  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
violated Code obligations or failed to provide services that benefit the estate (instead of insiders). The rights and powers vested in creditors and other parties in interest provide further protection.
7. Other courts have followed Hansen, Jones & Leta, further elaborating on DIP and DIP counsel fiduciary duties.
1. Bankruptcy Code § 327(a) requires that counsel for the trustee not "hold or represent an interest adverse to the estate" and be a "disinterested person." Courts have held that § 1107 imposes the same requirement on counsel for the DIP. "Disinterestedness" by definition includes a checklist of attributes for the applicant counsel, such as not being itself a creditor or equity security holder. It also requires that the applicant not personally hold an interest "materially adverse" to the estate or any class of creditors or equity holders. To that extent only it overlaps the §327(a) requirement that the applicant not "hold" or "represent" an adverse interest. Adverse interest has been defined broadly to mean either (i) possessing or asserting any economic interest that would tend to lessen the value of the bankruptcy estate or that would create either an actual or potential dispute in which the estate would be a rival claimant, or (ii) possessing or having a predisposition under the circumstances to be biased against the estate. A number of courts have also used a disinterestedness test of whether the person "in the slightest degree might
This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
