05 B 27545

In this chapter 7 case, the chapter 7 trustee sought to employ Neal Levin of Freeborn Peters LLP as special counsel to pursue causes of action against certain parties affiliated with the debtor (“Teknek Parties”). Levin previously represented the chapter 7 trustee in this capacity and also represented the estate’s main creditor, Systems Division, Inc. (“SDI”) at a point during the bankruptcy case. Levin previously withdrew representation of both parties when the trustee initiated an adversary proceeding against SDI. Now, the trustee seeks to re-employ Levin for the limited purpose of pursuing causes of action against the Teknek Parties. Both the Teknek Parties and SDI object. SDI objected on the grounds that it previously withdrew its as of right and that alleged misconduct by Levin precluded his employment with the estate. The Court held that the Teknek Parties lacked standing to object to Levin’s re-employment and overruled SDI’s objection as it related to its assertion that it withdrew its claim and Levin’s alleged misconduct. However, the Court found that 11 U.S.C. 327(a) precluded Levin’s re-employment to the chapter 7 trustee in this case. Therefore, the objection was ultimately sustained.