THE ETHICS OF REPRESENTING DEBTORS &
CREDITORS IN BANKRUPTCY

B. Trustee Power to Waive the Debtor's Privilege.

1. The client, not the attorney, holds the attorney-client privilege and can waive it; the client likewise may consent to disclosure of confidential information. A trustee in bankruptcy steps into the shoes of the debtor in many respects, taking over management of a corporate debtor. The Supreme Court has held that a bankruptcy trustee is empowered to waive the attorney-client privilege of a corporate debtor just as prior corporate management could waive it. A partnership is an entity, like a corporation, and its bankruptcy trustee may waive the partnership's privilege. Once in bankruptcy, only the trustee, not the shareholders, control the privilege.
2. There is a split of authority on whether the attorney-client privilege always passes by operation of law to the bankruptcy trustee, so that the trustee may unilaterally waive the privilege of an individual debtor. The Supreme Court expressly declined to rule on the issue, but pointed out that since individuals do not act through agents like corporations, the rationale of taking over management's privilege rights would not apply, and other reasons would have to support any trustee waiver of an individual debtor's privilege. Some courts hold the trustee always may waive; some that the trustee may never