Opinion ID: 4538956
Heading Depth: 3
Heading Rank: 2

Heading: Substantial Contribution

Text: Cohen also challenges the Bankruptcy Court’s denial of his substantial-contribution claim. In reviewing the determination of whether there has been a substantial contribution under the Bankruptcy Code, “[w]e exercise plenary review over the district court’s decision, as well as over the legal determinations of the bankruptcy court.” Lebron v. 12 Cohen notes that he has “emphatically raised” whether “vindication of the public interest” alone is a sufficient basis to support an award of attorneys’ fees to an objector. Appellants’ Reply Br. 6. Because we hold that Cohen improved the settlement in other, more direct ways, we need not reach this question. We note, however, that the standard for awarding fees to objectors—whether the objector improved the settlement—is tied to the settlement reached in the respective case. 13 Our Court recognizes two methods for making such calculation—the lodestar and the percentage-of-recovery. See S.S. Body Armor I., 927 F.3d at 773. The lodestar approach is often used in statutory fee-shifting cases but may be used in other circumstances, “where ‘the nature of the settlement evades the precise evaluation needed for the percentage[-]of[- ]recovery method.’” Id. at 774 (alteration in original) (quoting In re Gen. Motors Corp., 55 F.3d at 821). The percentage-ofrecovery method is “[g]enerally used in common fund cases.” Id. at 773. 24 Mechem Fin. Inc., 27 F.3d 937, 942 (3d Cir. 1994). “[W]e review the bankruptcy court’s factual findings for clear error.” Id. The Bankruptcy Code permits the payment of “administrative expenses,” including the “reasonable compensation for professional services rendered by an attorney” of “an equity security holder . . . in making a substantial contribution in a case under chapter . . . 11.” 11 U.S.C. § 503(b)(3)(D), (b)(4) (emphasis added). There has been a substantial contribution when “the efforts of the applicant resulted in an actual and demonstrable benefit to the debtor’s estate and the creditors.” Lebron, 27 F.3d at 944 (quoting Haskins v. United States (In re Lister), 846 F.2d 55, 57 (10th Cir. 1988)). Cohen argues that he provided a substantial contribution to Body Armor’s estate.14 However, even if he did make a substantial contribution, he did not do so “in a case under chapter . . . 11.” 11 U.S.C. § 503(b)(3)(D). Rather, the expenses he incurred in making a substantial contribution accrued months and years before Body Armor petitioned for bankruptcy. To be sure, there is “no across-the-board bar” to recovery of pre-bankruptcy-petition expenses that benefit the estate. Lebron, 27 F.3d at 945. But here, even if Cohen would not have undertaken his efforts “absent an expectation of reimbursement,” he certainly did not undertake those efforts under Chapter 11 or with “an expectation of reimbursement from [Body Armor’s Bankruptcy E]state.” Id. at 944; see also 14 Cohen’s substantial-contribution claim “admittedly is a backup argument.” J.A. 1667–68. He emphasizes that any substantial-contribution award would “reduce, and not replace, the legal fee to which [he is] entitled” as a settlement objector. Appellants’ Br. 36 n.12. 25 In re Lister, 846 F.2d at 57 (denying substantial-contribution claim for pre-petition efforts because creditor was “unaware of the pendency of bankruptcy proceedings until after the petition had been filed [so a]ny benefit accruing to the bankruptcy estate as a result of these efforts was only incidental”).