In re Glenview Health Care Facility, Inc.

Case Type:
Case Status:
Reversed and Remanded
19-8028 (6th Circuit, Nov 06,2020) Published
The bankruptcy court erred by disqualifying proposed counsel for a creditors' committee based on the court's conclusion that the law firm's prior representation of a 50% shareholder of the debtor prevented the firm from being disinterested. Section 1103 of the Bankruptcy Code does not require that counsel for a committee be disinterested. The bankruptcy court improperly grafted the requirements of section 327 into section 1103.
Procedural context:
A law firm that was disqualified by the bankruptcy court from representing a creditor's committee for a conflict of interest timely appealed the bankruptcy court's disqualification order.
Glenview Health Care Facility, Inc. (“Debtor”) was jointly owned, in equal shares, by Kay Bush and Lisa Howlett. The Official Committee of Unsecured Creditors of the Debtor retained Dentons Bingham Greenebaum LLP (“DBG”) to represent it in connection with the case. In DBG's declaration, DBG disclosed that it had previously represented Lisa Howlett in estate planning matters, and that this representation ended three years before the commencement of the bankruptcy case. DBG also volunteered to wall off the professionals who represented Ms. Howlett from representing the Committee. Nevertheless, the Debtor objected. Ms. Howlett did not object. The Debtor asserted that DBG assisted the Debtor and Ms. Howlett with the preparation of a buy-sell agreement for the purchase and sale of the Debtor and all its assets. As evidence, the Debtor submitted a 2016 invoice from DBG with entries for a buy-sell agreement. DBG responded that no such agreement was ever executed. The bankruptcy court disqualified DBG after a non-evidentiary hearing. The Committee disbanded, and DBG timely appealed from the disqualification order.

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