New Cases For the Week of June 25, 2007 - June 29, 2007

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June 28, 2007

Case

Court

Holding

In re Macke International Trade, Inc.
(DBN Subscription Required)
9th Cir. BAP A bankruptcy court may, under appropriate circumstances, order a petitioning creditor to pay an alleged debtor’s attorney’s fees and costs when, upon finding that the interests of creditors and debtor would be better served, it dismisses a good faith involuntary petition pursuant to § 305(a).
     

June 27, 2007

Case

Court

Holding

In re Count Liberty LLC
(DBN Subscription Required)
Bankr. C.D. Cal.

An attorney for a debtor in possession is a fiduciary of the bankruptcy estate. While counsel’s duty to the estate may not rise to the level of a policeman for the debtor’s post-petition conduct,57 an attorney for the debtor in possession has fiduciary obligations to the estate stemming from his fiduciary duties to the debtor in possession and his responsibilities as an officer of the court. A debtor in possession’s attorney bears a heightened duty of care to ensure the integrity of the bankruptcy process. A debtor in possession’s attorney must be proactive, i.e., prepared to render unsolicited legal advice regarding preventative or corrective action that may be necessary for the debtor in possession to properly discharge its fiduciary obligations.

Counsel for the DIP is liable for sanctions for failing to act diligently to ensure that the DIP ’s principal took appropriate steps to safeguard funds that were supposed to be segregated from a free and clear sale.

Zurich Am. Ins. Co. v. Tessler
(DBN Subscription Required)
4th Cir. A wrongful death claimant who had not yet filed suit, but whose identity and potential claim were either actually known or reasonably ascertainable to the debtor, was a "known creditor" of the debtor, and thus entitled to specific notice of the bankruptcy proceeding and applicable filing dates.
     

June 25, 2007

Case

Court

Holding

Enron Creditors Recovery Corp. v. J.P. Morgan Securities, Inc.
(DBN Subscription Required)
Bankr. S.D. N.Y. A party is not entitled to dispositive substantive review of disputed issues in a case before complying with relevant discovery.
     

 

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