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*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
B.R. 221 (Bankr. E.D. Va. 1989); In re Argus Group 1700, Inc., 199 B.R. 525 (Bankr. E.D. Pa. 1996)(bankruptcy case was two-party dispute so litigation counsel was primary legal advisor). 139 In re Woodworkers Warehouse, Inc., 323 B.R. 403 (D. Del. 2005).
140 In re Woodworkers Warehouse, Inc., 323 B.R. 403 (D. Del. 2005)(not disqualified); Meespierson, Inc. v. Strategic Telecom, Inc., 202 B.R. 845 (D. Del. 1996)(inapplicable; no excuse to disqualification); In re Abrass, 250 B.R. 432 (Bankr. M.D. Fla. 2000)(same); contra In re Arochem, 176 F.3d 610, 622 (2d
Cir. 1999)(applying § 327(a) by analogy to § 327(e)); Stoumbos v. Kilimnik, 988 F.2d 949, 964 (9th Cir. 1993)(not disqualified); In re Peters Contracting, Inc., 301 B.R. 857, 860-61 (Bankr. M.D. Tenn. 2003); In re M.T.G., Inc., 928 B.R. 310, 316 (Bankr. E.D. Mich. 2003)(not disqualified); In re National Century Financial Enterprises, Inc., 298 B.R. 124, 132 (Bankr. S.D. Ohio 2003)(joint representation of debtor and individual creditors as litigation plaintiffs despite potential for conflict in event of recoveries); In re American Energy Trading, Inc., 291 B.R. 154, 157-58 (Bankr. W.D. Mo. 2003)(actual conflict in circumstances of this case from representation of creditors); In re Development Corp. of Plymouth, Inc., 283 B.R. 464, 467-69 (Bankr. E.D. Mich. 2002); In re Vetrans Choice Mtg., Inc., 285 B.R. 70, 73-74 (Bankr. S.D. Ga. 2002); In re NWFX, Inc., 267 B.R. 118, 246 (Bankr. W.D. Ark. 2001)(same, but employment allowed under § 327(a)).
14111 U.S.C. § 327(c); In re BH & P Inc., 949 F.2d 1300 (3d Cir. 1991) explained in In re Marvel Entertainment Group, Inc., 140 F.3d 463 (3d Cir. 1998).
142ABA Model Rule of Professional Conduct ("Model Rule") 1.7. Model Rule 1.13(e) specifically authorizes counsel for an entity to represent its officers, shareholders or other constituents also, subject to the provisions of Model Rule 1.7. But see In re Amdura Corp., 121 B.R. 862, 866 (Bankr. D. Col. 1990)(while attorney professional conduct code applies to determination of disqualification, court recognizes "that activities and multiple representation that may be acceptable in commercial settings, particularly with the informed consent of clients, may not be acceptable in bankruptcy"). See In re Covenant Financial Group of America, Inc., 243 B.R. 450 (Bankr. N.D. Ala. 1999)(no inherent conflict in representing multiple entities). Advice to multiple clients includes advice on resulting attorney-client privilege limitations. In re Indiantown Realty Partners Ltd. Partnership, 270 B.R. 532 (Bankr. S.D. Fla. 2001); see notes 465, 478.
143Model Rule 1.7 Comment. In re Git-N-Go, Inc., 321 B.R. 54, 60 (Bankr. N.D. Okl. 2004). Some courts have written of the need for notice to creditors of DIP attorney conflicts in terms of creditor waiver. See In re Plaza Hotel Corp., 111 B.R. 882 (Bankr. E.D. Cal. 1990); In re Lee, 94 B.R. 172 (Bankr. C.D. Cal. 1988); In re BH & P, Inc., 103 B.R. 556 (Bankr. D.N.J. 1989), rev'd. in part 949 F.2d 1300 (3d Cir. 1991). See In re Perry, 194 B.R. 875 (E.D. Cal. 1996)(creditors are real parties in interest so debtor cannot waive conflict). The court in In re B.E.S. Concrete Products, Inc., 93 B.R. 228, 235 (Bankr. E.D. Cal. 1988) held that the parties themselves could waive the conflict upon appropriate disclosures, but noted that "the waiver is more difficult to obtain in a chapter 11 case because the debtor in possession stands in a fiduciary capacity that constrains its ability to make such a waiver."
144See Comment to Model Rule of Professional Conduct 1.7 ("A possible conflict does not itself preclude the representation. The critical questions are the likelihood that a conflict will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclosed courses of action that reasonably should be pursued on behalf of the client.") The Model Rules eliminated the old "appearance of impropriety" standard. In re Glenn Electric Sales Corp., 99 B.R. 596 (D.N.J. 1988).
145See, e.g., In re F&C International, Inc., 159 B.R. 220 (Bankr. S.D. Ohio 1993); In re Kendavis Industries, Int'l., 91 B.R. 742 (Bankr. N.D. Tex. 1988); In re Grabill Corp., 113 B.R. 966 (Bankr. N.D. Ill. 1990) aff'd. on other grounds, 135 B.R. 835 (N.D. Ill. 1991) and 983 F.2d 773 (7th Cir. 1993); In re Al Gelato Continental Desserts, Inc., 99 B.R. 404, 408409 (Bankr. N.D. Ill. 1989); In re B.E.S. Concrete
