Client Alert

U.S. Supreme Court Upholds Enforceability Of Contractual Attorneys Fees Clause In Bankruptcy

April 05, 2007

Stephen Sepinuck

In a decision generally favorable for lenders and lessors, the United States Supreme Court ruled that a bankruptcy creditor can include in its claim and potentially recover post-petition attorneys fees incurred in protecting its rights, provided its underlying contract with the debtor makes the debtor responsible for such expenses. The March 20th decision in the case of Travelers Casualty and Surety Co. v. Pacific Gas & Electric Co. resolved a split among the circuits and makes clear that federal bankruptcy policy does not trump creditors contractual rights to attorneys fees.

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