Representing both a corp and its creditor owner as clients
Posted: Mon May 08, 2017 8:16 pm
Jason, may not get the briefing. I have that issue right now.
Sent from my iPhone
> On May 8, 2017, at 5:03 PM, Jason Wallach jwallach@ghplaw.com [cdcbaa] wrote:
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> Hale, if you are talking about twin Chapter 7s then I think you just go with the Rule 3-310 waiver. But in a Chapter 11, with a higher disinterestedness standard, you have to convince the court that the conflict is de minimis and that the advantage to creditors of minimizing legal costs outweighs the problem. Case is AFI holdings, I think, a Judge Z case that went up to the 9th Circuit about 20 years ago. I have some briefing if you want.
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> Jason
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> JASON WALLACH
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> jwallach@ghplaw.com
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> Gipson Hoffman & Pancione, APC
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> Sent: Monday, May 08, 2017 4:51 PM
> To: cdcbaa@yahoogroups.com
> Subject: [cdcbaa] Representing both a corp and its creditor owner as clients
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> Normally there's not the need for two bankruptcies when a small business owner wants to file, as the owner typically personally guarantees all corporate liabilities. However, in a situation where the debtor just wants closure and full protection of 11 USC 362, sometimes they just want both.
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> When the owner is owed money from the corporation -- which I imagine is most of the time as business owners typically skip paying themselves before contemplating bankruptcy -- that would make him I suppose a creditor of the corporation. This would raise a conflict, and now we have adverse interests pursuant to Rule 3-310. Subsection C says this is waived if informed written consent can be obtained, but can the same person inform himself (let's assume that part has been done) and then sign the waiver as both individual and president? There are no other shareholders.
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> In short, is there a way for the same counsel to represent both a corporation and its 100% shareholder when some paychecks were skipped making him arguably a creditor?
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> Hale
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The post was migrated from Yahoo.