as the attorney client privilege and the relationship between client and counsel. The USTP invites public review of and comment on these proposed guidelines by January 31, 2012.
The Firm’s Shelley Kinsella and Jonathan Stemerman will be assisting Mr. Zahralddin in the work of the Task Force. The Business Bankruptcy Committee is the world’s largest organization of bankruptcy restructuring lawyers made up exclusively of bankruptcy attorneys, law professors and judges. Mr. Zahralddin is the Co-Chair of the Sub-Committee on Trustees and Examiners within the Business Bankruptcy Committee. The Committee has become the go-to organization for bankruptcy reform, and develops and reviews proposed bankruptcy legislation and rules. As a nongovernmental organization recognized by the United Nations Commission on International Trade Law, the Committee is an important participant in UNCITRAL’s Insolvency Working Group.