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Judge Carol A. Doyle

Judge Jacqueline P. Cox

07 B 03856

Chapter 11 debtors filed application to employ law firm as special litigation counsel to represent them in pending state-court litigation involving derivative claims and counterclaims the debtors’ principals filed against each other on behalf of certain debtors. The court overruled the objection from one of the debtors’ principal members and prior manager and held that the law firm’s employment was in the best interest of the estate and that the interests of the debtors’ controlling principals, who are defendants in the state court litigation, are not adverse to the estates’ interests. The court also noted that special counsel risked total denial of any requested compensation award if it failed to timely disclose the development of an adverse interest while representing the debtors.

Judge Jack B. Schmetterer

Chief Judge Pamela S. Hollis

03 A 02300

Chapter 7 trustee sued KPMG, whom debtor had retained to perform a valuation analysis for its employee stock purchase plan. The trustee sought over $20 million in damages, alleging that KPMG breached its contract with the debtor, committed professional malpractice, and aided and abetted debtor's directors and officers in the breach of their fiduciary duties. Held: Judgment for the defendants. After considering the numerous decisions made by KPMG in the exercise of its professional judgment, as well as the circumstances in which the valuation analysis was issued, court determined that KPMG was not negligent.

In Re: Darlene Williams
April 23, 2007

06 B 15945

Chapter 13 debtor sought to retain her car over secured creditor's objection. Since debtor was not entitled to a discharge pursuant to 11 USC 1328(f), plan had to provide that the creditor retain its lien until payment of "the underlying debt determined under nonbankruptcy law." 11 USC 1325(a)(5)(B)(i)(I)(aa). Secured creditor objected on the grounds that the plan failed to do so. The issue was whether that phrase meant that the debtor had to pay the contract rate of interest or whether a prime-plus-risk-factor rate of interest as described in Till v. SCS Credit Corp., 541 U.S. 465, 474 (2004), would be sufficient.
Held: Till and its prime-plus-risk-factor analysis does not apply to the interpretation of 1325(a)(5)(B)(i)(I)(aa). Plan must provide that Debtor pay the contract rate of interest.

Judge A. Benjamin Goldgar