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information in the schedules filed with the petition is incorrect. The amendments incorporate into the Bankruptcy Code a variation on Bankruptcy Rule 9011 that is harsher than the current rule, and applies to every attorney's signature on a petition, certification, pleading or written motion. Among other things, the new Code language requries that all factual contentions be "well grounded" instead of having "evidentiary support," and that all legal arguments be made in "good faith," instead of being "nonfrivolous." Bankruptcy Rule 9011 may also be amended to expressly extend its reach to all documents, including schedules, submitted to the court or a trustee, even if the lawyer does not sign them, to comply with the "sense of Congress" in the 2005 Bankruptcy Code amendments. Counsel should check bankruptcy records by PACER or otherwise to confirm that the debtor's statements about prior bankruptcy cases are accurate.
2. The duty to disclose assets on schedules includes disclosure of all potential causes of action. The attorney likewise must take care not to file a disclosure statement overlooking known assets, or a plan counsel knows the debtor cannot fund or that counsel knows is unconfirmable. On the other hand, the creditors should not have to pay more for an incompetent or deceptive debtor through increased counsel fees. Two courts have suggested guidelines for counsel working with debtors on disclosure to resolve this tension. Another has cautioned that DIP counsel should take heed of objections and motions by creditors, which may disclose serious problems and concerns with the DIP's operations and representations to counsel.
This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
