  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
2418 U.S.C. § 155.
25Chambers v. NASCO, Inc., 111 S.Ct. 2123 (1991); In re Mroz, 65 F.3d 1567 (11th Cir. 1995); In re Disciplinary Proceedings, 282 B.R. 79 (1st Cir. BAP 2002); In re Vettori, 217 B.R. 242 (Bankr. N.D. Ill. 1998); Matter of Malmen, 140 B.R. 819 (Bankr. M.D. Fla. 1992); see discussion in In re Gioioso, 979 F.2d 956 (3d Cir. 1992).
26 In re Brooks-Hamilton, 329 B.R. 270 (9th Cir. BAP 2005); In re Bellows-Fairchild, 322 B.R. 675 (Bankr. D. Or. 2005); In re Crayton, 192 B.R. 970 (9th Cir. BAP 1996). See n. 517-18 regarding proce
dures for imposing such severe sanctions.
27 Model Rule 8.3 RESTATEMENT OF THE LAW GOVERNING LAWYERS § 5 (1998); see § 27:28.
28Model Code of Judicial Conduct 3D(2).
2911 U.S.C. § 1107(a); CFTC v. Weintraub, 471 U.S. 343, 355, 105 S. Ct. 1986, 1994 (1985); Wolf v. Weinstein, 372 U.S. 633, 83 S. Ct. 969, 979-80 (1963). In re Americana Expressways, Inc., 133 F.3d 752 (10th Cir. 1997); Home Ins. Co. of Illinois v. Adco Oil Co., 154 F.3d 739 (7th Cir. 1998). A corporation's directors owe fiduciary duties to creditors when the company becomes insolvent, even absent bankruptcy. FDIC v. Sea Pines Co., 692 F.2d 973 (4th Cir. 1982), cert. denied 461 U.S. 928 (1983); Pereira v. Logan, 294 B.R. 449, 519-20 (Bankr. S.D.N.Y. 2003) (fiduciary duty owed to corporate creditors under Delaware law when the corporation is "in the vicinity of insolvency"); In re Harloff, 289 B.R. 770 (Bankr. M.D. Fla. 2002) (duty to collect estate property without personal compensation); Whitley v. Carolina Clinic, Inc., 455 S.E.2d 896 (N.C. App. 1995); see In re Metropolitan Cosmetic & Reconstructive Surgical Clinic, 115
B.R. 185 (Bankr. D. Minn. 1990); but see also In re SIDCO, Inc., 162 B.R. 299 (Bankr. E.D. Cal. 1993), aff'd. 173 B.R. 194 (E.D. Cal. 1994)(questioning existence of fiduciary duties to creditors).
30See Davis, McCullough, McNulty and Schuler, Corporate Reorganizations in the 1990s: Guiding Directors of Troubled Corporations Through Uncertain Territory, 47 Business Lawyer 1 (Nov. 1991); Varallo and Finkelstein, Fiduciary Obligations of Directors of the Financially Troubled Company, 48 Business Lawyer 239 (Nov. 1992). A DIP's fiduciary duties to creditors do not extinguish fiduciary duties to its partners. Washington Medical Center v. Holle, 573 A.2d 1269 (D.C. App. 1990).
31In re JLM, Inc., 210 B.R. 19 (2d Cir. BAP 1997); In re Texasoil Enterprises, Inc., 296 B.R. 431 (Bankr. N.D. Texas 2003); In re Sky Valley, Inc., 135 B.R. 925 (Bankr. N.D. Ga. 1992); In re Whitney Place Partners, 123 B.R. 117 (Bankr. N.D. Ga. 1992); In re Wilde Horse Enterprises, Inc., 136 B.R. 830 (Bankr. C.D. Cal. 1991); In re V. Savino Oil & Heating Co., 99 B.R. 518 (Bankr. E.D.N.Y. 1989)(DIP holds powers in trust for creditors); In re Sowers, 97 B.R. 480 (Bankr. N.D. Ind. 1989); In re Consupak, Inc., 87 B.R. 529 (Bankr. N.D. Ill. 1988); Model Rule 2.1; ABA Code DR 7-101, EC 7-8.
32E.g. In re Rancourt, 207 B.R. 338 (Bankr. D. N.H. 1997); In re Doors and More, Inc., 126 B.R. 43 (Bankr. E.D. Mich. 1991); In re Modern Office Supply, Inc., 28 B.R. 943 (Bankr. W.D. Okla. 1983); In re APP Plus, Inc., 223 B.R. 870 (Bankr. E.D.N.Y. 1998).
33Home Ins. Co. of Illinois v. Adco Oil Co., 154 F.3d 739 (7th Cir. 1998)(lawyer-debtor reduced assets by failing to pursue malpractice coverage); In re Simon Transporation Services, Inc., 292 B.R. 207 (Bankr.
D. Utah 2003) (DIP omissions gave insiders competitive advantage in §363 sale); In re Harloff, 289 B.R. 770 (Bankr. M.D. Fla. 2002) (collect estate property for no additional compensation); In re Hampton Hotel Investors, L.P., 270 B.R. 346 (Bankr. S.D.N.Y. 2001)(failure to collect receivables from partners' affiliate, and collusive agreement on asset sales); In re Honey Creek Entertainment, Inc., 246 B.R. 671 (Bankr. E.D. Okla. 2000)(unauthorized transfers to non-debtor companies controlled by DIP management); In re Performance Nutrition, Inc., 239 B.R. 93 (Bankr. N.D. Tex. 1999)(officer's self-interest took priority over debtor corporation's interests in sale of assets); Tenn-Fla Partners v. First Union Nat. Bank of Fla., 229 B.R. 720 (W.D. Tenn. 1999); In re 239 Worth Ave. Corp., 236 B.R. 492 (Bankr. S.D. Fla.
