661 F. App'x 124
2d Cir.2016Background
- Debtor: Fletcher International, Ltd.; appellant Alphonse Fletcher, Jr. proceeded pro se seeking removal of the Chapter 11 trustee (Richard J. Davis) and disgorgement of trustee and retained professionals' fees.
- Trustee had been appointed and retained professionals (Luskin, Stern & Eisler LLP and Goldin Associates, LLC) were approved over a year before Fletcher raised conflict claims.
- Fletcher alleged conflicts based on the Trustee’s prior partnership at Weil Gotshal and connections between Weil or retained professionals and third parties involved in an unrelated lawsuit (the Dakota Litigation).
- Bankruptcy court instructed Fletcher to submit a brief identifying statutes, alleged violations, and requested relief; Fletcher failed to file the ordered brief and repeatedly missed procedural requirements.
- Bankruptcy court denied motions to remove trustee, disqualify retained professionals, disgorge fees, and denied an evidentiary hearing; district court affirmed, and this appeal followed.
Issues
| Issue | Fletcher's Argument | Davis/Trustee's Argument | Held |
|---|---|---|---|
| Whether the Trustee should be removed for conflicts of interest under 11 U.S.C. § 324(a) | Trustee’s Weil Gotshal ties and related third‑party relationships create conflicts and require removal | Trustee retired from Weil nine months before appointment; alleged ties are attenuated and unrelated to the estate | Denied — no cause shown; allegations were conclusory and failed to show fraud or actual injury |
| Whether retained professionals should be disqualified under 11 U.S.C. § 327(a) | Retained Professionals’ relationships with third parties create adverse interests to the estate | No present adverse interest to the estate shown; many connections were disclosed and objections were untimely | Denied — no present adverse interest plausibly alleged; disclosures largely made and objections untimely |
| Whether fees/expenses should be disgorged or an evidentiary hearing ordered | Fees should be disgorged due to conflicts and undisclosed connections | No actionable conflict or prejudice shown to justify disgorgement; procedural default | Denied — court did not abuse discretion refusing disgorgement or hearing |
| Whether motions could be denied for procedural noncompliance (failure to file required brief/timely objections) | Substantive relief warranted despite procedural lapses | Fletcher repeatedly failed to comply with court orders and did not timely object | Denied — bankruptcy court properly exercised case‑management authority and denied motions for procedural noncompliance |
Key Cases Cited
- In re Cacioli, 463 F.3d 229 (2d Cir.) (standard of review in bankruptcy appeals)
- In re First Cent. Fin. Corp., 377 F.3d 209 (2d Cir.) (review standards for bankruptcy court findings)
- In re Eloise Curtis, Inc., 326 F.2d 698 (2d Cir.) (trustee removal viewed as discretionary)
- In re Arlan’s Dep’t Stores, Inc., 615 F.2d 925 (2d Cir.) (deference in attorney compensation review)
- In re Smith, 507 F.3d 64 (2d Cir.) (abuse of discretion framework)
- In re AroChem Corp., 176 F.3d 610 (2d Cir.) (disqualification under §327 requires present adverse interest)
- In re Freeport Italian Bakery, Inc., 340 F.2d 50 (2d Cir.) (fraud and actual injury elements for trustee removal)