Judge Raps ‘Cat and Mouse Game,’ Withholds Attorney Fees
A federal bankruptcy judge has refused to approve a fee request of almost $75,000 by a New York law firm because it did not clearly disclose the relationship between the lead lawyer and one of the unsecured creditors he represented.
Lawyer Douglas Spelfogel of Berkman, Henoch, Peterson & Peddy of Garden City was the son-in-law of the CEO of one of the creditors, the New York Law Journal reports. But instead of disclosing the exact information in an affidavit, the firm said an unnamed lawyer “is related to [an] officer and shareholder of one of the general unsecured creditors of the debtors.”
U.S. Bankruptcy Judge Stephen Gerling, chief judge of the court in New York’s Northern District, said in a Jan. 11 opinion (PDF posted by the New York Law Journal) that the disclosure “appears to have been purposefully vague.”
He said the disclosure did not satisfy the federal bankruptcy rule requiring lawyers to reveal their connections with parties in a bankruptcy case. The rule “is not intended to condone a game of cat and mouse where the professional seeking appointment provides only enough disclosure to whet the appetite of the [U.S. trustee], the court or other parties [of] interest, and then the burden shifts to those entities to make inquiry in an effort to expand the disclosure,” he said.
