Motors Liquidation Company

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	) 	Chapter 11
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MOTORS LIQUIDATION COMPANY., et al., )
f/k/a General Motors Corp., et al. ) 	Case No. 09-50026 (REG)
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Debtors. 	) 	Jointly Administered
_______________________________________)
BENCH DECISION ON PENDING FEE ISSUES
The pending issues on fee-related matters are decided as follows:
Fees on Responding to Fee Application Objections
While the reasonable costs of required fee applications are compensable, that
doesn’t mean that the costs of defending objections to those fee applications are
necessarily compensable as well—since as Chief Judge Bernstein of this Court observed
in CCT Communications, 1 there’s no parallel statutory requirement to defend against an
objection to a fee application, or to receive compensation for the legal fees incurred in
that defense. Rather, as a general matter, fee litigants, like other litigants, must generally
bear their own legal expenses under the “American Rule.”2
But I also agree with Judge Bernstein that professionals shouldn’t be penalized by
the cost of defending meritless objections. Failing to allow professionals the costs of
1 	In re CCT Communications, Inc., 2010 Bankr. LEXIS 2947, *21, 2010 WL 3386947, *8 (Bankr.
S.D.N.Y. Aug 24, 2010) (“CCT”).
2 	See Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975) (“In the United
States, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys’ fee from
the loser”); CCT, 2010 Bankr. LEXIS at *21, 2010 WL 3386947 at *8 (citing In re St. Rita’s
Assocs. Private Placement, L.P., 260 B.R. 650, 652 (Bankr. W.D.N.Y. 2001) (Bucki, J.) (“St.
Rita’s”)).
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defending meritless objections would dilute fee awards, and encourage parties to file
frivolous objections.3
Thus, where the outcome is a split decision, or the fee applicant otherwise fails to
substantially prevail, I believe that the applicant should indeed bear its own legal
expenses for addressing the objection to its fees, under the American Rule.4 But as in
CCT, I believe that I should authorize payment of the costs of defending against the
objection if the fee applicant substantially prevails.5
I’ll determine, by on-the-record conference call, whether the applicant has
substantially prevailed, to the extent it isn’t obvious and the applicant and the objector
cannot agree.
Rate Increases
Retained professionals are to provide written notice of upcoming increases in
their billing rates to counsel for the Debtors, Creditors’ Committee, Asbestos Committee,
Treasury (through the U.S. Attorney), the United States Trustee, and the Fee Examiner, to
give any of them a chance to be heard (preferably before services are performed at higher
rates) if any perceives the increases to be unreasonable. But the professionals need not
post notice of upcoming increases on ECF. In the event any objection to those increased
rates is filed, the objection and any briefs with respect to the objection are to be filed like
any other papers, and the hearing on the objection will be in open court.
Dated: New York, New York 	s/Robert E. Gerber
November 23, 2010 	United States Bankruptcy Judge
3 	See CCT, 2010 Bankr. LEXIS at *21-22, 2010 WL 3386947 at *9.
4 	See CCT, 2010 Bankr. LEXIS at *21, 2010 WL 3386947, *8; St. Rita’s, 260 B.R. at 652. See also
In re Brous, 370 B.R. 563, 572 (Bankr. S.D.N.Y. 2007) (declining to award costs of defending
objection where objector substantially prevailed).
5 	See CCT, 2010 Bankr. LEXIS at *23, 2010 WL 3386947 at *9.
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