anty. The NHL sought damages for, among other things, its attorneys’ fees and expenses incurred during the bankruptcy proceedings and the amounts that the Coyotes team owed to unsecured creditors and to the Coyotes’ coach, Wayne Gretzky.26 The Moyes defendants removed the matter to the U.S. District Court for the Southern District of New York, then transferred venue to the Arizona District Court, which then referred the matter to the Arizona Bankruptcy Court because it was related to the pending Coyotes bankruptcy.27 Following years of discovery and motions practice, the parties each filed competing summary-judgment motions. Having determined that the claims asserted in the NHL’s lawsuit were Stern claims, the Arizona Bankruptcy Court issued proposed findings of fact and conclusions of law to the Arizona District Court with respect to the competing summary-judgment motions. Among other things, the Arizona Bankruptcy Court recommended that the Arizona District Court find that the NHL was entitled to recover only its attorneys’ fees and costs incurred after approval of the sale agreement.

Specifically, the Arizona Bankruptcy Court recommended finding that the NHL’s claims for aiding and abetting a breach of fiduciary duty were precluded by the bankruptcy pre-emption doctrine, as were its claims for most of the attorneys’ fees and other costs incurred in connection with the bankruptcy cases. By an order entered on Nov. 12, 2015, the Arizona District Court ruled on the pending summary-judgment motions, agreeing with the bankruptcy court that the NHL’s claim for aiding and abetting a breach of fiduciary duty and part of its breach-of-contract claims were pre-empted to the extent that such claims were based on an allegation that the Moyes defendants wrongfully compelled the Moyes entities’ bankruptcy filings.28 However, the Arizona District Court disagreed that the majority of the post-petition attorneys’ fees and expenses that the NHL incurred in pursuing its claims and defending its rights in the Moyes entities’ bankruptcy were not recoverable from the Moyes defendants.29 Citing Travelers for the presumption that “[c]‌ ntractual agreements to pay attorneys’ o fees arising in bankruptcy court are not pre-empted under the Bankruptcy Code,” the Arizona District Court expressly determined that “[i]‌ a debtor can be [held] contractually liaf ble for the attorneys’ fees [that] its creditors incur‌ red] in its [ bankruptcy, it follows that a nondebtor can be contractually liable for the same fees.”30 The district court distinguished an unenforceable contractual term purporting to prohibit a debtor from filing for bankruptcy from a term providing that, in the event that a debtor chooses to file for bankruptcy protection, the other party must pay the creditor’s attorneys’ fees.31 The district court stated that “[a]‌ though such a contractual l provision provides a disincentive to filing for bankruptcy, it does not effectively proscribe or limit bankruptcy protection or otherwise conflict with the Bankruptcy Code ... nor does it call into question the good faith of the bankruptcy filing.”32 Thus, the court granted summary judgment for the NHL on the issue of the Moyes defendants’ liability for attorneys’ fees and costs incurred in connection with the Moyes entities’ bankruptcy proceedings and the antitrust suit filed against the NHL therein. Conclusion NHL v.

Moyes confirms that contractual provisions allowing a creditor to recover attorneys’ fees and other costs caused by a bankruptcy filing are not pre-empted and are not invalid ipso facto clauses that are per se unenforceable when a debtor files for bankruptcy. Thus, as a general rule, creditors would be wise to include such clauses in their operative agreements. However, the NHL v. Moyes court’s analysis was focused on whether the NHL was able to assert its attorneys’ fees claim against the Moyes defendants, not against the Moyes entities, which were the actual debtors.

Since the NHL was not seeking allowance of its attorneys’ fees as part of a claim against a debtor, the district court did not need to interpret § 506‌ b) of the Bankruptcy Code and determine ( whether the NHL, as an unsecured creditor, could even have an allowed attorneys’ fees claim against a debtor for postpetition fees and expenses. As previously noted, courts are split fairly evenly on this issue. Until the Supreme Court decides the issue, or the Bankruptcy Code is amended to expressly address the issue, the outcome may depend (like many things) on the specific arena in which the parties choose to play.

abi Reprinted with permission from the ABI Journal, Vol. XXXV, No. 2, February 2016. The American Bankruptcy Institute is a multi-disciplinary, nonpartisan organization devoted to bankruptcy issues. ABI has more than 12,000 members, representing all facets of the insolvency field.

For more information, visit abi.org. 26 Id. 27 Id. Four entities filed jointly in 2009; three cases were converted to chapter 7 cases on Dec. 20, 2010, leaving one remaining case in chapter 11, Coyotes Hockey LLC (the main case). 28 Id.

at *4-8. 29 Id. at *11-12. 30 Id. at *11. 31 Id.

at *12. 32 Id. (citation omitted). 66 Canal Center Plaza, Suite 600 • Alexandria, VA 22314 • (703) 739-0800 • Fax (703) 739-1060 • www.abi.org .