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*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
95In re Johns-Manville Corp., 801 F.2d 60 (2d Cir. 1986); In re Central Ice Cream Co., 836 F.2d 1068 (7th Cir. 1987); In re Water's Edge Ltd. Partnership, 251 B.R. 1 (Bankr. D. Mass. 2000); In re Rancourt, 207 B.R. 338 (Bankr. D.N.H. 1997)(negotiating a plan that provides value for equity is not a conflict if there is full disclosure of divergence in interests); Compare Tenn-Fla Partners v. First Union Nat. Bank of Fla., 229 B.R. 720 (W.D. Tenn. 1999)(sale under plan inadequate to pay creditors fully; undisclosed resale post-confirmation to benefit only equity); In re Humble Place Joint Venture, 936 F.2d 814 (5th Cir. 1991) (bad faith filing evidenced by plan gratuitously relieving insiders of guarantee obligations; fees ordered disgorged); In re General Homes Corp., 199 B.R. 148 (S.D. Tex. 1996)(insiders profited at expense of debenture holders under proposed plan); See In re Downtown Investment Club III, 89 B.R. 59 (9th Cir. BAP 1988); In re Granite Sheet Metal Works, Inc., 159 B.R. 840 (Bankr. S.D. Ill. 1993); In re Bonneville Pacific Corp., 147 B.R. 803 (Bankr. D. Utah 1992) rev'd in part Hansen, Jones & Leta v. Segal, 220 B.R. 434 (D. Utah 1998); In re Chou-Chen Chemicals, Inc., 31 B.R. 842 (Bankr. W.D. Ky. 1983).
96 In re Water's Edge Ltd. Partnership, 251 B.R. 1 (Bankr. D. Mass. 2000); see In re Az-Tze Cheng, 308 B.R. 448 (9th Cir. BAP 2004) (debtor and DIP are two capacities of action).
97In re Coram Healthcare Corp., 271 B.R. 228 (Bankr. D. Del. 2001); see In re Bush Industries, Inc., 315 B.R. 292 (Bankr. W.D. N.Y. 2004) (plan with golden parachute and insider debt forgiveness not in good faith).
98In re Phoenix Petroleum Co., 278 B.R. 385 (Bankr. E.D. Pa. 2001).
99In re Universal Factoring Co., Inc., 329 B.R. 62, 80 (Bankr. N.D. Okla. 2005).
100In re SIDCO, Inc., 173 B.R. 194 (E.D. Cal. 1994); In re Brennan, 187 B.R. 135 (Bankr. D.N.J. 1995); In re Whitney Place Partners, 147 B.R. 619 (Bankr. N.D. Ga. 1992); In re Stamford Color Photo, Inc., 98 B.R. 135 (Bankr. D. Conn. 1989); In re Nephi Rubber Products Corp., 120 B.R. 477 (Bankr. N.D. Ill. 1990).
101Model Rule 1.2(a)("A lawyer shall abide by a client's decisions concerning the objectives of representation . . . .); Model Rule 1.4(b)("A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."); Model Rule 1.13(a)("A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents."); Bankruptcy Rule 9001(5). Hansen, Jones & Leta P.C. v. Segal, 220 B.R. 434 (D. Utah 1998); In re Brennan, 187 B.R. 135 (Bankr. D.N.J. 1995); In re Spanjer Bros., Inc., 191 B.R. 738 (Bankr. N.D. Ill. 1996); In re Rivers, 167 B.R. 288 (Bankr. N.D. Ga. 1994)(attorney may not make decisions for client, even if DIP is incompetent); see In re Lee Way Holding Co., 100 B.R. 950 (Bankr. S.D. Ohio 1989)(counsel breached fiduciary duty to legal system by failing to remove uncompromising influences that could have impeded professional judgment); In re Sky Valley, Inc., 135 B.R. 925 (Bankr. N.D. Ga. 1992)(incumbent on DIP counsel to advise other DIP professionals of their responsibilities under Code and disclosures necessary to fulfill those responsibilities).
102In re Water's Edge Ltd. Partnership, 251 B.R. 1 (Bankr. D. Mass. 2000). 103Compare In re Brennan, 187 B.R. 135 (Bankr. D.N.J. 1995)("reality is that debtor usually seeks to further its own interest at the expenses of its creditors. . . the real problem. . . is creditor mistrust of the debtor, and therefore of his, her or its professionals. However, unless such mistrust is sufficiently serious to warrant appointment of a trustee, requiring related debtors to change professionals, or to have different professionals, often fails to create the independent perspective which is intended by such requests"); In re Best Western Heritage Inn Partnership, 79 B.R. 736, 740 (Bankr. E.D. Tenn. 1987)("difficult to believe that Congress intended to require a disinterested attorney for a debtorinpossession as a somewhat ineffective safeguard for the rights of creditors and investors other than management.") and In re SIDCO,
