This note provides a framework for courts and attorneys faced with the issue whether section 506(b) preempts state law notice provisions. The note studies the language and legislative history of section 506(b), pointing out the inconsistencies and ambiguities that make it difficult to determine congressional intent. The note then surveys the various rationales advanced by the lower courts in resolving this issue. Using the recent Fourth Circuit case of Unsecured Creditors' Committee v. Walter E. Heller & Co. to illustrate several of these rationales, the note suggests that a more consistent approach to this issue is needed. After examining the legislative history of section 506(b) in light of federal preemption doctrine,13 and concluding that contradictory inferences arising from the legislative history preclude an unequivocal determination of congressional intent to preempt state law under 506(b), the note argues that such a determination is unnecessary to reach the conclusion that state law notice provisions should be preempted under section 506(b). Rather, since state law notice statutes serve to provide no meaningful protection to the bankrupt debtor, while creating a procedural burden on the bankruptcy courts and a financial burden on the bankruptcy estate, the state statutes should be preempted in bankruptcy because they interfere with the accomplishment of the policy goals that underlie the Bankruptcy Code.
R. Wilson Freyermuth,
Preemption of State Law Notice Provisions Governing the Recovery of Attorneys' Fees by Section 506(b) of the Bankruptcy Code, 1986 Duke Law Journal 176
Available at: https://scholarship.law.missouri.edu/facpubs/794