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SDNY Bankruptcy Court Deepens Split Over Prepetition Fees Under Section 506(b)
Original: Does Section 506(b) Permit 'Reasonable' Prepetition Fees and Charges? S.D.N.Y. Bankruptcy Court Deepens the Splits with the Fifth and Eleventh Circuits.
A bankruptcy court in the Southern District of New York has ruled on whether Section 506(b) of the Bankruptcy Code allows creditors to collect 'reasonable' fees and charges that accrued before a bankruptcy petition was filed. The decision runs contrary to the Fifth and Eleventh Circuits, deepening an existing circuit split on the question. Commentators note the disagreement raises the likelihood that appellate courts, or eventually the Supreme Court, will need to resolve how post-petition versus prepetition fee entitlements are treated in bankruptcy cases.
Why now: The ruling conflicts with Fifth and Eleventh Circuit precedent on a recurring bankruptcy fee question, drawing attention from insolvency practitioners.
Southern District of New York Bankruptcy CourtSection 506(b)Fifth CircuitEleventh CircuitLoeb & Loeb
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- Does Section 506(b) Permit 'Reasonable' Prepetition Fees and Charges? S.D.N.Y. Bankruptcy Court Deepens the Splits with the Fifth and Eleventh Circuits. · Loeb & Loeb LLP
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