Second Circuit Holds Post-petition Attorneys' Fees Based on Prepetition Indemnity Agreement Allowable as Unsecured Claims: Ogle v. Fidelity & Deposit Company of Maryland

On November 4, 2009, the New York office issued an Alert Memo entitled “Second Circuit Holds Post-petition Attorneys’ Fees Based on Prepetition Indemnity Agreement Allowable as Unsecured Claims: Ogle v. Fidelity & Deposit Company of Maryland.” The alert memo summarizes and considers the implications of the recent ruling by the U.S. Court of Appeals for the Second Circuit in Ogle v. Fidelity & Deposit Co. of Md. The decision holds that the Bankruptcy Code does not prohibit a creditor from claiming as a prepetition unsecured claim attorneys’ fees that accrue after the bankruptcy filing pursuant to an otherwise enforceable prepetition indemnity agreement. The decision is welcome news for creditors, insofar as it provides a clear and definitive statement, at least in the Second Circuit, as to an unsecured creditor’s rights to recover attorneys’ fees that accrue post-petition under a prepetition contractual indemnity. The decision further provides support for the broader proposition that unsecured creditors may be entitled to other post-petition costs and expenses that are expressly provided for under prepetition contracts, including potentially prepayment costs and no-call premiums in loan agreements.