Macdonald | Fernandez LLP


221 Sansome Street
San Francisco, CA 94104
Telephone: (415) 362-0449
Facsimile: (415) 394-5544
914 Thirteenth Street
Modesto, CA 95354
Telephone: (209)549-7949
Facsimile: (209) 236-0172

Serving Two Masters: Representing the Chapter 11 Debtor and the Estate

On September 19, 2010, Judge Alan Jaroslovsky entered a short memorandum opinion denying $8,000 in attorney's fees for defending an individual chapter 11 debtor's claim of exemption for $1 million in retirement funds.  The Judge ruled that it was a conflict of interest for a law firm to represent both the estate and the debtor where their interests were opposed.  The court noted that it had the power to order the firm to disgorge all of its unpaid fees, but declined to do so in order to avoid a financial disaster for the firm.  In the end, the firm's fees were reduced by $8,000 and it was barred from collecting this amount from the estate, the debtor or anyone else.  This opinion underscores the fact that handling an individual chapter 11 bankruptcy case requires a high degree of care and skill.  To learn more, check out our in-depth article on individual chapter 11 cases. - Reno Fernandez