UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
WILLIAM R. GOAN
DEBTOR CASE NO. 92-20747
This matter is before the Court on the Objection of the United States Trustee to the Employment of Gregory A. Moore as Attorney for the Debtor, filed herein on May 28, 1992. The debtor's Chapter 11 petition was filed in this Court on May 13, 1992. The debtor filed his Application to Employ Wilson, Nelson & Isaacs as Counsel and to Designate Gregory A. Moore as Case Attorney on June 8, 1992. The Application was accompanied by the Affidavit of Gregory A. Moore, in Accordance with'327 of Bankruptcy Code and Bankruptcy Rule 2014.
Bankruptcy Code'327(a) places two requirements on the employment of professionals: (a) that they do not hold or represent an interest adverse to the estate, and (b) that they are "disinterested persons." The objection of the U.S. Trustee is based on the fact that the debtor is the president and sole shareholder of Stabil, Inc., a company which filed for Chapter 11 protection in this Court on January 29, 1992 (Case No. 92-20112). Stabil, Inc., is represented by McGehee Isaacs, a partner in the firm of Wilson, Nelson & Isaacs, the firm which employs Mr. Moore. It is the position of the U.S. Trustee that concurrent representation of a debtor-in-possession and its sole shareholder may constitute a conflict of interest.
The debtor's Application states that Wilson, Nelson & Isaacs has no connection with the debtor, his creditors or any other party in interest, aside from its representation of Stabil, Inc. The application further states that since consolidation and joint administration is being sought in these cases, cause exists for concurrent representation. A Motion for Joint Administration of Estates Pursuant to Bankruptcy Rule 1015(b) and Consolidation of Estates Pursuant to 11 U.S.C.'302(B) was filed on May 28, 1992.
A case cited by the U.S. Trustee, In re Roberts, 75 B.R. 402 (D.Utah 1987), for the proposition that disclosure requirements are mandatory, holds that the fact of simultaneous representation of a corporation and its principals in separate Chapter 11 cases, without more, "does not justify the conclusion that a conflict of interest existed in the representation, or even that there was an appearance of impropriety..." At page 405. The court found, however, that the law firm was not "disinterested" because it had been a pre-petition creditor of the debtors. This is not a factor in the instant case.
The Objection of the U.S. Trustee having been addressed and the Court having reviewed the Application for Employment herein, and there appearing to be no other objections to the Application, the Court will enter an Order sustaining the Application to Employ.
By the Court -
Gregory A. Moore, Esq.