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Whether “Hedging” Anticipated Contingency Fees Should Be Deemed Impermissible Fee-Sharing Under Section 504 When The Policy Considerations Underlying The Statute Are Not Offended, David Bloom

Bankruptcy Research Library

(Excerpt)

Although the Bankruptcy Code establishes a clear prohibition against the sharing of fees by persons receiving compensation or reimbursement under section 504, it is unclear whether bankruptcy attorneys may be permitted to enter into “hedging” arrangements in order to obtain downside protection against risks associated with appeal. Ultimately, what is needed to decide this issue is a determination of what constitutes “sharing” of compensation within the meaning of the Code. Recently, in In re Winstar Communications, Inc., 378 B.R. 756 (Bankr. D. Del. 2007), the bankruptcy court found no ambiguity in the statute, and gave the term “sharing” …