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2006 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY

By Susan M. Freeman

*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)

 

226 In re Rusty Jones, Inc., 134 B.R. 321, 344 (Bankr. N.D. Ill. 1991).
227 Id., 134 B.R. at 346.
228 Matter of Arlan's Department Stores, 615 F.2d 925, 932 (2d Cir. 1979).
229 Id., 615 F.2d at 932.
230 134 B.R. at 345.
231 In re Hathaway Ranch Partnership, 116 B.R. 208, 219 (Bankr. C.D. Cal. 1990); See Begun, 162 B.R. at 177 (duty "to reveal any interest which may be antagonistic or opposite to the interest of the estate.) 232In re Park-Helena Corp., 63 F.3d 877 (9th Cir. 1995) cert. denied, 116 S. Ct. 712 (1996)(failure to

provide details of retainer payment; strict compliance with disclosure rules required); In re Triple Star Welding, Inc., 324 B.R. 778 (9th Cir. BAP 2005) (disclosure of funds received within one year prepetition, but not that part of funds were for antecedent debt within preference period); In re Cook, 223 B.R. 782 (10th Cir. BAP 1998)(creditor representation disclosed, but not contingency fee agreement); In re EZ Links Golf, LLC, 317 B.R. 858 (Bankr. D. Colo. 2004) (notice of important and consequential connections with parties integral to debtor were inadequately disclosed); In re Jore Corp., 298 B.R. 703 (Bankr.

D. Mont. 2003) (disclosure of creditor conflict waiver but not restriction on litigation against that creditor); In re Molten Metal Technology, Inc., 289 B.R. 505 (Bankr. D. Mass 2003) (representation in lawsuit by special counsel disclosed, but not joint defense agreement restricting ability to share information); In re LSS Supply, Inc., 247 B.R. 280 (Bankr. D. Ariz. 2000)(failure to disclose connections with corporate insiders and control and multiple capacities of insiders with debtor); In re Filene's Basement, Inc., 239

B.R. 845 (Bankr. D. Mass. 1999)(accounting firm's prior representation and Chinese Wall disclosed, but not identity of parties, nature of litigation, or other facts alerting court of potential problem); In re Filene's Basement, Inc., 239 B.R. 850 (Bankr. D. Mass. 1999)(law firm's description of litigation and extent of attorney-client relationship with creditor misleading); In re Granite Partners, L.P., 219 B.R. 22 (Bankr.

S.D.N.Y. 1998)(extent of representation and client restrictions not disclosed); In re Southmark Corp., 181

B.R. 291 (Bankr. N.D. Tex. 1995) (affidavit disclosed fact of prior services for creditor unrelated to debtor but not type of services or substantial compensation by creditor); In re Brennan, 187 B.R. 135 (Bankr.

D.N.J. 1995)(description of types of information needed); In re Leslie Fay Companies, Inc., 175 B.R. 525 (Bankr. S.D.N.Y. 1994); In re Amdura Corp., 139 B.R. 963 (Bankr. D. Colo. 1992)(disclosure of creditor as client insufficient due to not disclosing magnitude of relationship); In re Murphy, 178 B.R. 13 (Bankr.

S.D. Fla. 1995); In re Imperial Corp. of America, 181 B.R. 501 (Bankr. S.D. Cal. 1995) (special counsel should make full disclosures); but see In re Missouri Mining, Inc., 186 B.R. 946 (Bankr. W.D. Mo. 1995) (attorney promptly corrected erroneous disclosures and was not sanctioned); In re CIC Investment Corp., 175 B.R. 52 (9th Cir. BAP 1994) (court may excuse failure to disclose); In re Cent. Florida Metal Fabrication, Inc., 207 B.R. 742 (Bankr. N.D. Fla. 1997)(same).

233 In re United Companies Financial Corp., 241 B.R. 521 (Bankr. D.Del. 1999); In re Gulf Coast Orthopedic Center, 243 B.R. 135 (Bankr. M.D. Fla. 1999).

234Halbert v. Yousif, 225 B.R. 336 (E.D. Mich. 1998); In re Smitty's Truck Stop, Inc., 210 B.R. 844 (10th Cir. BAP 1997); In re Begun, 162 B.R. 168 (Bankr. N.D. Ill. 1993); In re Quality Respiratory Care, Inc., 157 B.R. 180 (Bankr. D. Me. 1993); In re Bob's Supermarket's, Inc., 146 B.R. 20 (Bankr. D. Mont. 1992); In re Hathaway Ranch Partnership, 116 B.R. 208 (Bankr. C.D. Cal. 1990); In re Automend, Inc., 85

B.R. 173 (Bankr. N.D. Ga. 1988); In re Glenn Electric Sales Corp., 99 B.R. 596 (D. N.J. 1988); In re Estes, 57 B.R. 158 (Bankr. N.D. Ala. 1986).

235In re Big Rivers Electric Corp., 355 F.3d 415 (6th Cir. 2004); In re Lewis, 113 F.3d 1040 (9th Cir. 1997); In re Ponce Marine Farm, Inc., 259 B.R. 484 (D. Puerto Rico 2001); In re EToys, Inc., 331 B.R. 176 (Bankr. D. Del. 2005); In re Condor Systems, Inc., 302 B.R. 55 (Bankr. N.D. Cal. 2003); In re Keller

 

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