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Bankrupt Debtor Awarded Legal Fees for Creditor’s Sanction Appeal

May 17, 2022, 4:52 PM

A bankruptcy judge has the authority to order a mortgage servicer to pay a bankrupt homeowner’s attorney fees incurred during the company’s appeal of a contempt sanction, the Second Circuit ruled.

"[A] bankruptcy court’s traditional power to impose contempt sanctions carries with it the authority to award damages and attorneys’ fees—including appellate attorneys’ fees,” the US Court of Appeals for the Second Circuit said Tuesday.

The appellate opinion overturns lower court rulings that said a bankruptcy court lacked power to award fees for an appeal to the district court. Appeals of bankruptcy court rulings typically go first to a district ...