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Posts tagged "Bankruptcy Estate Professionals"

Contingent Interest in Commissions Earned Post-Petition Can Be Bankruptcy Estate Property

In re Anderson, BAP No. ID-16-13156-JuFB, filed on August 11, 2017, the Ninth Circuit Bankruptcy Appellate Panel upheld the Bankruptcy Court's finding that the debtors' contingent real estate commissions were estate property. The debtors were real estate agents. When they filed their bankruptcy petition, they had 13 transactions which were under contract and in escrow but had not yet closed. Under Idaho state law, the debtors were not entitled to payment of their commissions until the transaction closed. The closings did not occur until after the filing of the bankruptcy. The Bankruptcy Court found, and the BAP agreed, that because the interest in the commissions was sufficiently rooted in the pre-bankruptcy past and especially because the debtors were unable to show that any of the acts necessary to earn the commissions were performed post-petition, the commissions were property of the bankruptcy estate.

Professionals Employed by Bankruptcy Estate Beware

Professionals seeking to be employed under Bankruptcy Code Section 328, most commonly when seeking to be employed on a contingency fee basis, should be careful to ensure the employment motion and order specifically state the professional is being employed under Section 328. Compensation under Section 330 is subject to a reasonableness test but under Section 328, compensation under the terms stated will be allowed absent the Court finding that such compensation terms were "improvident in light of developments not capable of being anticipated at the time of the fixing of such terms." As such, if the professional seeks compensation under the "easier" test of Section 328, the professional must be sure to explicitly seek employment under Section 328 in the employment motion and to be safe, should also so state in the employment order.

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