Great Debates: The Role of the United States Trustee — Friend or Foe?

By: Russell L. Munsch (Co-speaker)
ABI Annual Spring Meeting
April 19-22, 2001

Introduction
The following is an introduction into various issues faced by bankruptcy lawyers, accountants and other professionals who must consistently interact with the Office of the United States Trustee. These materials address several issues that professionals must face and precautions that must be taken to avoid disqualification, or worse, disgorgement of fees. These materials also address the issue of post-confirmation U.S. Trustee fees and whether such fees are appropriate or simply a further tax imposed upon successful debtors as a cost to utilize the Chapter 11 process.

I. RETENTION OF PROFESSIONALS
A. Disinterestedness
Under the Bankruptcy Code, only "attorneys, accountants, appraisers, auctioneers, or other professional persons" are required to seek formal retention through the court. 11 U.S.C. § 327(a). The phrase "other professional persons" has been construed by the courts to include only those who play "a central role in the administration of the debtor's estate."2

Section 327(a) of the Bankruptcy Code sets forth two requirements for employment of a professional. First, the professional must not "hold or represent an interest adverse to the estate"; and second, the professional must be a "disinterested person."

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