Law firm can't block bankruptcy dismissal

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Boston (Dolan) — A law firm that acted as counsel for the creditors’ committee in a Chapter 11 bankruptcy lacked standing to challenge dismissal of the case, the 7th Circuit has ruled.

The firm was retained by the creditors’ committee as litigation counsel in an involuntary Chapter 11 petition against a cattle company and owner. It filed applications for its fees and administrative expenses with the court, but soon after, the attorney with primary responsibility for representing the committee moved to another firm. After the court denied a negotiated reorganization plan, the debtors moved to dismiss.

At an omnibus hearing, the same attorney appeared as counsel for the committee, but no attorney from his former law firm was present.

The 7th Circuit said the firm lacked standing to appeal dismissal.

“[The firm] concedes that appearance and objection are required for bankruptcy standing. [The firm] submits that it met this requirement through the appearance of [its former] attorney, counsel to the committee, at the omnibus hearing in the bankruptcy court. [The attorney], however, never submitted an appearance on behalf of the [law] firm in the bankruptcy court.”