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Three recent cases deal with Single Asset Real Estate cases. In re Scotia Pacific Co. LLC, 508 F. 3d 214 (5th Cir. 2007) (tree growing company is not SARE case); In re Heather Apartments L.P., 366 B.R. 45 (Bk. D. Minn. 2007) (apartment complex is SARE, and sought additional time to begin paying mortgage; court held allegations generally applicable in chapter 11 cases for denying stay relief were inadequate given specific statutory interest provision, and debtor had to show sale was subject to binding documents and imminent); In re Kara Homes, 363 B.R. 399 (Bk. D.N.J. 2007) (real estate development and 20+ property owning subs filed; court held property owning subs were SARE cases because they were essentially selling homes and other activities were incidental).
The automatic stay is not applicable to a 100% owned nondebtor subsidiary, where subsidiary was a distinct legal entity and a judgment against the subsidiary would have imposed no obligation on the parent. The fact that the parent had an equity interest in the subsidiary was irrelevant. Kreisler v. Goldberg, 478 F.3d 209 (4th Cir. 2007).
New Rule 6003 which precludes employment of professional persons within 20 days of filing is n/a to an interim appointment. Here, the Court applied case law from rule 4001, and said that interim employment was necessary to enable a corporation to obtain representation and to assure compensation of professionals. As part of the interim order, all objections to retention were reserved and Court consideration was to be de novo. In re First NLC Financial Services, LLC, 382 B.R. 547 (Bk. S.D. Fla. 2008).
Chapter 7 debtor retained firm prepetition and gave retainer. Court held that attorney could not be compensated for postpetition services from property of the estate, and here, the retainer was estate property. The attorney argued that the Supreme Court's Lamie case authorized compensation for attorneys for debtors of chapter 7 debtors out of retainers, but the court said that the retainer in this case was a security retainer and was property of the estate and not a flat fee, and Lamie was not applicable to security retainers. In re Wagers, 2007 WL 4328792 (10th Cir. 2007)
It has been common for prepetition counsel for a debtor who was not disinterested to seek to remain in the case as special counsel pursuant to section 327(e) which has only an adverse interest test. One case rejected an application for retention where the counsel was, in fact, being retained to deal with the key issues in the case that went to the heart of reorganization matters. The Court said that section 327(e) was not appropriate for such a retention. In re Running Horse, L.L.C., 371 B.R. 446 (Bk. E.D. Cal. 2007).
A few cases have begun to disallow fees when counsel did work in situations where there was no prospect of a successful reorganization or cases where counsel had continued to render services after the situation became hopeless. See In re APW Enclosure Systems, Inc., 48 BCD P162 (Bk. D. Del 2007) (low probability of success from the beginning and chapter 7 was a foregone conclusion); Kaye v. Hughes & Luce, LLP, 2007 WL 2059724
