Malone v. Iceberg Transport S.A. et al

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GOLD & APPEL TRANSFER S.A.,
Debtor in a Foreign
Proceeding.
____________________________
MEADE MALONE, OFFICIAL
LIQUIDATOR FOR GOLD & APPEL
TRANSFER S.A.,
Plaintiff,
v.
ICEBERG TRANSPORT S.A., et
al.,
Defendants.
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Case No. 05-00775
(Case Under Section 304 of
the Bankruptcy Code)
Adversary Proceeding No.
05-10022
OPINION RE MOTION FILED BY WALT ANDERSON
TO REMOVE PLAINTIFF'S COUNSEL DUE TO CONFLICT OF INTEREST
Walt Anderson, one of the defendants, has filed a motion to
remove the plaintiff's counsel, Daniel M. Litt and his law firm,
due to an alleged conflict of interest. Anderson's allegations,
a hodgepodge of facts devoid of any real substance, do not make
out a case for removing Litt and his law firm, and thus his
The opinion below is hereby signed. Dated: December
2, 2005.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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motion will be denied as a matter of law without the necessity of
taking evidence (and without the necessity of reciting the
lengthy factual rebuttal the plaintiff has raised in response to
the motion).
1. Knowledge gained by Litt or his law firm in pursuing
claims on behalf of the plaintiff or on behalf of another client,
Nortel, an entity that is not one of Anderson's related entities,
may be adverse to Anderson, but that does not constitute a
conflict.
2. Even if, as Anderson contends, Litt (either as an
attorney for Nortel or as a former provisional liquidator of the
debtor or as a witness in criminal proceedings against Anderson)
or his law firm took actions that were improperly adverse to
Anderson or any of his related entities, that does constitute a
ground for removing Litt and his law firm from representing the
plaintiff in this proceeding. This is unaltered by the fact that
the plaintiff (the current liquidator and former joint
provisional liquidator with Litt of the debtor's estate) might be
joined as a co-defendant in any lawsuit brought against Litt or
his law firm for such alleged misconduct.
3. Finally, Anderson contends that Litt was removed as
joint provisional liquidator of the debtor's estate based on a
conflict of interest, but does not specify what that conflict
was. This does not suffice to warrant removing Litt and his law
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1 Under the Bankruptcy Code prior representation (indeed,
even ongoing representation) of a creditor does not preclude an
attorney from being employed to represent an entity administering
an estate in liquidation proceedings absent an actual conflict of
interest raised by the United States Trustee or a creditor. See
11 U.S.C. § 327(c). Anderson has not alleged that the law of the
British Virgin Islands is meaningfully different, and, in any
event, the liquidation court in the British Virgin Islands is the
appropriate court to decide whether the liquidator may employ
Litt. However, Anderson's standing to raise the issue is in
doubt.
3	O:\JUDGTEMP\Malone vs Iceberg Opinion re Motion to Disqualify Litt.wpd
firm. First, without more, the allegation does not constitute a
basis for removing Litt and his law firm from a different role,
that of representing the current liquidator as his counsel.
Second, to the extent Anderson were to contend that Litt and his
firm represented a creditor, Nortel, and that this was the
alleged conflict involved in Litt's removal as a provisional
liquidator, that would not preclude Litt from representing the
plaintiff (the current liquidator). Anderson has alleged no
conflict of interest regarding Litt's representation of Nortel
and his representation of the liquidator: the interests of those
parties are the same in this proceeding, namely, to maximize the
assets of the estate through the recoveries being pursued by the
plaintiff. Accordingly, nothing in those provisions of the D.C.
Bar Rules of Professional Responsibility addressing conflicts of
interest, Rules 1.7 through 1.9, precludes the representation.1
An order follows.
[Signed and dated above.]
Copies to: All counsel of record.
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