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Fifth Circuit Affirms Fee Enhancement, Reverses Fees Incurred in Defending Fee Application

May 2, 2014

In In re Asarco, the Fifth Circuit held that 11 U.S.C. § 330 permits the bankruptcy court to enhance the fees of counsel but does not permit the bankruptcy court to award attorney fees incurred by counsel in defending its fee application.

ASARCO was a copper mining, smelting and refining company. Two years before it commenced its bankruptcy case, ASARCO’s parent company directed ASARCO to transfer a controlling interest in the Southern Copper Corporation to the parent company. After ASARCO filed its bankruptcy petition, bankruptcy counsel prosecuted fraudulent transfer and related litigation against the parent company. The litigation against the parent company was successful and resulted in the recovery of funds sufficient (among other things) to fund a reorganization plan that included full payment to ASARCO’s creditors and a reorganized ASARCO that emerged from bankruptcy with $1.4 billion in cash.

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