The Current State of Retention of Professionals: Enlightened Solutions or Clever Avoidance?

Presented at the 27th Annual Jay L. Westbrook Bankruptcy Conference, November 13-14, 2008.

11/13/2008

In this article, Robert Albergotti and John Middleton provide an overview of the current state of retention of professionals in bankruptcy and reorganization scenarios.  Issues include:

1. What problems does the retention of pre-petition crisis managers, either an individual who functioned in an officer capacity or the professional’s firm, raise in the bankruptcy context?. Can these problems be cured by hiring under § 363?
2. What “professionals” have to be retained under § 327? Communications/P.R. firms?
3. Where is the line drawn regarding the magnitude of activity of firm’s other clients with potential (or real) conflicts with the debtor? If the claim is undisputed, does it make a difference?
4. What is the effect of another client of debtor’s counsel acquiring a claim against the debtor post-petition or becoming a potential bidder for the debtor’s assets?
5. Does a waiver cure a potential disqualification?
6. Should non-attorney professionals be held to a less stringent test for disinterestedness?
7. Non-hourly compensation arrangements, i.e. fixed monthly fees, success fees, etc. – When are these arrangements approved, up front or at the end of the case?
8. Can a professional get a non-refundable retainer?
9. Does the use of conflicts counsel cure a potential disqualification?
10. What guidelines apply to professionals hired by the committees? Must they follow the same requirements as professionals retained by the debtor?
11. What time records have to be maintained by non-attorney/accountant professionals?
12. May a professional represent multiple affiliated debtors in their respective bankruptcy cases?

The complete article appears in the PDF below.

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