In the case of bankruptcy, what is the priority of fees for bankruptcy attorneys?

In the context of bankruptcy, attorneys' fees related to bankruptcy proceedings are typically treated as administrative expenses. This means they are incurred during the bankruptcy process and are prioritized above a number of claims in the hierarchy of bankruptcy debtor obligations.

When a company goes into bankruptcy, secured creditors—those with collateral backing their loans—are paid first. Following this group, priority is given to administrative expenses, which includes fees for bankruptcy attorneys. Hence, bankruptcy attorney fees will be settled after secured creditors but before unsecured claims or other liabilities like general employee wages accrued before the bankruptcy filing.

This priority is crucial as it provides the necessary legal and professional support to navigate the bankruptcy process effectively, ensuring that the interests of the creditors and the estate are managed properly. Employees' claims for wages, though also significant, may fall into subordinate positions after these administrative expenses have been paid, depending on the timing of wage claims.

In summary, bankruptcy attorney fees are prioritized to ensure that legal representation and guidance are compensated for their essential role during the proceedings, establishing their claim after secured creditors but before other unsecured claims.