In Re Water's Edge Ltd. Partnership

Decision

JAMES F. QUEENAN, Jr., Bankruptcy Judge.

This case presents the question whether counsel to a debtor in possession is “disinterested” or holds an “interest adverse to the estate” within the meaning of section 327(a) of the Bankruptcy Code. The question arises primarily because of counsel’s prior representation of a party who sponsored and funded the debtor’s plan of reorganization. Its resolution depends in part upon a somewhat neglected aspect of the responsibilities of a debtor in possession— whether it has fiduciary obligations concerning the payment it proposes to make under its…