Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistKickerFeaturesSectionsNewsLJN Newsletters

Retention of Restructuring Professionals

By Richard L. Wynne and Chad J. Husnick
June 27, 2005

Restructuring professionals must be acutely aware of potential conflicts of interest. Indeed, federal courts on occasion have disqualified a professional or ordered the disgorgement of the professional's fees in situations where that professional failed to properly disclose a conflict of interest. The importance of conflicts of interest is especially evident in today's global economy, in which restructuring matters routinely involve many of the same parties.

It is not always easy for professionals to determine whether they are disqualified from providing services to a debtor in bankruptcy. For example, it is well settled that disclosures are not limited to actual conflicts, but also include potential conflicts. See, e.g., Halbert v. Yousif and Tanners, Inc., 225 B.R. 336, 345-346 (Bankr. E.D. Mich. 1998) (“the concept of disinterestedness in ' 327(a) unquestionably covers not only actual, but also potential, conflicts of interest, and includes the avoidance of an appearance of a conflict of interest”) (citing Rome v. Braunstein, 19 F.3d 54, 57-58 (1st Cir. 1994)). However, are professionals really required to resort to speculation and conjecture in order to unearth every potential conflict of interest? Should professionals be concerned that parties will make strategic challenges to their employment in a particular proceeding? The bankruptcy court's decision in the WorldCom bankruptcy addressing a motion to disqualify WorldCom's accountant provides some important clarification regarding professional retention in bankruptcy. See In re WorldCom, Inc., 311 B.R. 151 (Bankr. S.D. 2004).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.

Protecting Innovation in the Cyber World from Patent Trolls Image

With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.