THE ETHICS OF REPRESENTING DEBTORS &
CREDITORS IN BANKRUPTCY

1. Professionals employed by one committee generally may not serve another committee in the same case or in a related case to avoid breaching fiduciary duties. A single creditors' committee and its counsel may be appointed, however, in related, jointly administered cases.
2. An attorney representing a creditors' committee may not represent any other entity having an adverse interest in connection with the case. But representation of one or more creditors of the same class represented by the committee is not considered an adverse interest per se. The ability to represent creditors and the creditors' committee simultaneously was not authorized until the 1984 BAFJA amendments to the Bankruptcy Code. Prior representation of another party in interest may be disqualifying.
3. Courts evaluate potential conflicts between duties to the committee and duties to a separate creditor client on a case-by-case basis. Pursuing litigation for individual creditors potentially adverse to the committee or other committee members has been held to require disqualification as committee counsel. A remote, speculative possibility of a future dispute over a creditor client's claim or a possible cause of action against that client does not disqualify committee counsel. Even though the interests of the committee and an individual creditor client may diverge in part, their interests may be aligned in connection with specific litigation, warranting employment of the attorney as special counsel to the committee for a specific purpose. In some instances, a member's counsel may act on behalf of the entire committee, and be entitled to fee payment by the

This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)