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In re Minor Family Hotels, LLC (Case No. 10-62543) 12/3/2012

The debtor filed a Motion for Distribution requesting that its attorneys' fees be paid from escrowed funds held in trust by the debtor, all of which serves as the collateral for secured creditors.  The Court granted the debtor's motion in part, holding that the debtor may distribute the attorneys' fees from the proceeds from the sale of real property.  A secured creditor also filed a Motion for Distribution, seeking that any distribution be pro rata between the secured creditors.  Under 11 U.S.C. § 506(c), the Court found that the motion filed by the secured creditor for any such distribution to be made pro rata between secured creditors is not appropriate as a pro rata distribution is not proper under the Bankruptcy Code.  The Court held that the remainder of the escrowed funds shall be distributed to claim holders in the order of priority.

Date: 
Monday, December 3, 2012
Category: 
Attorneys Fees
Chapter: 
11