CITICORP VENTURE CAPITAL, LTD., a New York Corporation, Appellant No. 02-1815 v. COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS, AND COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS AS ESTATE REPRESENTATIVE OF PAPERCRAFT CORPORATION; CITICORP VENTURE CAPITAL, LTD., a New York Corporation, v. COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS, AND COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS AS ESTATE REPRESENTATIVE OF PAPERCRAFT CORPORATION, Appellant No. 02-1905, 323 F.3d 228

Summary

Because the bankruptcy court subordinated attorneys' fees pursuant to its equitable powers, the American Rule was not implicated. The bankruptcy court's conclusion that the creditor's inequitable conduct justified subordination of attorneys' fees was not clearly erroneous. The creditor's inequitable conduct included repeatedly litigating issues that were decided against it, such as the issue of whether it profited from its illegal claims trading, and the fact that the testimony of the creditor's representatives during the litigation was not credible. Further, the bankruptcy court's finding that the creditor's conduct delayed the plan process by at least four months and that the creditor's intent was to benefit itself over and above other creditors to whom it owed a fiduciary duty not to self-deal was not clear error. Also, the district court did not err by affirming the bankruptcy court's calculation of the creditor's profit. Finally, the district court did not err by reducing the ...