The majority acknowledged that King’s attorneys legitimately worked and deserved compensation, but the law did not permit retroactive applications from former trustees. “The decision seems harsh to the law firm and produces an arguable windfall for the estate,” the majority wrote, but noted King’s application was “out of time.”
Donald King bankruptcy Fees : Dissenting Opinion
Judge Wilkinson’s dissent emphasized the majority’s excessive focus on the trustee’s status at the time of application rather than the work performed. He argued that the conversion to Chapter 13 didn’t erase the Chapter 11 case and that King remained responsible for wrapping it up. Wilkinson warned the decision undermined bankruptcy courts’ discretion to grant or deny fee applications based on merit, favoring a strict rule instead.
“If the application is in some way undeserving, the bankruptcy court can exercise its equitable discretion to deny it,” Wilkinson wrote. “But a bright-line rule is both textually and practically untenable.”
Donald King bankruptcy Fees : Conclusion
The Fourth Circuit’s ruling underscores the strict interpretation of the bankruptcy code concerning trustee applications for fees, affecting how former trustees like Donald King can seek compensation.
