Baker Botts, LLP v. ASARCO, LLC - Oral Argument - February 25, 2015

Baker Botts, LLP v. ASARCO, LLC

Media for Baker Botts, LLP v. ASARCO, LLC

Audio Transcription for Opinion Announcement - June 15, 2015 in Baker Botts, LLP v. ASARCO, LLC

Audio Transcription for Oral Argument - February 25, 2015 in Baker Botts, LLP v. ASARCO, LLC

John G. Roberts, Jr.:

We'll hear argument next today in Case No. 14-103, Baker Botts v. ASARCO. Mr. Streett.

Aaron M. Streett:

Mr. Chief Justice, and may it please the Court: At the end of a bankruptcy case, a professional must file a detailed fee application. Numerous interested parties may object and the court must hold a hearing to resolve those objections and make an independent assessment of reasonable compensation. Each of those steps is indispensable to accurately determining the professional's core fees and the estate's administrative expenses, allowing the trustee to close the case and ultimately pay the estate's creditors. Everyone agrees that preparing the application is compensable as reflected by Section 330(a)(6)'s guidance for determining the amount of that compensation.

Defending the application against objections is an inseparable part of that same code-mandated process.

There is no principle basis and certainly no textual basis for categorically banning compensation for that next step. To the contrary --

Antonin Scalia:

Well, the principle basis, as I understand it, is that when you prepare it, you're -- you're serving the -- the trustee.

You're serving his needs but, you know, if he's disallowing it, you're, to the contrary, acting against the trustee's interest.

Isn't that a principle distinction?

Aaron M. Streett:

It would certainly not be in the vast majority of cases.

For example, in the typical Chapter 7 case the trustee hires a professional, the trustee wishes to pay the professional fully for his good work, and the debtor comes in and objects. By defending that application against the debtor's objections, the professional is serving the trustee.

The same thing happened here where the debtor --

Antonin Scalia:

So you'd acknowledge it's okay if the trustee objects, then he doesn't have to pay, right?

Aaron M. Streett:

I would not acknowledge that, Your Honor, but --

Antonin Scalia:

I didn't think you would.

Aaron M. Streett:

But that is the reason there should not be a categorical --

Sonia Sotomayor:

But the trustee is not the estate.

Aaron M. Streett:

That's correct, and there's no --

Sonia Sotomayor:

The estate wants to keep as much money as it can to give to the creditors. That's the purpose, right?

Aaron M. Streett:

Well, in this case, for example, the estate paid all of Baker Botts's core fees and wanted to pay all those fees, and you had ASARCO coming in as the reorganized company and objecting.

So, again, I don't think that is true in the vast -- in many, many cases.

And typically it's not the case in the Chapter 7 case.

As the National Association of Bankruptcy Trustees point out as amicus, a trustee is not going to be able to retain competent and skilled counsel if the debtor is going to dilute that.

Sonia Sotomayor:

If you hired another law firm to fight this objection, would that other law firm have been entitled to fees too?

Aaron M. Streett:

It would possibly be entitled to fees through 330(a)(1)(b)

I think in your hypothetical you're assuming that the other law firm would not be approved by the trustee as an estate professional.

So that's the on/off switch for compensation under 330(a), a compensation as a service rendered.

So the only possible way they could be compensated would be as an expense for rendering a service to the estate professional.

Sonia Sotomayor:

I just want to understand your rule completely.

Anybody who prepares a fee application -- an accountant, an expert -- the bankruptcy court can pay all of their legal fees, if the trustee has hired their lawyer?

Aaron M. Streett:

Yes.

Sonia Sotomayor:

Approved their lawyer? But if the trustee hasn't, then they have to assume the costs of fighting --