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*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
disqualifying initially will not be sanctioned at end of case).
190See In re Indian River Homes, Inc., 108 B.R. 46 (D. Del. 1989)(attorney was relative of debtor); In re Sharon Steel Corp., 154 B.R. 53 and 156 B.R. 14 (W.D. Pa. 1993) rev'd., U.S. Trustee v. Price Water-house, 19 F.3d 138 (3d Cir. 1994). See also In re Fretter, Inc., 219 B.R. 769 (Bankr. N.D. Ohio 1998)(mortgage subject to preference challenge).
191In re Pillowtex, Inc., 304 F.3d 246 (3d Cir. 2002)(when facially plausible preference claim, court cannot approve retention conditioned on later refund if preference later proven); In re First Jersey Securities, Inc., 180 F.3d 504 (3d Cir. 1999); In re Triple Star Welding, Inc., 324 B.R. 778 (9th Cir. BAP 2005) (firm may be disqualified after consideration of circumstances; no compensation until preference determined and disgorged); In re Florence Tanners, Inc., 209 B.R. 439 and 213 B.R. 129 (Bankr. E.D. Mich. 1997) aff'd. in relevant part Halbert v. Yousif, 225 B.R. 336 (E.D. Mich. 1998); see In re Dˇcor Corp., 171
B.R. 277 (Bankr. S.D. Ohio 1994); see also In re Fretter, Inc., 219 B.R. 769 (Bankr. N.D. Ohio 1998)(mortgage subject to preference claim). 192In re Sabre Intn'l., Inc. 289 B.R. 420 (Bankr. N.D. Okla. 2003).
19311 U.S.C. § 327(c); In re Premier Farms, L.C., 305 B.R. 717 (Bankr. N.D. Iowa 2003) (current representation of secured creditor was disqualifying even though less than 1% of firm's billings due to perceived or actual bias favoring long-term bank client over one-time DIP); In re Zenith Electronics Corp., 241 B.R. 92 (Bankr. D. Del. 1999)(prior representation of creditor/shareholder against debtor is actual conflict, and cannot be waived (by equity committee) when objection is made).
194See In re Hessinger Resources, Inc., 67 B.R. 378 (C.D. Ill. 1986); In re Flanigan's Enterprises, Inc., 70 B.R. 248 (Bankr. E.D. Fla. 1987).
195 In re Woodworkers Warehouse, Inc., 303 B.R. 740 (Bankr. D. Del. 2004) reversed in part In re Woodworkers Warehouse, Inc., 323 B.R. 403 (D. Del. 2005).
196 In re Berger McGill, Inc., 242 B.R. 413 (Bankr. S.D. Ohio 1999)(chapter 7).
197 E.g. In re Johnson, 312 B.R. 810 (E.D. Va. 2004); In re Adam Furniture Indus., 191 B.R. 249 (Bankr. S.D. Ga. 1996); In re RPC Corp., 114 B.R. 116 (M.D.N.C. 1990) and cases cited therein; In re Renninger Mason Contractors, Inc., 58 B.R. 516 (Bankr. E.D. Pa. 1986) and cases cited therein. But see In re Durbin, 205 B.R. 17 (Bankr. D. N.H. 1997)(counsel sanctioned for settling estate's litigation then pursuing claim against same defendant for creditor client). See In re Southern Kitchens, Inc., 216 B.R. 819 (Bankr. D. Minn. 1998)(former debtor's counsel disqualified from serving as trustee's counsel).
198See In re Carr, 224 B.R. 785 (Bankr. D. Idaho 1998); In re Unitcast, Inc., 214 B.R. 979 (Bankr.
N.D. Ohio 1997)(DIP's consultant sanctioned for also representing creditor in matter related to bankruptcy case; inherent conflict); In re Greater Pottsdown Community Church, 80 B.R. 706 (Bankr. E.D. Ba. 1987); In re Flexible Artcraft Graphics Unlimited, Inc., 74 B.R. 917 (Bankr. N.D. Ohio 1987); In re Thompson, 77 B.R. 113 (N.D. Ohio 1987); In re Ochoa, 74 B.R. 191 (Bankr. W.D.N.Y. 1987); In re Lee Way Holding Co., 100 B.R. 950 (Bankr. S.D. Ohio 1989); Compare In re Heissinger Resources Ltd., 67 B.R. 378 (C.D. Ill. 1986), where the court found there to have been no conflict when the creditor was represented early in the case by counsel later appointed for the trustee, where that creditor was represented in adversary proceedings against the trustee exclusively by separate counsel. See also In re Oatka Restaurant and Lounge, Inc., 73 B.R. 84 (Bankr. W.D.N.Y. 1987)(DIP counsel disqualified because representing creditor in separate action that could adversely affect estate). Cf. In re Georgetown of Kettering, Ltd., 750 F.2d 536 (6th Cir. 1984) and In re AOV Industries, Inc., 797 F.2d 1004 (D.C. Cir. 1986)(both interpreting prior version of Code). See In re Kliegl Bros. Universal Elec. Stage Lighting, 189 B.R. 874 (Bankr. E.D.N.Y. 1995)(DIP counsel represented post-petition lender on other matters).
199 In re Cook, 223 B.R. 782 (10th Cir. BAP 1998)(contingency fee agreement with creditor increased risk of alignment with creditor interest adverse to trustee he also represented and incentive to shift assets
