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*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
same conflicts).
13011 U.S.C. § 101(13)(E).
131In re Arochem Corp., 176 F.3d 610, 629 (2d Cir. 1999)(personal standard); In re BH & P, 949 F.2d 1300, 1310 (3d Cir. 1991) (same); In re Huntco, Inc., 288 B.R. 229 (Bankr. E.D. Mo. 2002) (personal standard for disinterestedness does not apply when firm merely represents materially adverse interest; evaluate representional adversity by flexible fact-specific analysis).
132In re West Delta Oil Co., Inc., 432 F.3d 347 (5th Cir. 2005), following In re Roberts, 46 B.R. 815, 82627 (Bankr. D. Utah 1985), aff'd in part, 75 B.R. 402 (D. Utah 1987); In re Granite Partners, L.P., 219
B.R. 22 (Bankr. S.D.N.Y. 1998); see also In re Leslie Fay Companies, Inc., 175 B.R. 525, 533 (Bankr.
S.D.N.Y. 1994)(". . . if it is plausible that the representation of another interest may cause the debtor's attorneys to act differently than they would without that other representation, then they have a conflict and an interest adverse to the estate."); Roger J. Au & Sons v. Aetna Ins. Co. (In re Roger J. Au & Sons, 64 B.R. 600, 604 (N.D. Ohio 1986); In re Michigan General Corp., 78 B.R. 479 (Bankr. N.D. Tex. 1987).
133In re Marvel Entertainment Group, Inc., 140 F.3d 463 (3d Cir. 1998); compare In re Granite Partners, L.P., 219 B.R. 22 (Bankr. S.D.N.Y. 1998) and cases cited therein for appearance of impropriety standard.
134In re Prince, 40 F.3d 356 (11th Cir. 1994); U.S. Trustee v. Price Waterhouse, 19 F.3d 138 (3d Cir. 1994); In re Middleton Arms, Limited Partnership, 934 F.2d 723 (6th Cir. 1991) (court cannot use § 105 powers to disregard disinterestedness criterion); In re Pierce, 809 F.2d 1356 (8th Cir. 1987) (only Congress, not courts, can change disinterestedness requirements). In re Eagle Picher Industries, Inc., 999 F.2d 969 (6th Cir. 1993)(investment banker for outstanding securities of DIP); see also In re Park-Helena Corp., 63 F.3d 877 (9th Cir. 1995) (disclosure rules to be literally construed, even if results are harsh).
135 In re Marvel Entertainment Group, Inc., 140 F.3d 463 (3rd Cir. 1998); In re Occidental Financial Group, Inc., 40 F.3d 1059(9th Cir. 1994); In re Interwest Business Equipment, Inc., 23 F.3d 311 (10th Cir. 1994); In re Martin, 817 F.2d 175 (1st Cir. 1987); In re International Oil Co., 427 F.2d 186 (2d Cir. 1970);
In re B H & P, Inc., 949 F.2d 1300 (3d Cir. 1991); In re Harold & Williams Development Co., 977 F.2d 906 (4th Cir. 1992); In re Consolidated Bancshares, Inc., 785 F.2d 1249 (5th Cir. 1986)(facts regarding alleged conflict in representing DIP and officer/director must be brought out at hearing to evaluate whether conflict exists); but see In re Freedom Solar Center, 776 F.2d 14 (1st Cir. 1985)(resolve doubts in favor if disqualification); In re W.F. Development Corp., 905 F.2d 883 (5th Cir. 1990), cert. denied 111
S.Ct. 1311 (1991)(no hearing necessary as to general partner/limited partner, since always a conflict). 136In re West Delta Oil Co., Inc., 432 F.3d 437 (5th Cir. 2005); Kittay v. Kornstein, 230 F.3d 531 (2d Cir. 2000); In re Arochem Corp., 176 F.3d 610 (2d Cir. 1999); In re M.T.G., Inc. 298 B.R. 310 (Bankr.
E.D. Mich. 2003); In re RPC Corp., 114 B.R. 116 (M.D.N.C. 1990) and cases cited therein; In re West Pointe Properties, L.P., 249 B.R. 273 (Bankr. E.D. Tenn. 2000); In re Covenant Financial Group of America, Inc., 243 B.R. 450 (Bankr. N.D. Ala. 1999).
137In re Maximus Computers, Inc., 278 B.R. 189 (9th Cir. BAP 2002) (prepetition representation of creditor disclosed, but not postpetition representation or impact of creditor's fee payment on special counsel's fee applications); In re Molten Metal Technology, Inc., 289 B.R. 505 (Bankr. D. Mass. 2003) (failure to disclose joint defense agreement that restricted special counsel's ability to disclose information useful to estate); In re Fretter, Inc., 219 B.R. 769 (Bankr. N.D. Ohio 1998)(inadequate disclosure by special counsel and adverse interests with respect to its representation sanctioned); but see In re Adam Furniture Industries, Inc., 191 B.R. 249 (Bankr. S.D. Ga. 1996)(lesser disclosures needed for special counsel).
138In re Abrass, 250 B.R. 432 (Bankr. M.D. Fla. 2000); In re Tidewater Memorial Hospital, Inc., 110
