Richards Layton & Finger
 

Bankruptcy Court's Refusal to Appoint Financial Group as Estate Professional Is Not Misconduct

August 22, 2014

In In re Complaint of Judicial Misconduct, the United States Court of Appeals for the Ninth Circuit rejected a complaint for judicial misconduct filed by the principal owner of a financial group against a sitting bankruptcy judge who refused to approve the appointment of the financial group based on the judge’s view that the financial group had disregarded the terms of retention orders entered by the judge in other cases.

Complainant principal owner of a financial group had been appointed as an advisor to a bankruptcy estate by the bankruptcy judge pursuant to multiple orders that included a monthly cap on fees. The complainant exceeded the monthly cap and the judge refused to approve payment of fees in excess of the cap. The complainant appealed and ultimately prevailed, although the reviewing court noted that the judge might have been able to limit the payment of excess fees to the complainant if the judge had relied on a different code section.

After the appeal was concluded, the judge refused to appoint the complainant in other cases on the grounds that (1) the complainant had violated his orders; (2) the complainant had appealed and prevailed on a technicality, and (3) the judge did not have confidence in the complainant because the judge believed that the complainant had violated the terms of his prior orders. Complainant thereafter filed its complaint alleging judicial misconduct.

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