Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 3–CASE ADMINISTRATION

Sub Chapter II –Officers

Sec. 327. Employment of professional persons

 (a) Except as otherwise provided in this section, the trustee, with 
the court's approval, may employ one or more attorneys, accountants, 
appraisers, auctioneers, or other professional persons, that do not hold 
or represent an interest adverse to the estate, and that are 
disinterested persons, to represent or assist the trustee in carrying 
out the trustee's duties under this title.
    (b) If the trustee is authorized to operate the business of the 
debtor under section 721, 1202, or 1108 of this title, and if the debtor 
has regularly employed attorneys, accountants, or other professional 
persons on salary, the trustee may retain or replace such professional 
persons if necessary in the operation of such business.
    (c) In a case under chapter 7, 12, or 11 of this title, a person is 
not disqualified for employment under this section solely because of 
such person's employment by or representation of a creditor, unless 
there is objection by another creditor or the United States trustee, in 
which case the court shall disapprove such employment if there is an 
actual conflict of interest.
    (d) The court may authorize the trustee to act as attorney or 
accountant for the estate if such authorization is in the best interest 
of the estate.
    (e) The trustee, with the court's approval, may employ, for a 
specified special purpose, other than to represent the trustee in 
conducting the case, an attorney that has represented the debtor, if in 
the best interest of the estate, and if such attorney does not represent 
or hold any interest adverse to the debtor or to the estate with respect 
to the matter on which such attorney is to be employed.
    (f) The trustee may not employ a person that has served as an 
examiner in the case.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2563; Pub. L. 98-353, title III, 
Sec. 430(c), July 10, 1984, 98 Stat. 370; Pub. L. 99-554, title II, 
Secs. 210, 257(e), Oct. 27, 1986, 100 Stat. 3099, 3114.)


                      Historical and Revision Notes

                         legislative statements

    Section 327(a) of the House amendment contains a technical amendment 
indicating that attorneys, and perhaps other officers enumerated 
therein, represent, rather than assist, the trustee in carrying out the 
trustee's duties.
    Section 327(c) represents a compromise between H.R. 8200 as passed 
by the House and the Senate amendment. The provision states that former 
representation of a creditor, whether secured or unsecured, will not 
automatically disqualify a person from being employed by a trustee, but 
if such person is employed by the trustee, the person may no longer 
represent the creditor in connection with the case.
    Section 327(f) prevents an examiner from being employed by the 
trustee.


                        senate report no. 95-989

    This section authorizes the trustee, subject to the court's 
approval, to employ professional persons, such as attorneys, 
accountants, appraisers, and auctioneers, to represent or perform 
services for the estate. The trustee may employ only disinterested 
persons that do not hold or represent an interest adverse to the estate.
    Subsection (b) is an exception, and authorizes the trustee to retain 
or replace professional persons that the debtor has employed if 
necessary in the operation of the debtor's business.
    Subsection (c) provides a professional person is not disqualified 
for employment solely because of the person's prior employment by or 
representation of a secured or unsecured creditor.
    Subsection (d) permits the court to authorize the trustee, if 
qualified to act as his own counsel or accountant.
    Subsection (e) permits the trustee, subject to the court's approval, 
to employ for a specified special purpose an attorney that has 
represented the debtor, if such employment is in the best interest of 
the estate and if the attorney does not hold or represent an interest 
adverse to the debtor of the estate with respect to the matter on which 
he is to be employed. This subsection does not authorize the employment 
of the debtor's attorney to represent the estate generally or to 
represent the trustee in the conduct of the bankruptcy case. The 
subsection will most likely be used when the debtor is involved in 
complex litigation, and changing attorneys in the middle of the case 
after the bankruptcy case has commenced would be detrimental to the 
progress of that other litigation.


                         house report no. 95-595

    Subsection (c) is an additional exception. The trustee may employ as 
his counsel a nondisinterested person if the only reason that the 
attorney is not disinterested is because of his representation of an 
unsecured creditor.


                               Amendments

    1986--Subsec. (b). Pub. L. 99-554, Sec. 257(e)(1), which directed 
the insertion of ``, 1202,'' after ``section 721,'' was executed by 
making the insertion after ``section 721'' to reflect the probable 
intent of Congress.
    Subsec. (c). Pub. L. 99-554, Sec. 257(e)(2), which directed the 
insertion of ``, 12,'' after ``section 7,'' was executed by making the 
insertion after ``chapter 7'' to reflect the probable intent of 
Congress.
    Pub. L. 99-554, Sec. 210, inserted ``or the United States trustee'' 
after ``another creditor''.
    1984--Subsec. (c). Pub. L. 98-353 substituted ``In a case under 
chapter 7 or 11 of this title, a person is not disqualified for 
employment under this section solely because of such person's employment 
by or representation of a creditor, unless there is objection by another 
creditor, in which case the court shall disapprove such employment if 
there is an actual conflict of interest.'' for ``In a case under chapter 
7 or 11 of this title, a person is not disqualified for employment under 
this section solely because of such person's employment by or 
representation of a creditor, but may not, while employed by the 
trustee, represent, in connection with the case, a creditor.''


                    Effective Date of 1986 Amendment

    Effective date and applicability of amendment by section 210 of Pub. 
L. 99-554 dependent upon the judicial district involved, see section 
302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of 
Title 28, Judiciary and Judicial Procedure.
    Amendment by section 257 of Pub. L. 99-554 effective 30 days after 
Oct. 27, 1986, but not applicable to cases commenced under this title 
before that date, see section 302(a), (c)(1) of Pub. L. 99-554.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 326, 328, 330, 331, 1107 of 
this title; title 28 section 586.


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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software