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attorneytrustbankruptcy
attorneytrustbankruptcy

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Metropolitan Warehouse, Inc.; U.S. v.

Facts

The Trustee claimed that the Bankruptcy Court erred in appointing Kronish Lieb as special counsel to the Debtor, arguing that the firm was previously denied employment as general bankruptcy counsel due to a conflict of interest. The Trustee asserted that the functions assigned to Kronish Lieb were central to the Debtor's bankruptcy case, including obtaining court approval for cash collateral use and selling assets. The Debtor countered that Kronish Lieb's tasks were narrowly defined and did not overlap with the general bankruptcy counsel's duties.

The Trustee claimed that the Bankruptcy Court erred in appointing Kronish Lieb as special counsel to the Debtor, arguing that the firm was previously denied employment as general bankruptcy counsel due to a conflict of interest.

Issue

Whether the services Kronish Lieb was appointed to perform constitute representing the trustee or the debtor-in-possession in 'conducting the case' under 11 U.S.C. 327(e).

Whether the services Kronish Lieb was appointed to perform constitute representing the trustee or here, the debtor-in-possession, in 'conducting the case.'

Rule

Section 327(e) of the Bankruptcy Code provides that the Trustee, with the court's approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate.

Section 327(e) of the Bankruptcy Code provides: The Trustee, with the court's approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed.

Analysis

The court analyzed the tasks assigned to Kronish Lieb and determined that they did not constitute conducting the bankruptcy case. The court noted that the Debtor had retained general bankruptcy counsel to handle the basic functions of the case, and the tasks assigned to Kronish Lieb were specifically delineated and did not overlap with those functions. The court emphasized that the appointment of special counsel was consistent with the purpose of Section 327(e) to avoid unnecessary duplication of services.

The court analyzed the tasks assigned to Kronish Lieb and determined that they did not constitute conducting the bankruptcy case. The court noted that the Debtor had retained general bankruptcy counsel to handle the basic functions of the case, and the tasks assigned to Kronish Lieb were specifically delineated and did not overlap with those functions.

Conclusion

The court affirmed the bankruptcy court's order appointing Kronish Lieb as special counsel to perform the services delineated therein.

The court affirmed the bankruptcy court's order appointing Kronish Lieb as special counsel to perform the services delineated therein.

Who won?

The Debtor prevailed in the case because the court found that the appointment of Kronish Lieb as special counsel did not violate the statutory requirements and was appropriate given the specific tasks assigned.

The Debtor prevailed in the case because the court found that the appointment of Kronish Lieb as special counsel did not violate the statutory requirements and was appropriate given the specific tasks assigned.

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