### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 11-41010

In the Matter of: ASARCO, L.L.C., Debtors,
A SARCO, L.L.C.; ASARCO INCORPORATED; AMERICAS MINING CORPORATION, Appellants Cross-Appellees,
v. BARCLAYS CAPITAL, INCORPORATED, Appellee Cross-Appellant.

Appeals from the United States District Court for the

Southern District of Texas

Before WIENER, ELROD, and SOUTHWICK, Circuit Judges. JENNIFER WALKER ELROD, Circuit Judge: In th is fee dispute, we are asked to determine whether the bankruptcy court erred in: (1) awarding a $975,000 fee en h a n c e m e n t to Barclays Capital, Inc. (“Barcl a y s”) pursuant to 11 U.S.C. § 328(a); and (2) denying Barclays’s request for a $2 million “success fee” based on the successful o u tcome of ASARCO, L.L.C.’s Chapter 11 bankruptcy proceeding. For the following
reasons, we R EVERSE the $975,000 fee enhancement and REMAND to the district court for further proceedings consistent with this opinion. U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D Decem ber 1 1, 2 012 Lyle W . Cayce Clerk Case: 11-41010 Document: 00512079670 Page: 1 Date Filed: 12/11/2012No. 11-41010 I. In August 2005, ASARCO, a mining company based in the United States and owned by Grupo Mexico S.A.B. d e C.V., filed a voluntary Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Southern District of Texas. ASARCO’s bankruptcy filing was precipitated by “a mounting labor crisis, billions of dollars in environmental an d a sbestos liability, and a decline in copper prices

. . . .” ASARCO LLC v. Barclays Capital Inc. (In re ASARCO LLC) , 457 B.R. 575, 578 (S.D. Tex. 20 11) ( ASARCO II

). Shortly a f

t e r the petition date, ASARCO filed an application to retain Lehm an Brothers (“Lehman”) as its financial advisor and investment banker during the course of t h e b a n kruptcy proceeding. In October 2005, the bankruptcy court approved ASARCO’s application to retain Lehman pursuant to § § 327(a) and 328(a) of the Bankruptcy Code. See 11 U.S.C. §§ 327(a) and 328(a). ASARCO’s engagement l e tter with Lehman (“Engagement Letter”) provided that Lehman would perform the following services:

a. Advise and assist [ASARCO ] i n formulating a plan of reorganization and/or analyzing any proposed plan, incl u d i ng assisti n g i n the plan negotiation and confirmation process of a Restructuring Transaction under Chapter 11 of the Bankruptcy Code;
b. In connection therewith, provide financial advice and assistance to [ASARCO] in structu r i n g any new securities to be issued in a Restructuring Transaction;

c
. Participate in negotiations among [ASARCO] and its creditors, unions, suppliers, lessors and other int e r e s t e d p arti e s r e l ating to the Chapter 11 Case;
d. Participate in hearings before the bankruptcy court with respect to the matters upon which L e h m a n Brothers has provided advice,

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including, as relevant, coordinating with [ASARCO’s] counsel with respect to testimony in connection therewith;

e. Provide expert witness testimony concerning any of the subjects encompassed by the other financial advisory services;
f. Upon request, revie w a n d analyze any proposals [ASARCO] receives from third parties i n connection with a Transaction, including, without limitation, any p ro p o s al s f o r deb t o r - in - p o s s e s s i o n (“DIP”) financing and/or exit financing;

g. Assist [ASARCO] in connect i o n w ith [ASARCO’s] liquidity analysis;
h

. R evi e w a n d a n alyze [ASARCO’s] business, operations, properties, financial condition a n d prospects and financial projections (including business plans provided by [ASARCO]);
i

. Evaluate [ASARCO’s] debt capacity in light of its projected c a s h flows and assist in the determination of an a p propriate capital structure for [ASARCO]; j. Analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by any Transaction;
k. Provide strategic advice with regard to restructuring or refinancing [ASARCO’s] financial obligations;
l. Assi s t i n the drafting, preparation and distribution of selected information and other related documentation describing [ASARCO] and the terms of a potential transaction;

m. A ssist [ASARCO] in identifying, contacting and evaluating potential purchasers for any Sale Transaction; and

n. Provide such other advisory services as are customarily provided in connection with the analysis and negotiation of a Restructuring Transaction or a Sale Transaction, as requested.

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ASARCO II

, 457 B.R. at 578–79. The Engagement Letter also listed services that were outside the scope of Lehman’s e n gagement, including “accounting, audit, crisis manage m e n t, or business consulting services,” and “designing or implementing operating, organizational, administrative, ca s h management or liquidity improvements , o r a n y advice or opinions with respect to solvency in connection with any transaction.” Id. at 579 (internal quotation marks omitted). As compensation for the aforementioned services, ASARCO agreed to pay Lehman a $100,000 monthly advisory fee for the first 24 months of service and $75,000 per month thereafter until the end of Lehman’s engagement. ASARCO also agreed to pay Lehman a $4 million transaction fee; however, 100% of the advisory fees paid during the first 24 months and 50% of the advisory fees paid thereafter would be credited towards the $4 million transaction fee. In Au gu s t 2 0 07, and again in January 2008, ASARCO applied to the bankruptcy court for permission to expand the scope of Lehman’s engagement and augment Lehman’s compensation pa c k a ge. ASARCO stated that it had originally anticipated that Lehman’s role in the ba n k r u p tcy proceeding would be limited and thus had negotiated the Engagement Letter with that limited role in mind. After Lehman was retained, however, ASARCO regularly a s ked Lehman to undertake additional (and, at times, critical) responsibilities that fell outside the scope of the Engagement L e t t e r. ASARCO wanted to compensate Lehman for these additional servi c e s and to redefine the terms governing its retention of Lehman for the remaining months of its engagement. With regard to compensation, ASARCO sought to increase Lehman’s monthly advisory fee retroactively to $150,000 for the period between April 2007 and September 2008. In addition, Lehman asked the bankruptcy court for authority to apply for “an additional discr e t i o n ary fee based [on] the successful outcome” of ASARCO’s b a nkruptcy. In its January 2008 application, ASARCO also requ e s t e d

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permission to pay L e h m a n a total of $1 million for specified services that it would render in connection with three pending fraudulent-transfer proceedings. In May 2008, the bankruptcy court approved ASARCO’s request to pay Lehman $1 million for services related to the fraudulent-transfer proceedings, but it declined to approve any of the other proposed revisions to the Engagement Letter. See In re ASARCO LLC, 2010 WL 4976937, at *3 (Bankr. S.D. Tex. Dec. 2, 2010) (

ASARCO I

). According to the bankruptcy court: Lehman was bound by the terms of its origin a l engagement but could, und e r § 3 28(a), apply for additional compensation after the conclusion of its employment if it could prove that its original terms and conditions w e r e “improvident in light of developments not capable of being anticipated at the time of fixing of such terms and conditions.” Id. (quoting 11 U.S.C. § 328(a)). Less than four months later, in September 2008, Lehman’s parent company, Lehman Brothers Holdings Inc., filed its own Chapter 11 bankruptcy petition, commencing the largest bankruptcy proceeding in U n i t ed States history. And, a week after that, Barclays acquired Lehman’s investment banking and financial advisory businesses. 1 Barclays informed ASARCO that it was not willing to proceed under the terms of the Engagement Letter. ASARCO subsequent l y agreed to increase Barclays’s compensation and, in l a t e N ovember 2008, the bankruptcy court approved t h e r evised terms of Barclays’s engagement (“Revised Engagement 2

For the sak e of clar ity, we wi ll ref er to Lehm an as Barcl ays for the rem aind er of this 1 opi nion, eve n w hen dis cus sin g even ts t hat pr ece dedBar clays ’s ac quis itio n o f Lehm an. ASARCO and Barcl ays cont em plat ed that the sam e team of inves tm ent bank ers and 2 fina ncial advis ors that pr evi o u s l y a s sis ted ASARCO unde r the banner of Lehm an wo uld cont inue to se rve ASARCO as ne wl y-m inte d me mbe rs of Bar clays

. 5 Case: 11-41010 Document: 00512079670 Page: 5 Date Filed: 12/11/2012No. 11-41010

Letter”) in accordance with §§ 327(a) and 328(a) of the Bankruptcy Code. The 3 Revised Engagement Letter provided that Barclays would receive a monthly advisory fee of $225,000 and a transaction fee of $5 million. Unlike the original Engagement Letter, the Revised Eng a gement Letter specified that ASARCO’s monthly advisory fee payment s w o u l d not be credited towards the $5 million transaction fee. In addition, the Revised Engagement Letter authorized Barclays to seek a “discretionary fee based upon the successful outco m e o f the case.” Barclays then proceeded to provide its services t o A SAR C O up to the point of plan confirmation. In November 2009, the bankruptcy court approved the b a n k r u p tcy plan that was presented by Grupo Mexico, which provided for: (1) a 100% re t u r n t o all of ASARCO’s creditors; and (2) Grupo Mexico’s r e a c q uisition of ASARCO. The confirmed plan “result[ed] in one of the most successful bankruptcies in the United States in history.” ASARCO II , 457 B.R. at 580. The bankruptcy court praised Barclays for helping to make this outcome possible, remarking that “[d]uring its more than four years of int e n s ive service Lehman and then B ar[clays] played a critical role in achieving the successful reorganization o f [ASARCO].” ASARCO I , 2010 WL 4976937, at *13

. After the plan’s confirmation, Barclays submitted a final fee appli c a t i o n requesting, inter alia , (1) $1,202,500 for “unanticipated services”; (2) a $ 2 million

success fee (“Success Fee”) based on the overall outcome of ASARCO’s reorganization; and (3 ) a $ 6 million auction fee (“Auction Fee”) for Barclays’s assistance in marketing and auctioning one o f t h e bankruptcy estate’s largest

The bank rup tcy cour t’s ord er st ated , in per tine nt par t, that “f ee app lica tio ns fil ed by 3 [Bar clays ] sha ll be subje ct toreviewpurs uant tothe st andar ds s et for th in Sec tio n 32 8(a) of the Bank rup tcy Code and not subject to the st andar d of revie w se t for th in Sec tio n 330 of the Bank rup tcy Code .” 6 Case: 11-41010 Document: 00512079670 Page: 6 Date Filed: 12/11/2012No. 11-41010

a s s ets. In December 2010, the bankruptcy court ruled that Barclays c o u l d

4

recover an addition a l $ 9 75,000 for the “unanticipated services” pursuant to § 328(a) of the Bankruptcy Code. I d

. a t * 8

. The bankruptcy court denied Barclays’s request for the Success Fee and the Auction Fee. Id. at *13. The reorganized ASARCO a p p e aled the bankruptcy court’s award of $975,000 to Barclays, and Barclays appealed the bankruptcy c o urt’ s denial of the Success Fee and Auction Fee. ASARCO II , 457 B.R. a t 5 7 7–78. The district court affirmed all of the bankruptcy court’s decisions. Id. at 594. Thi s appeal followed, in which ASARCO ch all e n ge s th e $ 9 7 5 , 0 0 0 f e e aw ar d and Barclays contests the denial of its request for a $2 million success fee. Barclays has not challenged the denial of its request for a $6 millio n Auction Fee. II. In reviewing the rulings of the b a nkruptcy court, this court applies the

same standards of review as applied by the district court. In re Scopac , 624 F.3d 274, 279–80 (5th Cir. 2010). We review the award of attorneys’ fees for abuse of discretion. In re Barron , 225 F.3d 583, 585 (5th Cir. 2 0 0 0 ) (Ba r ron I ); see also In re Pilgrim’s Pride Corp. , 690 F.3d 650, 657–61 (5th Cir. 2012). In conducting this review, we analyze the legal conclusions that guided the awarding court’s determinations de novo and that court’s findings of fa c t f o r clear error. In re Coho Energy Inc. , 395 F.3d 198, 204 (5th Cir. 2004); In re Co n s o l

. Bancshares, Inc. , 785 F.2d 1249, 1252 (5th Cir. 1986). We also review mixed questions of law and fact de novo. In re Quinlivan , 434 F.3d 314, 318 (5th Cir. 200 5).

The requ es t for the Auction Fee wa s prem ise d on a sup ple me ntal engagem ent let ter 4 that Barcl ays ente red into wi th ASARCO

. Th e b ank rup tcy cour t had never app roved this sup ple me ntal engagem ent let ter

. 7 Case: 11-41010 Document: 00512079670 Page: 7 Date Filed: 12/11/2012No. 11-41010 III. The first issue we cons i d e r is whether the bankruptcy court erred in awarding $9 7 5 , 0 0 0 to Barclays pursuant to § 328(a) of the Bankruptcy Code. ASARCO contends that the court erred in so doing because the s ubsequent developments giving rise to the additional services provided by Barclays were not “incapable of anticipation,” which is a necessary prerequisite under § 328(a) for increasing such fees. Barclays counters that it provided numerous services that were both outside of the scope of the Revised Engagement Letter and “not capable of being anticipated” at the time the bankruptcy court approved Barclays’s retention, justi f yi n g t he $975,000 fee enhancement. As set forth below, we agree with ASARCO that the bankruptcy court erred in awarding the $975,000 fee enhancement. A. Before delving into the merits of this case, w e d e e m it useful to consult § 328(a) of the Bankruptcy Code and our relevant case law interpreting it. Section 328(a) provides that: The trustee, or a committee appointed under sectio n 1 1 0 2 of this title, with the court’s approval , m a y e mploy or authorize the employment of a professional person under section 32 7 or 1103 of this title, as the case may be, on a n y reasonable terms and condition s of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employme n t , if such terms and conditions prove to have beenimprovident in light of developments not capable of being anticipated at t h e time of the fixing of such terms and conditions. 11 U.S.C. § 328(a) (emphasis added). We have repeat e dly int erp r e t e d § 3 28(a) as meaning precisely what it says: A professional may be retained on any reasonable terms; but, once those terms

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have been approved pursuant to § 328(a), the court may not stray from them at the end o f t he engagement unless developments subsequent to the original approval that were incapable of being anticipated render the terms improvident. See Coho Energy , 395 F.3d at 204–05; In re Barron , 325 F.3d 690, 693 (5th Cir. 2003) (Barron II

); Barron I

, 225 F.3d at 586 (admonishing the bankruptcy court for failing to rely “upon the plain language of” § 328(a)); see also In re Nucentrix Broadband Networks, Inc. , 314 B.R. 574, 580 ( B a n k r
. N.D. Tex. 2004) (“As taught by the Fifth Circuit, the bankruptcy court must honor the plain meaning of Section 328.”). Section 328(a) therefore creates a “high hurdle” for a movant seeking to revise the terms governing a prof e s s io n al’ s compensation ex post facto

. In re Smart World Techs., LLC, 552 F. 3 d 228, 234–35 (2d Cir. 2009) ( “Surprisingly few cases have construed [§ 328(a)’s] language, but those that have make it evident that it is a high hurdle to clear.”); s e e a lso Coho Energy , 395 F

. 3 d a t 2 0 5 (commenting that § 328(a) sets a “high standard”). Such a movant must show not merely that a compensation adjustment is appropriate in light of subsequent developments that were previously unforeseen or unanticipated by the parties; instead, the movant is tasked with the weightier burden of proving that the subsequent d e v e l o p m ents were incapable of being anticipated at the time the engagement was approved. See Barron II , 325 F.3d at 693 (“[T]he intervening circumstances must have be e n i n capable of anticipation , n o t merely unanticipated.”); Barron I , 225 F.3d at 586 (“It is not enough that the deve l o p m e nt s w e r e simply unforeseen.”); Smart World , 552 F.3d at 235 (“[S]imply because the size and scope of a settlem e n t h a d n o t actually been anticipated, it do e s n o t f ollow that it was incapable of anticipation .”). Likewise, before a court may revise a compensation agreement, it must explain with specificity why the subsequent developments we r e “ incapable of being foreseen.” Barron II

, 325 F.3d at 693; see also 3 Collier on Bankruptcy § 328.01 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2009) (“A failure by the bankruptcy court
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to make a record establishing that the approval was improvident and setting out with specificity (not conclusory statements) the development that could not have been anticipated at the time of approval will be insufficient to comply with the requirements of s e c t i on 328.”) (emphasis added); cf. In re Evangeline Ref. Co. , 890 F.2d 1312, 1327–28 (5th Cir. 1989) (“If a court awa r d s f e e s but fails to explain why compensation was awarded at the level it was given, it is difficult, if not impossible, for an appellate court to engage in meaningful review of a fee award.”). Section 328(a)’s establishment of such a “h i gh hurdle” was no accident. Congress enacted § 328(a) to eliminate the previous uncertainty associated with professional compensation in b a n kruptcy proceedings, even at the risk of potentially underpaying, or, conversely, providing a windfall to, p r o f essionals retained by the estate under § 328(a). Coho Energy , 395 F.3d at 204 (“When [the bankruptcy courts’] fee discretion began to dissuade professionals from offering their services to debtors, Congress passed section 328(a) of the bankruptcy code, which allowed profe s s i onals to have greater certainty as to their eventual payment.”); see also Barron II , 325 F.3d at 695 (Jon e s , C

. J

. , concurring) (referring to the attorney’s fee as a “sizeab l e w indfall” but agreeing that the attorney was entitled to receive it under § 328(a)); Smart World , 552 F.3d at 232 (“Where the court pre-approves the terms and conditions of the retention under section 328(a), its power to amend those terms is severely constrained.”); In re Nat’l Gypsum Co. , 123 F.3d 861, 862–63 (5th Cir. 1997) (“If the most competent professionals are to be available for complicated capital restructuring and the development of successful corporate reorganization, they must know what they will receive for their expertise and commitment. Courts mus t p r o t e c t those agreements and expectations, once found to be acceptable.”). Thus, consistent with § 3 2 8 ( a) ’ s text and purpose, we have reversed a bankruptcy court’s reduction of an attorney’s conting e n c y fee based on the

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limited amount of work that wa s n e eded for the attorney to prevail in an adversar y proceeding. Barron II , 325 F.3d at 691–92. In Barron II , the bankruptcy court had approved a 33% c o n t ingency fee under § 328(a) for an attorney retained by the estate to p u r s u e a fraudulent transfer action against the debtor’s husband. I d

. Af ter expeditiously obtaining and collecting on a judgment for $160,000, the attorney filed an application seekin g a $ 5 3 ,333.33 fee, which amounted to 33% of the recovery. Id. at 692. The bankruptcy court refused to approve the ap p l i c a t i on and instead reduced the attorney’s fee to $24,341.25. Id. The court ex p l a i n e d t h a t a $53,333.33 fee was too high, and thus, improvident, in light of three developments: (1) it “did not anticipate the substantial amount of the subsequent recovery”; (2) the adversary proceeding

w a s a “slam dunk,” which enabled the attorney to prevail quickly; and (3 ) t h e judgment was collected with “relative ease.” Id. at 693. We reversed and reinstated the original contingency fee because: (1) the bankruptcy cou r t had failed to explain specifically why the three subsequent developments were actually incapable of anticipation; and (2) the record indicated that the developments were foreseeable. Id. at 693–94. In so doing, 5

we made clear that fee arrangements approved under § 328(a) may not be cast aside merely because the fee appears excessiv e i n h i n d sight at the end of the

case. I d

. a t 693–95; see also Smart World , 552 F.3d at 235 (“[T]he fact that contingency fees may appear excessive in retros p e c t is not a ground to reduce them because ‘early success b y counsel is always a possibility capable of being

In s u p por t of our conc lus ion that the deve lop me nts we re for es eeabl e, we expla in e d 5 that : (1) the bank rup tcy cour t had pr evious ly rec eived doc ume nts indi cat ing that the husb and
ow ed $160, 000; (2) bef ore the att orne y wa s ret ained , cre dit ors had argued that the fr audul ent tra nsf er pr oce edi ng “w ould pr ove eas y”; and( 3) “[t] here[wa s] noevi denc e t hat [t he deb tor ’s husb and] did not have fund s wi th wh ich to pay an event ual judgm e n t o r t hat he wo uld be incli ned to avoid his obligat ion. Altho ugh ther e wa s no cer taint y that [t he att orne y] wo uld be able to coll ect the judgm ent, it se em s to u s o n e coul d equall y reas onably antic ipat e that he mi ght not unrea so nably avoid paym ent, even if ther e wa s so me pos sib ilit y that c o l l e c t ion
wo uld not be eas y.” Id. at693 –94. 11 Case: 11-41010 Document: 00512079670 Page: 11 Date Filed: 12/11/2012No. 11-41010

anticipated.’” (quoting In re Gilbertson , 2007 WL 433096, at *5 (E.D. Wisc. Feb. 4, 2007)). Such arrangements will be h o n o r e d unless they are proved to fit within § 328(a)’s narrow improvidence exception. Barron II , 325 F.3d at 694. We have upheld a bankruptcy court’s revision of a fee arrangement pursuant to § 328(a)’s improvidence excepti o n o n o n l y one occasion. See Coho Energy , 395 F

. 3 d a t 2 0 5

. In Coho Energy , the debtor hired a law firm to represent it in a contract dispute. Id. at 200–01. The fee agreement, which was approved under § 328(a), provided that the a t t o r n e ys would receive a 30% contingency fee, and that any disputes between that firm and the debtor would be resolved thro u gh arbitration. Id. at 201. The debtor subsequently terminated its relationship with that law firm and hired another to continue the litigation that had been commenced by the initial firm. Id. T h e s u c c e s s o r law firm ultimately obtained an $8.5 million settlement in the debtor’s favor. Id. Even though the new firm was successful in settling the c o n t ract dispute, the first firm initiated an arbitration proceeding against the debtor to re c o v e r i ts fees. Id. N o t h avi ng been informed of the $8.5 million settlement, the arbitrator presumed that the litigation w ould settle for approximately $20 million and generate a $5.9 million contingency fee award for the original law firm. Id. at 6 201, 205. The bankruptcy court did not adhere to the arbitrator’s findings, and instead awarded the original firm only $1,540,625 in legal fees. Id. at 202. We affirmed the bankruptcy court’s decision, holding that: One of the findings of the arbitration panel was that the full amount [the attorney] would be entitled to under the contract would be $5.9 million. This shows that the arbitration panel was operating on the
as s umption that the total settlement would be approximately $20 million. That the arbitration panel would be kept so ill-informed as

The arbit rat or als o det erm ined t h a t the origi nal fir m wo uld be enti tle d to a $2.9 6 mi llionf ee bas ed on the quantum m eru it doc tri ne. Id. 12 Case: 11-41010 Document: 00512079670 Page: 12 Date Filed: 12/11/2012No. 11-41010

t o u s e figures two and a half times in excess of the actual a m o u n t qualifies as an unanticipatable development . . . . Id. at 205. Thus, Coho Energy teaches that § 328(a)’s improvidence exception
may be satisfied if: (1) the fee arrangement c a l l e d for an adjudicatory body to resolve compensation disputes; and (2) that body’s conclusions were premised on patently erroneous findings of fact. Finally, it bears mention that the Bankruptcy Code does not require that, when setting t h eir rate or means of payment at the commencement of an engagement, professionals select the rigid standards of § 3 2 8 (a). To the contrary, professionals employed by the e s t a te have the option of being compensated under either § 328(a) or § 330(a). Barron II , 325 F.3d at 692; In re Texas Sec., Inc. , 218 F.3d 443, 445 (5th Cir. 2000); Nat’l G y p s um , 123 F.3d at 862. “Section 328 applies when the bankruptcy court approves a particular rate

or means of payment [at the outset of the engagement], and § 330 applies when the court does not do so. ” T exas Se c
. , 218 F.3d at 445. Section 330(a) is a far

more flexible provision, authorizing bankruptcy courts to award “r easonable compensation f

o r actual, necessary services rendered by the

. . . professional
person
. . . .” 11 U.S.C. § 330 ( a)(1)(A). Unlike § 328(a), § 330(a) affords bankruptcy c o urts broad discretion when determining the amount that professionals should be paid after they have completed their engagements. See In re Babcock & Wilcox Co. , 526 F.3d 824, 828 (5th Cir. 2008). This discretion enables bankruptcy court s t o consider numerous factors—including (1) the lodestar, (2) those found in § 330(a)(3)’s non-exclusive list, and (3) those listed

7 8

“The lod es tar amo unt is equal to the num ber of hours reas onably expe nded mul tip lied 7 by t he pr evailin g hou rly rat e i n t he com mun ity fors im ilar wo rk .” Pil grim ’s Pri de , 690 F.3d at 655 (int erna l q uota tio n m ark s om itt ed)

. S ect ion 330( a)( 3) pr ovide s: 8

In d e t e r m i n ing the amo unt of reas onable com pens atio n to be aw ard ed to an 13 Case: 11-41010 Document: 00512079670 Page: 13 Date Filed: 12/11/2012No. 11-41010

i n Johnson v. Georgia Highway Express, Inc. , 488 F.2d 714, 717–19 (5th C i r
. 1 9 9 4)

—wh e n d et e r minin g “r e a s o n ab l e c o m p e n s ation.” Pilgrim’s Pride , 690 F.3d 9
at 654–56. A s discussed above, however, professionals may avoid subjecting their fees to the inherent uncertainty associated with such court discretion by

exam iner , tru st ee unde r chap ter 11, or pr o f e s s i o nal per so n, the cour t sha ll
cons ide r the natur e, the exten t, and th e v a l u e of suc h se rvice s, tak ing into
acc ountal l r elevantf

act ors , inclu ding— (A) t he tim e s pentons uch se rvice s; (B) t he rat es c hargedf or suc h s ervic es ; (C) wh ethe r the se rvice s we re nece ss ary to the a d mi nis tra tio n of, or benef icia l a t the tim e at wh ich the se rvice wa s rend ere d tow ard the
com ple tio n o f, a cas e u ndert his t itle ; (D ) wh ethe r the se rvice s we re per for me d wi thin a reas onable amo unt of tim e com me nsur ate wi th the com ple xity, im por tanc e, and na t u r e of the pr oblem , iss ue, ort askad dr es se d; (E) wi th res pec t to a pr ofe ss ional per so n, wh ethe r t h e per so n is boar d
cer tif ied or othe rw ise has de m o n s tra ted sk ill and expe rien ce in the bank rup tcy fie ld; and (F) wh ethe r the com pens atio n is reas onable bas ed on t h e cus tom ary com pens atio n char ged by com par ably sk illed p r a cti tio ners in cas es othe r than cas es und er this t itle

. 11 U .S .C. § 330( a)( 3).
Thet we lve Johns on fac tor s are: 9 (1) The tim e and labor requ ired ; (2) The novelt y and dif fic ulty of the ques tio ns; (3) The ski ll requi sit e to per for m thelegal service pr ope rly; ( 4) The pr eclu sio n o f othe r em plo ymen t by the att orne y due to acc ept ance of the cas e; ( 5 ) T h e cus tom ary fee ; (6) Wh ethe r the fee is fixed or cont ingent ; (7) Time lim itat ions im pos ed by the clie nt or othe r cir cum st ance s; (8) The amo unt involved and the
res ults obta ined ; (9) The expe rien ce, rep utat ion, and abilit y of the a t tor neys ; (10) The “und es irabi lity” of t h e c a s e; (11) The natur e and length of the pr ofe ss ional rela tio nshi p wi th the clie nt; ( 12) Awa rd s in sim ilarc ase s. Pil grim ’s Pri de , 690 F.3dat654( quot ing Johns on , 488 F.2dat717–19)

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obtaining prior app r o v a l o f their fee arrangements under § 328(a). See also 1 0 Nat’l Gypsum , 123 F.3d at 862 (explaining that, under § 330(a), “compensation [is] subject to the uncertainties of what a judge [thinks] the work [is] worth after it ha[s] been done”); Smart World , 552 F.3d at 232 (“[S]ection 328(a) permits a bankruptcy court to forgo a full post-hoc reasonableness inquiry.”). In so doing, however, professionals must accept t h e tradeoff presented by § 328(a). That section’s cert a i n ty and predictability come at the expense of flexibility: The
p ro f e s s ionals would be underpaid if their engagement s s h o ul d r e quir e m o r e w ork than they had initially expected. See Nucentrix , 314 B.R. at 580–81 (“[I]f a firm obtains the protection of Section 328, the firm and the Court must live with the conditions of that section.”). B. We now turn to the case at hand. T h e district court affirmed the bankruptcy court’s $ 9 7 5 , 000 fee enhancement based on numerous developments that it concluded were incapable of anticipation. The first development involved the length of the ASARCO bankruptcy proceeding. ASARCO II , 457 B.R. at 582.

We note in pas sin g, how ever, that wh en a cour t app roves a sp ecif ic hourl y rat e (e. g. , 1 0 $200 per hour) pur sua nt to § 328( a) but fai ls to pr e-a pp rove the sp ecif ic num ber of hours that wi ll be bille d at that pr e-a pp roved hourl y rat e, the cour t may revie w the hours bill e d for
reas onable nes s in acc ord ance wi th § 330( a). See In re Confe ctio ns by Sandra, Inc. , 83 B.R. 729, 733 (B. A.P. 9th Cir. 1987) (“Altho ugh the hourl y rat e wa s fixed by t h e May 10th ord er app roving the fee arr angem ent, the hours expe nded in pur su i n g the clai m we re not fixed

. Thus, unde r the hourl y rat e app roac h, the tri al c o u r t w o u l d have dis cre tio n to revie w the app ellant ’s fee sc hedu les to det erm ine if the hours expe nded we re reas onable unde r t h e cir cum st ance s. ”) ; Ste phen J. Lubben, The Cha p te r 1 1 F

ina nci al Adv is ors , 28 Emo ry Bank r. De v. J. 11, 27–28 (201 1) (“ In sho rt, § 328 involves wh ethe r the pr op o se d hourl y rat e is
reas onable , wh ile § 330 involves cons ide rat ion of wh ethe r the num ber of hours act ually bille d
wa s reas onable

. The cour t app roves t he rat e a t the poi nt of ret enti on and the tot al num ber of hours att he poin t of the fee app lica tio n.” ). The cour t may notsubs equent ly alterthe pre

app roved hourl y rat e, how e v e r , u n l es s it pr oves “im pr ovide nt in light of deve lop me nts not cap able of being antic ipat ed at the tim e of the f i x i n g o f s u c h ter ms and cond itio ns. ” See 11 U

. S

. C

. § 328( a); Texas Sec. , 218 F.3d at 445–46. On the othe r hand, wh en a cour t app roves a cont ingenc y fee or fla t fee unde r § 328( a), the cour t may never revis it the amo unt of the fee forr eas onable nes s unde r § 3 30(a). See Barron II , 325 F.3dat693 –95. 15 Case: 11-41010 Document: 00512079670 Page: 15 Date Filed: 12/11/2012No. 11-41010

The bankruptcy c o u r t found that, when the parties inked the Engagement Letter, ASARCO’s “restructuring process was expected to ta k e the form of a quick sale,” and that ASARC O “ e x pected the bankruptcy to take about one month.” Id. ; see also ASARCO I , 2010 WL 4976937, at *3 (“In the early sta ges of this case, the Debtors’ restructuring process was expected to take the form of

a quick sale, because the company was unlikely to survive for long on its own in i t s then-current operational state.”). The bankruptcy court found that this
expe c t a tion was reasonable based on the public information available to Barclays at that time—which was limited because ASARCO w a s a non-public subsidiary of a foreign company. ASARCO II , 457 B.R. at 5 8 2

. After being retained, however, B a r c lays became aware of numerous internal problems, which hindered ASARCO’s ability to effectuate a quick sale: Since ASARCO was (and is) a non-public subsidiary of a foreign company, [Barclays] had no way of knowing that the Company had serio u s d e ficiencies in its internal management capabilities and reporting systems. Further, no one could have anticipated that the chief executive officer would be removed within one month or that t h e B o a r d would be replaced twice within the first months of this
case. Id. (citation, internal quotation marks, and alterations omitted). Second, i n a ddition to the departures of the CEO and board of directors, ASARCO expe ri e nced a steady exodus of its salaried employees throughout 2005 and 2006. Id. at 582–83; see also ASARCO I , 2010 WL 4976937, at *5 (ASARCO

was “losing personn e l a t an alarming rate”). The bankruptcy court found the scale of the employee exodus unusual, remarking t h a t “ a lthough some management upheaval is to be expected in a Chapter 11 case, it would be difficult to forecast that a company with the size, complexity and history of ASARCO would lack depth of man agement to the extent of company [sic].” ASARCO I

, 2010 WL 4 9 7 6 937, at *5. This prompted Barclays, at ASARCO’s request, to develop an employee retention p l an, a task that was specifically

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excluded from the scope of Barclays’s engagement. ASARCO II , 457 B.R. at 582–83. The dist r i c t court summarized other services performed by Barclays to help stabilize ASARCO, some t h a t were outside the scope of the Engagement Letter and others that were not the kind traditionally performed by investment bankers, including the following: [Barclays] worked to resolve ASARCO ’ s liquidity crisis, a “service beyond the scope of a traditional investment banker.” To that end, it ne g otiated the terms of a debtor-in-possession financing facility (“DIP”) and worked to resolve op e rational crises caused by the ongoing labor strike, both of which were instrumental in avoiding a disadvantageous quick liquidation. [Barclays] recruited new members to ASARCO’s board of directors, and upon the board’s request advised ASARCO’s management on a daily bas i s o n tasks that the debtor’s management typically p e r forms. This work included preparing “numerous reports analyzing budget and cash flow projections and certain metal p u r chase agreements,” and [Barclays] professionals were permanently on-site at the Debtor’s Tucson offices.

. . . [Barclays] filled ASARCO’s management vacuum caused by the dismissal of ASARCO’s CEO and the absence of a CFO. [Barclays] acted in place of a CFO and later assisted the new CFO in s e v eral tasks, such as creating reports for constituents, managing
c o m m u nications with financial a dvi s o r s a n d cr e dit o r s , an d ob t ainin g and analyzing financial information. [Barclays] led sear c hes for a new CEO and contacted Joseph Lapinsky, whose work as CEO was of enormous benefit to ASARCO. [Barclays] also worked to retain for ASARCO t h e management consulting firm of Alvarez & Marsal. [Ba r clays] designed and implemented a copper hedging program, “unique for a chapter 11 debtor outside of the ordinary course of the debtor’s business,” and expended many hours achi eving a consensus regarding the hedging program among ASARCO’s many creditors. Id. (quoting ASARCO I , 2010 WL 4976937, at *4– 7).

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Afte r explaining the nature of Barclays’s expanded role in ASARCO’s reorganization, the district court “turn[ed] to a review of the Bankruptcy Court’s factual de termination that [Barclays’s] agreement was improvident and incapable of anticipation.” Id. at 585 (emphasis added). The district court explained that it would conduct this revie w p u r s uant to the deferential clear error standard and then held that: Under this deferential standard , this Court affirms the Bankruptcy Court’s determination t h at [Barclays’s] arrangement was improvident and incapable of anticipation when it was made. There is ample evidence in the record to support the Bankruptcy Court’s conclusions that the length and complexity of the bankruptcy were incapable of anticipation when [ B a r c lays] entered into the engagement letter.

. . . Evidence

. . . also supports the finding that [Barclays] performed many services outside the scope of its original agreement, the need for which was incapable of anticipation when the agreem ent was made. This Court finds that the Bankruptcy Cou r t ’ s finding that Bar[clays] deserved $975,000 to make up for [Bar c l a y s ’ s] services was supported by the record and not clearly
erroneo u s ; therefore, the Court affirms the award of $975,000 to Bar[clays]. Id. at 585 (emphasis added). C. It is true that appellate courts must review the facts on which a fee award is based for clear error. See Quinlivan , 434 F.3d at 318. In the c o n t e x t o f a § 328(a) award, however, clear error is not the a p propriate standard for reviewing a conclusion that the facts ( i.e. , the subsequent developments) were “not capable of being anticipated.” See 11 U.S.C. § 328(a). The question whether subsequent developments were “not capable of being anticipated” is, at the very least, a mixed question of law and fact, if not a pure question of law, subject in either case to de novo review. See Barron II , 3 2 5 F

. 3 d at 693 (holding “as a matter o f law, that none of the[] facts or developments [were] ‘not capable of being anticipated’ within the meaning of S e c ti o n 3 2 8 (a) ”) ; see also Quinlivan , 434

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F.3d at 318 (providing that questions of law and mixed questions of law and fact

are reviewed de novo). Thus, the district cour t erred in reviewing the ban k r u p t cy court’s conclusion that the subsequent developments were “not capable of being anticipated” for clear error. Moreover, the district court erred in reviewing the a m o unt of the bankruptcy court’s fee enhancement for clear

error. See ASARCO II , 457 B.R. at 585. We review the amount of the fees awarded by the bankruptcy court for abuse of discretion. See Barron I , 225 F.3d at 585. We reverse the bankruptcy c o u r t because none of the facts on which the $975,000 enhancement is based satisfy § 328(a)’s improvidence exception. The bankruptcy court’s analysis focused on the notion that, given ASARCO’s status

as a non-public subsidiary of a foreign corporation, Barclays did not know—and

was incapable of discovering—how dysfunctional ASARCO truly was at the time that it agreed to the terms of the Engagement Letter. The bankruptcy court also relied h e avi l y on the fact that many of ASARCO’s executives, directors, and

sa l a r i e d employees had jumped ship during the pendency of the bankruptcy

cas e , r e s u lting in a significant vacuum of leadership and management. The additional services performed by Barcl a ys were aimed at reducing ASARCO’s dysfunction and filling the gaps created by those who had left. Although these efforts were commendable, we conclude that the developments giving rise to the need for Barclays’s additional services were capable of being anticip a ted and, therefore, fail to satisfy § 328(a)’s improvidence exception. Barc l ays contends, in essence, that when it agreed to the terms of the Engagement Letter, it anticipated that ASARCO would be making a quick stop in Chapter 11. To analogize, Barclays apparently thought that it had a dusty, yet functional, Corvette o n i ts hands. Although it needed a little polish, this Corvette was poised for a speedy trip into and out of Chapte r 11 with the help of an experienced driv er, i.e. , Barclays. Once in the driver’s seat, however,

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Barclays realized that the Corvette needed far more than a car wash. The dust

was n othing compared to the disarray that it discovered “under the hood.” Assuming, arguendo , that Barclays did not know that ASARC O h a d more serious problems, we nevertheless conclude that it could have and should have anticipated, within the meaning of § 328(a), that a company in need of a Chapter 11 reorganization might have latent problems lurking under its hood. Cf. In re Home Express, Inc. , 213 B

. R. 162, 165 (Bankr. N.D. Cal. 1997) (“[B]ad management is too often the norm in Chapter 11 cases.”). It is foreseeable that such problems, once discovered, could transform what was expected to be a pitstop into a lengthy reorganization process, requir ing considerably more work than was initially expected. Here, the record indicates t hat, much like the dusty Corvette, ASARCO

was coated in, at the very least, a substantial layer of dust when Barclays agreed to the terms of the Engagement Letter. At that time, a union was on strike and “no end to the strike was in sight.” ASARCO I , 2010 WL 4976937, at *4. In the words of the bankr u p t cy court, the strike made it “impossible to predict when [ASARCO’s] employees would return to their jobs and allow [ASARCO] to resume normal operations .” Id. (emphasis added). Further, Barclays was well

aware that ASARCO’s bankruptcy fili n g h a d been precipitated by, in addition to the labor crisis, “bill i o n s o f dollars in environmental and asbestos liability, and a decline in copper prices.” ASARCO II , 457 B.R. at 578. T h u s , B a r c l a ys

was capable of anticipating that it s plans for a quick pit-stop reorganization could be slowed by the problems of which it was aware, like the labor strike, as well as other fores e eable problems—such as inadequate leadership, management, internal c o n trols, and reporting systems—that it had not yet discovered. See Home Express , 2 1 3 B.R. at 165 (explaining that surprises are common in Chapter 11 proceedings).

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Moreover, Barc l ay s ’ s E n g a ge m e nt L e tter with ASARCO clearly illustrates the parties’ understanding that the reorganization process could last well over

one month, if not multiple years. Specifically, the Engagement Letter provided that Barclays would receive a $100,000 monthly advisory fee for the first 24 months of service and, thereafter, $75,000 per month until the end of Barclays’s engagement. These terms are significant because courts routin e l y hold that

s ub sequent developments were capable of being anticipated when t h e engagement agreemen t explicitly plans for the possibility that such developments might occur. See, e.g., Smart World , 552 F.3d at 235 (“[T]he prospect of prolonged litigation always exists, and was clearly anticipated by the parties, who made [the attorneys’] contingent fee a function of the length of the l i t i g a tion.”); In re Merry-Go-Round Enters., Inc. , 244 B.R. 327, 337 (Bankr. D

. Md. 2000) (pre-trial settlement was capable of being anticipated as the parties’ contingency fee a greement established the applicable fee in the event of a settlement); Confections by Sandra , 83 B.R. at 733 (same); Liani v. Baker , 2010 WL 2653392, at *10 (E.D.N.Y. June 28, 2010) (“[I]t was impossible to argue that Liani’s default was a development ‘not capable of being anticipated’

. . . [because the] very provision at issue was included in the agreement precisely because the possibility of default was anticipated.”). Accordingly, the Engagement Letter itself undermines Barclays’s contention that a protracted reorganization could not have been anticipated. It demonstrates the parties’ own understanding that the engagement c o u l d l a s t for more than two years. See also ASARCO II , 457 B.R. at 585 n.6 (“This Court finds it incredible that any sophisticated lawyer or advisor actually thought that this bankruptcy would last for only one month.”). We are also unpersuaded by Barclays’s proffered excuse that it had no way of knowing—and, therefore, could not have anticipated—the full extent o f ASARCO’s internal disarray because ASARCO was a non-public subsidiary that did not share confidential information prior to Barclays’s retention. Barclays’s

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theory essentially concedes that, when it signed up for the job, it knew that it lacked a complete understanding of ASARCO’s overall condition. Cognizant of this information gap, it nevertheless agreed to be compensated in accordance with the rigid standards found in § 328(a). Barclays was not required to do so; it could have chosen to be compensated under § 330(a), which gives bankruptcy courts broad discretion to award reasonable fees a f t e r the engagement has ended. See Barron II , 325 F.3d at 692; Texas Sec. , 218 F.3d at 4 4 5; Nat’l Gypsum , 123 F.3d at 862. This would have easily enabled Barclays to seek more compensation than it expected to request at the outset of the case if it ultimately provided more services t han originally anticipated. Barclays chose to be compensated in accordance with § 328(a), however, which mandates a different, immutable bargain. As Barclays enjoyed the benefits of t h i s bargain by, for

exa m p l e , obtaining pre-approval of a $4 million transaction fee, it must now 1 1 bear § 328(a)’s burdens. In re Amberjack Interests, Inc. , 326 B

. R

. 3 7 9 , 387 (Bankr. S.D. Tex. 2005) (“[Fee a p p l i c ant who] enjoyed the benefit of Section 328(a) in protecting his fee from potential reduction

. . . must also accept Section 328(a)'s rigid standard in attempting to enhance his fee.”). Because Barclay s knew when it signed the Engagement L e tt e r th at it l acked complete information, it canno t now seek additional compensation simply because the previously

u n d i sclosed information reduced Barclays’s projected bottom-line. Barclays could have anticipated this outcome and should have accounted for it in the fee arrangement that was approved under § 328(a). See also Home Express , 213 1 2

This tra nsa cti on fee wa s late r incr eas ed to $5 mi llion aft er Barcl ays rene gotiat ed the 1 1 ter ms of t he Engageme nt Lett er. We als o genera lly dis agree wi th the dis tinc tio n Barcl ays mak es betw een publ ic and 1 2 pr ivate co mp anies

. If w e acce pt ed Barc lays’ s the ory, it wou ld lik ely mak e it eas ier f or tho se em plo yed by p rivat e c om pani es , wh ich com pr iset he majo rit y of Chapte r 11 file rs , to s eekto re- wr ite thei r com pens atio n ter ms aft er the engagem ent has ende d, thus unde rm i n i ng § 328( a)’ s fr ame wo rk

. Such pr ofe ss i onals wo uld sim ply need to poi nt to conf ide ntial info rm atio n that they we re pr event ed fr om acc es sin g pr e-r e t e n t i o n wh en arguing that 22 Case: 11-41010 Document: 00512079670 Page: 22 Date Filed: 12/11/2012No. 11-41010

B.R. at 165 (“[M]o s t C h a p t e r 11 cases are filled with surprises, both good and bad, and [professionals] should build such contingencies into their flat fee.”). Likewi s e, we find no merit in Barclays’s contention that the employee exodus was incapable of anticipation. The bankruptcy court acknowledged that “some management upheaval is to be expected in a c h apter 11 case” but then concluded that “it woul d be difficult to forecast that a company with the size, complexity, and history of ASARCO” would have such a steady loss of salaried employees. ASARCO I , 2010 WL 4976937, at *5 (emphasis added). We conclude that, although th e p arties might not have expected such an extraordinary employee exodus, they could have anticipated that executives, board members, and salaried employees would depart the company after it fi l ed a Chapter 11 petition. See Michelle M. Harner, The Corporate Governance and Public Policy Implications of Activist Distressed Debt Investing , 77 F O R D H AM L. R E V

. 703, 759 n.352 (2008) (“Management turnover in connection with a Chapter 11 case is not

a n e w development.”); Lynn M. LoPucki & William C. Whitford, Corporate Governance in the Bankruptcy Reorgan iza t i on of Large, Publicly Held Companies , 141 U. PA

. L. R E V

. 669, 723–38 (1993) (discussing empirical research indicating t h a t turnover among chief executive officers is common during the pendency of Chapter 11 proceedings). T h e fact that the number of personnel departures was above average, or even extraordinary, does not transfo r m a f oreseeable development into one that is incapable of anticipation. Cf. Nucentrix , 314 B. R

. at 580 (“While no party, even including this Court, expected the auction process would be so successful, the success of the auction was capable of being anticipated.”).

sub se quent deve lop me nts , wh ich requ ired add itio nal, unexpe cte d se rvice s, we re incap able of antic ipat ion. We dec line to ope n t his d oor
. 23 Case: 11-41010 Document: 00512079670 Page: 23 Date Filed: 12/11/2012No. 11-41010

Finally, although Barclays underto ok numerous tasks, discussed supra , that e i t h e r w e nt beyond the scope of the Engagement Letter or constituted services not typically performed by investment banks, see ASARCO II , 457 B.R. at 582–83, the bankruptcy court failed to explain with the requisite specificity

w hy Barclays was incapable of anticipating that it would be asked to p e r f o r m such s e rvi c e s
. See Barron II , 325 F.3d at 693 (bankruptcy court must explain with specificity why developments were “incapable of being foreseen”); 3 Collier

on Bankrup tc y § 328.01 (“A failure by the bankruptcy court to make a record establishing that the approval was improvident and setting out with specificity ( no t co n c l us o r

y statements) the development that could not h ave b e e n a nticip at e d at the time of approval will be insufficient to comply w ith the requirements of section 328.”) (emphasis added). Thus, on this record, we conclude t h a t the bankruptcy court erred in granting fee enhancements based on services that fell outside the scope of Barclays’s engagement. 1 3 In sum, we conclude that all of the subsequent developments in the ASARCO bankruptcy proceeding were “capable of being anticipated” within the

me a ning of § 328(a). Accordingly, the bankruptcy court erred in awarding Barclays a $975,000 fee enhancement based on § 328(a). IV. The second issue presented in this case is whether the bankruptcy court erred in denying the $2 million Success Fee sought by Barclays. Although we find no reversible error, we remand to th e d istrict court with instructions to remand to the bankruptcy court for it to consider whether a Succes s F ee is

To the exten t the enhanc e m e nts we re bas ed on the em plo yee exod us or the 1 3 unexpe cte d inte rnal dysfunction at ASARCO , they we re im pr ope r beca use , as dis cus se d sup ra , thos e d evelop me nts w erec apab le of being antic ipat ed. 24 Case: 11-41010 Document: 00512079670 Page: 24 Date Filed: 12/11/2012No. 11-41010

appropriate in light of our conclusion that the $975,000 fee enhancement award was made in error. 1 4 A. Barclays first contends that the bankruptcy court “erred by not applying 11 U.S.C. § 330’s reasonableness test t o t he requested fee, which should have governed because the amount of the success fee wa s n o t p re-approved.” In support, Barclays relies on our s t atement in Texas Securities that § 328(a) “applies when the bankruptcy court approves a particular rate or means of
paymen t , a n d § 3 3 0 applies when the court does not do so.” 218 F.3d at 445. Barclays contends that because the Revised Engagement Letter “did not specify

an amount for the success f ee, the bankruptcy court should have considered § 330(a)(3)’s reasonableness factors.” Paragraph 6(f) of the Revised Engagement Letter authorized Barclays: to apply to the court for final approval of an additional discretionary fee based upon the successful outcome of the Chapter 11 case. This fee shall be based upon a variety of factors including but not limited to quality of service, creativity of advice, and comparable market rates, all of which should be evaluated b y t h e most objective standard available. ASARCO I

, 2010 WL 4976937, at *10

. Without addressing § 330(a)(3), the bankruptcy court denied Barcl a y s ’s request for the di s c r e t ionary Success Fee because it found that it had already awarded Barclays sufficient compensation: There is no dispute that these Chapter 11 Cases were a remarkable
success. Moreover, Bar[clays’] advice, commitment, and undertaking of a variety of tasks, including those that are typically

We do so beca use the bank rup tcy cour t’s find ing—t hat it had aw ard ed Barcl ays 1 4 suf fic ientc om pens atio n an d didno t needt o a wa rda Succ es s Fee—wa s bas ed in par t on the $975, 000 fee enhanc em ent. Ac cor dingly, t he bank rup tcy cour t, on rem and fr om the dis tri ct cour t, mus t cons ide r wh e t h e r a d i sc ret ionary Succ es s Fee sho uld be aw ard ed, and, if so , in wh at amo unt. 25 Case: 11-41010 Document: 00512079670 Page: 25 Date Filed: 12/11/2012No. 11-41010

not performed by investment bankers, provided benefits to the estate. Indeed, both this Court and the District Court r e c o gnized the benefits conferred upon the estate by Bar[clays]. The contract rate plus the additional [$975,000 in] fees awarded herein provide Bar[clays] with reasonable compensation for the services performed at a market rate. Therefore, taking into consi d e r ation the nonexclusive factors set out in the Bar[clays] engagement letter, the Court finds that no additional compensation is warranted. Id. at *11. We conclude that the bankruptcy court did not err in declining to consult the factors liste d in § 330(a)(3). Nothing in Paragraph 6(f) required the bankruptcy court to consult § 330(a)(3) and, more importantly, t h e R evised Engagement Letter exp licitly disclaims consideration of that provision. Paragraph 11 of the Revised Engagement Letter provi d e s t hat Barclays’s retention would be “subject to the standard of review provide d f o r i n Section 328(a) of the Bankruptcy Code, and not subject to any other standard of review under section 330 of the Bankruptcy Code.” We adhere to the parties’ wishes as expressed in the Revised Engagement Letter. Further, Barclays’s reliance on Texas Securities is misplaced. There, we were asked to determine whether an attorney’s employment was “governed by 11 U.S.C. § 328 or 11 U.S.C. § 330.” Texas Sec. , 218 F.3d at 444. The question

arose because the bankruptcy court’s order approvin g th e attorn e y’ s e m p l o y m e nt

was ambiguous as to which provision governed. See id. at 444–45. We resolved the dispute by applying t h e rule that § 328(a) “applies when the bankruptcy court approves a particular rate or means of payment, and § 330 applies when the court does not do so.” Id. at 445. In this case, however, there is no question that Barcla y s ’ s e n g a g ement was governed by § 328(a). We are only asked to

a ddress the much narrower question: whether § 330(a)(3)’s factors m u s t b e considered when a c o m p e n sation arrangement that was approved under § 328(a)

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provides for a discretionary success fee. Texas Securities provides no assistance in resolving this discrete issue. In disputes governed by § 328(a), the contractual arra n ge ment is supreme, and we shall enforce the contract as written. See Nat’l Gypsum , 123 F.3d at 862 (“Courts must protect those [§ 328(a)] agreements and expectations, once found to be acceptable.”); cf. In re Citation Corp. , 493 F.3d 1319, 1319 (11th Cir. 2007) (explaining that it is appropriate for the court to recognize that the employment contract “was a product of free and equal bargaining by sophisticated, knowledgeable parties” when considering whether to adjust a fee pre-approved under § 328). If Barclays wanted the Success Fee to be evaluated in light of the factors found in § 330(a)(3), it should have provided for such review expressly in the Revised Engagement L e t ter. Because the Revised Engagement Letter is devoid of any such manda t e , the bankruptcy court did not err in declining to address § 330(a)(3). 1 5 B. Barclays next contends that the bankruptcy court incorrectly focused on Paragraph 6(f)’s “comparable market ra t e s ” f a ctor and failed to consider the other factors listed in that paragraph when declining to award the Success Fee. We disagree. The bankruptcy cour t ’ s o p i nion stated that it considered “the nonexclusive factors set out in the” Revised Engagement Letter. See ASARCO I , 2010 WL 4976937, at *11. Accordingly, Barclays’s claim to th e c o n t rary is without merit.

We note tha t t h e t h r e e fac tor s fou nd in Paragr aph 6(f ) are unques tio nably non- 1 5 exclus ive. Acco rd ingly, the bank rup tcy cour t wo uld have been act ing wi thin its dis cre tio n by
cons ide ring § 330( a)( 3) wh en evaluat ing wh ethe r to grant the Succ es s Fee. Not hing in Paragr aph 6(f

) requ ired the bank rup tcy cou r t t o d o so , how ever, and we find no err or in its dec isi on not to cons ide r the fac tor s lis tedin § 3 30(a)( 3). 27 Case: 11-41010 Document: 00512079670 Page: 27 Date Filed: 12/11/2012No. 11-41010
C. Finally, Barclays ar gu e s that the bankruptcy court “made a clearly

erroneous factu a l finding that Bar[clays] had received market rate [compensation] when both parti e s ’ evidence showed to the contrary.” Our review of the record leaves us with the definite and firm conviction that no such error

occu r r e d

. Se e Quinlivan , 434 F.3d at 318. Accordingly, we reject Barclays’s contention that the bankruptcy court clearly erred in finding that Barclays was compensated at market rate. V. For the foregoing reasons, we REVERSE the $975,000 fee enhancement award and we REMAND to the district court for further proceedings consistent with this opinion.

28 Case: 11-41010 Document: 00512079670 Page: 28 Date Filed: 12/11/2012