Opinion ID: 3010894
Heading Depth: 3
Heading Rank: 1

Heading: Tension with S 1103(a) of the Bankruptcy Code

Text: Both the Debtor and Trustee find reason to preclude recovery for the entire category of attorney's fees for committee members in the sharp conflict such an interpretation would create with S 1103(a) of the Bankruptcy Code. Section 1103(a) sets forth the process by which the committee as a whole may employ professionals. It provides that the committee, at a scheduled meeting in which a majority of the members are present and with the court's approval, may select and authorize the employment . . . of one or more attorneys, accountants, or other agents, to represent or perform services for [the] committee. 11 U.S.C. S 1103(a). We have previously emphasized the importance of the requirement of prior court approval for the hiring of committee counsel. In Matter of Arkansas Co., Inc., 798 F.2d 645, 649 (3d Cir. 1986), we held that a court may 9 authorize employment of counsel nunc pro tunc only under extraordinary circumstances, explaining that the requirement of prior court approval was designed to eliminate the abuses and detrimental practices that had been found to prevail, such as cronyism and attorney control of bankruptcy cases. We stressed that the prior approval requirement ensures that the court may know the type of individual who is engaged in the proceeding, their integrity, their experience in connection with work of this type, as well as their competency concerning the same. Id. at 648 (quoting In re Hydrocarbon Chemicals, Inc., 411 F.2d 203 (3d Cir. 1969) (en banc)). Bradford's plain language interpretation of the statute would allow committee members to retain counsel privately, without prior review by the court and without notice to the committee or other creditors. The only review would come after the fact, when the court is called upon to determine: (1) whether the fees are reasonable . . . based on the time, the nature, the extent, and the value of such services, and the cost of comparable services other than in a case under this title, S 503(b)(4); and (2) if such fees were incurred in the performance of the duties of such committee, S 503(b)(3)(F). Consequently, the potential for the abuses that S 1103 was designed to eliminate is a real concern. In addition, if every member of a committee were to claim attorney's and accountant's fees, there would be a proliferation of administrative expenses which could unnecessarily drain estate assets. Accordingly, we cannot lightly dismiss the argument that the plain language reading of S 503(b)(4) leads inescapably to tension with the statutory scheme for retention of professionals by the committee established by S 1103.