This matter is before the Court on a Motion to Allow Creditors to Question Debtors at '341 Meetings filed in each of the above-captioned cases. These Motions were filed by Kentucky Finance Company, Inc. ("Kentucky Finance"), a creditor of each of the debtors. Kentucky Finance seeks an order allowing designated, non-attorney employees to question the above-named debtors, and all other debtors similarly situated, at the first meeting of creditors provided for in 11 U.S.C. '341. The debtors and the Chapter 13 trustee have filed responses. The U.S. Trustee has filed a Comment.

In each of the cases herein, a non-attorney employee of Kentucky Finance had attempted to question the debtors at their '341 meetings and was prevented from doing so by the Chapter 13 trustee. Kentucky Finance states that the Chapter 13 trustee advised the employee that he would not permit a non-attorney employee to question a debtor concerning collateral and that Kentucky Finance must be represented by counsel at all future '341 meetings. The Motions filed by Kentucky Finance were in response to this action by the Chapter 13 trustee.

Kentucky Finance argues that '341 allows the use of non-attorney employees in questioning debtors and submits a copy of a Bankruptcy Court opinion from the Northern District of Ohio, In re Roy W. Markley and Donna M. Markley, Case No. B87-01429, in support of its position. Therein the court determined that the '341 examination is an administrative, fact-finding procedure. It then turned to Ohio state law "to determine whether Ohio treats non-attorney representation of corporate creditors as the unauthorized practice of law." At page 29. The court's review of applicable Ohio cases led it to the conclusion that state law did not, and would not, prohibit a non-attorney employee of a corporate creditor from representing it at a '341 meeting. At page 30.

The U.S. Trustee also supports Kentucky Finance's position. His "Comment ... in Support of Non-Attorneys Questioning All Debtors at Meetings Convened Under 11 U.S.C. Section 341" cites, in addition to the Markley case, Wittman vs. ITT Financial Services (Civil Action No. R88-324) in which the U.S. District Court for the District of Maryland found that the '341 meeting is not an adjudicative proceeding, and that a non-lawyer representative of a corporation may question a debtor at such meeting. The Wittman court observed that the legislative history of '341 indicates that "[e]xcluding the judge from the creditor's hearing and separating out matters requiring judicial resolution strongly indicates the non-adjudicative nature of the 341 hearing." At p. 6.

The debtors herein contend in response to Kentucky Finance's position that use of a non-attorney employee to question debtors at a '341 meeting constitutes the unauthorized practice of law. They recite SCR 3.020 in pertinent part concerning the practice of law in the Commonwealth of Kentucky:

The practice of law is any service rendered involving legal knowledge or legal advice, whether of representation, counsel or advocacy in or out of court, rendered in respect to the rights, duties, obligations, liabilities, or business relations of one requiring the services.

The debtors argue that this definition encompasses the questioning of debtors at '341 meetings.

The Kentucky Bar Association, at its Board of Governors meeting held on June 3-4, 1991, issued an Informal Advisory Opinion dealing with this issue. The Opinion states in part, "While the bankruptcy courts appear to consider state law governing unauthorized practice for at least some purposes, it is apparent that the question is ultimately controlled by federal law, and that it ought to be decided by the bankruptcy court. One assumes that this is a situation in which uniformity would be desirable, and our own independent research did not reveal any cases upholding objections to non-lawyer creditor questioning in bankruptcy courts of any other state."

This Court is convinced that the analysis found in the Markley and Wittman opinions is correct, that a '341 meeting is a non-adjudicative proceeding in which a non-lawyer employee of a creditor may question debtors. In this regard, and in view of the Informal Advisory Opinion recently issued by the Kentucky Bar Association, it is also the opinion of this Court that this activity does not constitute the unauthorized practice of law.

This Court therefore concludes that Kentucky Finance Company, Inc.'s Motion to Allow Creditors to Question Debtors at '341 Meetings should be SUSTAINED.



By the Court -




Copies to:

Phaedra Spradlin, Esq.

Billy Todd Cheshire, Esq.

U.S. Trustee