There are many issues for creditors to consider during the Chapter 11 plan confirmation process. One such issue involves the dischargeability of a claim that accrues pre-petition, continues to accrue after the filing of the debtor’s Chapter 11 petition, and extends beyond confirmation of the debtor’s plan of reorganization. The recent decision in In re Castellino Villas, A.K.F, D.C. No. 2:12-cv-07282-JFW (9th Cir. 2016) highlights the importance to creditors of negotiating language expressly preserving a contractual right to attorney fees incurred in litigation commenced ­pre-petition that continues post-petition and post-confirmation.

FACTS

Castellino Villas entered into a ­written agreement with Picerne Construction Corp., a general contractor, for Picerne to construct a 120–unit apartment complex on property owned by Castellino.

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