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In re Hungry Horse

United States Bankruptcy Court for the District of New Mexico

574 B.R. 740 (2017)

Facts

Oil-field-services company Hungry Horse (debtor) filed a chapter 11 case in 2016. After Hungry Horse substituted its counsel in the bankruptcy action, it sought the bankruptcy court’s approval of its engagement agreement with its new law firm under 11 U.S.C. § 328(a). The engagement agreement provided, among other things, that Hungry Horse would pay the firm for reasonable legal fees incurred by the firm in obtaining court approval of the firm’s fee applications and for dealing with any objections to approval of the fee applications. The unsecured-creditors’ committee (creditors) objected to the engagement agreement. The committee argued that the agreement’s fee-defense provision was prohibited by Baker Botts LLP v. ASARCO LLC, 576 U.S. 121 (2015), in which the United States Supreme Court held that legal fees incurred in defending a fee application could not be awarded as reasonable compensation for services performed for a bankruptcy estate under 11 U.S.C. § 330.

Rule of Law

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Issue

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Holding and Reasoning (Thuma, J.)

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A "yes" or "no" answer to the question framed in the issue section;
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The procedural disposition (e.g., reversed and remanded, affirmed, etc.).

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