Litigation

Employment of Matrimonial Counsel for the Benefit of The Bankruptcy Estate

An application to employ matrimonial counsel and use estate funds will be granted where it is for the benefit of the estate. In re Goldstein, Bk. No. LA 07-11878 SB, Chapter 11, United States Bankruptcy Court for the Central District of California, June 29, 2007, decided, July 2, 2007, entered.

The husband and wife filed jointly for Chapter 11 bankruptcy and applied for authorization to employ their respective matrimonial attorneys to perform legal services in relation to their matrimonial dissolution proceeding. After a hearing, the court granted both motions to authorize employment of the divorce counsel under ' 327(e) of the Bankruptcy Code. It held that under the Bankruptcy Abuse Prevention Consumer Protection Act of 2005 (BAPCPA), any property obtained by the debtor during the pendency of the Chapter 11 proceeding is the property of the bankruptcy estate, and the individual debtors are not permitted to use their post-petition income to pay divorce counsel or other expenses without the authorization of the court. Here, the court granted the parties' application, holding that ' 327(e) authorizes the appointment of specialized counsel for a specific purpose if it is in the best interest of the estate and the counsel does not hold any interest adverse to the debtor with respect to the matter for which the counsel is to be employed.