“If a fee applicant establishes that its services were necessary to the administration of a bankruptcy case or reasonably likely to benefit the bankruptcy estate at the time at which they were rendered, then the services are compensable. In awarding fees, hindsight is irrelevant; retrospect is irrelevant; material benefit to the bankruptcy estate is irrelevant. What matters is that, prospectively, the choice to pursue a course of action was reasonable.”
In this case, the District Court vacated the fee awards with respect to the attorneys’ services relating to the adversary proceedings. The District Court determined that the decision to pursue adversary proceedings was an expensive course of action from the outset, and would have been more cost-effective, faster, and better for the estate to pay off the few unsecured creditors rather than hire professionals to litigate Adversary Proceedings quibbling about their priority. ‘This was not a good gamble.’
“The district court should have looked at the reasonableness of pursuing the adversary proceedings from the time Henderson and Wells Marble provided their services. Viewed prospectively, pursuit of the adversary proceedings was ‘necessary to the administration of the case’ to resolve otherwise unsettled disputes about the priority of claims.”
In re Community Home Financial Services, No.20-60718, 2021 WL 838267 (5th Cir. March 5, 2021).
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