Brya Keilson, Counsel in the Bankruptcy & Creditors' Rights practice, was interviewed by Law360 to discuss the U.S. Trustee's Office's $1 million settlement with Skadden, WilmerHale and Dechert for failing to disclose connections with the Sackler family and Purdue Pharma in its Chapter 11 case.
Professionals retained by a debtor are required to disclose relationships they have with any parties in interest in a Chapter 11 to avoid conflicts of interest, and failing to do so can lead to the U.S. Trustee's Office swinging its hammer.
Brya — who spent two years as a trial attorney with the Office of the U.S. Trustee until joining Morris James — told Law360 these obligations extend beyond business relationships that could create a conflict to any connections a professional may have with a party to a case.
In order to avoid a disgorgement of fees or disqualification, she said it is always best to err on the side of caution and share anything that could even possibly be construed as a conflict.
"Generally, the mantra is, 'Disclose. Disclose. Disclose,'" she said.
Brya also said firms should stand in the shoes of the enforcers when determining what connections to disclose under Section 327 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure.
"It's always better to look at it from the perspective of the trustee's office to make sure you overdisclose and don't underdisclose," she said.
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