Substantial Contribution Claims

The Bankruptcy Code does not define substantial contribution, permitting a bankruptcy judge to award such claims at her discretion. Predictably, then, courts have created various tests to gauge whether a creditor made a substantial contribution. Some courts focus on the creditor's intent when taking the actions alleged to have substantially contributed to the case ' did the creditor transcend self-interestedness for the benefit of the estate as a whole, or was the creditor acting as routinely expected to enhance the recovery on its claim? Courts following this approach must rely more on their own intuition than on any objectively verifiable facts. The ASARCO court took the opposite approach and focused primarily on whether the creditors had indeed caused the extraordinary benefit they claimed to have obtained for the estate. This approach is enormously helpful because it eliminates the uncertainty resulting from other courts' intent-divining rulings that are not easily applied to other cases. The element of causation was outcome determinative for the ASARCO court ' no matter how selfless, how well its attorneys performed, or how rare and successful the case's outcome may be, if a creditor did not directly cause the benefit to the estate which it cites as evidence of its substantial contribution, then it has not made a substantial contribution.