Court Opinion

ID: 9695470
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:20:26.931508+00
Date Added: 2024-06-11T18:20:13.049865
License: Public Domain

JONES, Bankruptcy Judge,
separately concurring and dissenting.
The Court below allowed the Debtor’s attorney fee application in full but delayed payment for six months. During this six month period, unsecured creditors and the trustee are to be paid on their claims. As discussed by the majority, the bankruptcy court’s order is contrary to the language of 11 U.S.C. § 1326(b)(1). Moreover, case law has held that attorney fees “may be paid either before or concurrently with creditors’ claims so long as the payment of attorney’s fees begins no later than the first payment to creditors.... ” See In re Parker, 21 B.R. 692, 694 (E.D.Tenn.S.D.1982). Accordingly, I concur with that portion of the majority’s opinion which reverses the bankruptcy court’s order delaying payment to the Debtor’s attorney while allowing other creditors to receive payment.
However, I must dissent to the extent that the majority’s decision requires full payment of the attorney’s fee before unsecured creditors. As stated in Parker, supra, attorney fees may be paid concurrent with creditor claims. Requiring advance payment of the entire attorney fee places this single administrative cost in a priority position to the trustee’s fee, which is paid concurrent with creditor claims.
Further, the majority’s decision here means that the court will have to lift the stay on secured debts in many cases. For example, assume an automobile loan with outstanding balance of $10,000 and vehicle value of $5,000. The plan will typically reduce the debt to the $5,000 value and pay the $5,000 with interest over the term of the plan. Where attorney fees must be paid first, it may mean that no payments to the secured creditor will be made for a substantial period of time. A $5,000 used vehicle might decrease in value by another $1,000 to $1,500 in one year’s time. Together with accrual of interest on the $5,000 obligation, that will mean that the secured creditor will become further unsecured by depreciation of his collateral and by the accrual of interest on his $5,000 debt. Consequently, the court would be obligated to deny confirmation of such plan or to lift the stay with respect to the automobile.
Finally, with respect to this particular case, it appears that the Bankruptcy Judge did not agree that the entire fee application should be allowed as fair and just compensation. Rather, it appears that he directed the full amount to be paid in a delayed manner as a compromise to an objection to the application. The record indicates that the Judge was attempting to reduce the amount the attorney was to receive overall rather than merely delay payment. I believe that simply reversing the Judge’s decision to delay payment without affording him the opportunity to re-examine the fairness and justness of the award is inappropriate. Consequently, I would reverse the judgment below and remand so that the *188Judge may reconsider his order allowing compensation. Accordingly, I respectfully dissent.