“Naturally, then, the bankruptcy court never approved the law firm’s retention,” the majority wrote. “Even so, the law firm provided legal work for King as the Chapter 11 Trustee.”
By May 2020, David’s case was converted to Chapter 13, with King not continuing as trustee. The Chapter 13 conversion order allowed King, as Chapter 11 trustee, to apply for reimbursement for Chapter 11 administrative expenses. King then sought $43,598 in legal fees, predominantly for Chapter 11 work.
Legal and Equity Arguments
David objected, stating the firm was only approved for Chapter 7 work. The bankruptcy court ruled that while the firm wasn’t properly retained for Chapter 11, King could apply retroactively. After rounds of legal exchanges, King initially succeeded in the Virginia district court.
The Fourth Circuit panel, however, overturned this, arguing that the bankruptcy code’s language about trustees refers to “the” trustee, implying only one current trustee can retain counsel and apply for fees. The majority found King’s cited precedents unavailing as they involved current trustees applying retroactively.
