The word that strikes knee-knocking terror in the minds and hearts of bankruptcy professionals. An order by the bankruptcy court that professionals retained in the case must “disgorge” fees they have been paid on an interim basis prior to final court approval. This is often seen in the context of a case becoming “administratively insolvent”—where there are insufficient assets to pay all administrative expense claims. It may also occur in situations where professionals are found to have (1) violated disinterestedness standards, (2) failed to keep detailed and adequate time records, or (3) been paid an excessive interim amount in light of ultimate results in the case.
See also Professionals’ Fees.
