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Chapter 11 Debtors Counsel Must Obtain Court Approval of Bid Procedures Before Auctioning Assets According to Latest ABI Quick Poll

Contact: John Hartgen
             [email protected]



March 28, 2008, Alexandria, Va. — Chapter 11 debtor’s counsel must obtain court approval of bid procedures prior to auctioning assets or risk having fees related to the auction disallowed, according to a majority of respondents in a recent ABI Quick Poll. Fifty-two percent of respondents thought that bid procedures by a chapter 11 debtor’s counsel must be approved prior to an asset auction, or the counsel’s fees related to that auction should be disgorged. Thirty-six percent “strongly agreed” and 16 percent “somewhat agreed” that the chapter 11 debtor counsel should receive court approval of bid procedures prior to an asset auction.

Forty-three percent of respondents, however, thought that chapter 11 debtor’s counsel should not have to obtain court approval of bid procedures before an asset auction. Twenty-seven percent “disagreed strongly” and 16 percent “somewhat disagreed” that chapter 11 debtor counsel must obtain court approval of bid procedures before an auction or risk having the fees related to the auction disallowed.

In the case of In re APW Enclosure Systems, Inc., a bankruptcy court disgorged the fees requested by the debtor’s counsel in connection with an asset auction because the counsel did not seek approval of the auction procedure until after the auction was completed. The court found that the counsel failed to meet its initial burden of showing that the services relating to the auction procedure had a reasonable likelihood of benefitting the estate at the time they were performed.

ABI members and members of the public were welcome to submit their response to the statement: “Chapter 11 debtor’s counsel must obtain court approval of bid procedures before auction or disgorge fees related to auction. (In re APW Enclosure Systems, Inc., 49 BCD 8 (Bankr. D. Del 2007)).”

ABI’s Quick Poll is posted on ABI’s home page, ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit to access the results of previous ABI Quick Polls.


ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit For additional conference information, visit