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Appointment of ProfessionalsIn re AFI Holding, Inc., 355 B.R. 139 (9th Cir. BAP 2006), aff’d and remanded, 530 F.3d 832 (9th Cir. 2008)(for determination of removed trustee’s right to fees).
Chapter 7 trustee had a material conflict of interest and thus was not disinterested as required by § 701(a)(1) where she previously represented insiders of the debtor. Totality of circumstances test applied. Failure to disclose all connections and appearance of inpropriety also supported her removal from the case. In re Tevis, 347 B.R. 679 (9th Cir. BAP 2006) Attorney for chapter 7 trustee who had a preliminary consultation with the debtors in the case had burden to show that there was no confidential information disclosed by the debtors that would create a conflict of interest under California law, and thus a material adverse interest precluding appointment under § 327. In re Triple Star Welding, 324 B.R. 778 (9th Cir. BAP 2005) Chapter 11 debtor’s attorney who failed to file a Rule 2014 statement of disinterestedness was not entitled to any fees absent full disclosure. The court had no discretion to waive this requirement. Furthermore, the court should have consider potential conflicts and receipt of a possible preference, which did not need to be addressed through an adversary proceeding. In re Maximus Computers, Inc., 278 B.R. 189 (9th Cir. B.A.P. 2002) Court erred in allowing creditor's counsel to represent the trustee, where firm failed to fully disclose its compensation arrangement with the creditor and whether the firm would continue to represent creditor. Firm might have been able to represent creditor in pursuing actions on behalf of the trustee under 503(b)(3)(B). In re S.S. Retail Stores Corp., 216 F.3d 882 (9th Cir. 2000) United States trustee originally objected to counsel for the debtor's appointment on the grounds that they were not disinterested, because one of their partners had been an assistant secretary of the debtor. The bankruptcy court found the firm to be qualified. That decision was affirmed by the bankruptcy appellate panel, but the appeal to the Ninth Circuit was dismissed as not from a final order. The firm thereafter received fees of over $200,000. Once the case was closed, the United States trustee appealed the final fee award on the grounds that the firm should not have been appointed. Held: Disgorgement would not be equitable, where the firm made full disclosure, engaged in no impropriety, and the United States trustee did not seek a stay of the order allowing its appointment. In re Capitol Metals Co., Inc., 228 B.R. 724 (9th Cir. B.A.P. 1998) Financial company may not serve as debtor’s post-petition financial adviser after company’s principal functioned as debtor’s prepetition chief financial officer. In re S.S. Retail Stores Corporation, 211 B.R. 699, 702 (9th Cir. B.A.P. 1997) Attorney’s disqualification from case because he was not disinterested was not attributable to his law firm. In re Mehdipour, 202 B.R. 474 (9th Cir. Cir. B.A.P. 1996), aff’d, 139 F.3d 1303 (9th Cir. 1998) Payment of broker’s commission as administrative expense was defacto approval of broker’s employment In re Bibo, Inc., 76 F.3d 256 (9th Cir. Cir. 1996), cert. denied sub nom. Fukutomi v. U.S. Trustee, 117 S. Court. 69 (1996). Bankruptcy court has authority to appoint Chapter 11 trustee sua sponte In re Martech USA, Inc., 188 B.R. 847 (9th Cir. B.A.P. 1995), aff’d, 90 F.3d 408 (9th Cir. 1996) The creditors in a bankruptcy case pending in Alaska elected Pardo, a New York resident, to serve as Chapter 7 trustee. Just prior to the election, Pardo entered into an oral, month-to-month lease of an office in Alaska. The lessor was Pardo’s Alaska counsel. Pardo visited his Alaska office for the first time on the morning that he was elected. The B.A.P. held that Pardo was ineligible to serve as trustee because he did not have an office in Alaska within the meaning of the bankruptcy code § 321(a)(1). In so holding the B.A.P. stated that a site which an individual rents for the sole purpose of allowing him an active role in one specific bankruptcy case is not to be considered that person’s office under Bankruptcy Code § 321(a)(1). In re Atkins, 69 F.3d 970, 975 (9th Cir. 1995) Court may enter nunc pro tunc order without showing under all 9 Crest Mirror factors if there is a showing of exceptional circumstances: 1) satisfactorily explain failure, 2) demonstrate benefit to the estate in a significant manner. In re Larson, 174 B.R. 797 (9th Cir. B.A.P. 1994) Given emergency nature of services performed during pre-appointment period, the short time between commencement of services and court appointment, the small sum in question and the benefit of the services to the estate, the bankruptcy court neither abused its discretion nor committed clear error in finding the objection regarding retroactive billing to be without merit. In re CIC Inv. Corporation., 175 B.R. 52 (9th Cir. B.A.P. 1994) Attorney with prepetition claim against bankruptcy debtor absolutely barred from representing debtor as general counsel (In re Marro (1st Cir.) distinguished. In re Occidental Financial Group, Inc., 40 F.3d 1059, 1062-63 (9th Cir. 1994) Undisclosed representation of principals who were creditors in Chapter 11 required disgorgement of fees - no quantum meruit In re Reimers, 972 F.2d 1127 (9th Cir. 1992) Bankruptcy court only change terms of contingent fee agreement in the event of unforeseen circumstances that renders the agreement unreasonable. In re Haley, 950 F.2d 588 (9th Cir. 1991) Real estate broker not entitled to recover commission because court approval to act as Broker for sale of debtors’ property had not been obtained In re Downtown Inv. Club III, 89 B.R. 59 (9th Cir. B.A.P. 1988) Representation of general partner and debtor equals a conflict of interest under the facts. In re Downtown Investment Club III, 89 B.R. 59, 63 (9th Cir. B.A.P. 1988) “ a nunc pro tunc order is improperly sought when the employment, due to an attorney’s mere negligence or inadvertence, has not yet been court approved. Allowing a judge to limit nunc pro tunc orders to extraordinary circumstances will deter attorneys from general nonobservance of §327. “ But excusable or explained negligence may justify nunc pro tunc. In re Crest Mirror & Door Co., Inc., 57 B.R. 830 (9th Cir. B.A.P. 1986) 9 part test |

