ORDER AFFIRMING BANKRUPTCY COURT’S DENIAL OF INTERIM FEE APPLICATION AND DISGORGEMENT OF RETAINER
Pending before the Court is Albert Kun’s appeal from the Bankruptcy Court’s order denying his interim application for attorney’s fees and disgorging his $5,000 retainer. Pursuant to Bankruptcy Local Rule 8012-1, the Court finds this matter appropriate for resolution without oral argument. After consideration of the record and the papers submitted by the parties, the Court AFFIRMS the Bankruptcy Court’s order denying fees and disgorging Mr. Kun’s retainer.
I. FACTUAL & PROCEDURAL BACKGROUND
Woodcraft Studios, Inc. filed for Chapter 11 protection on December 22, 2010. 1 Docket No. 16-5. 2 On January 13, 2011, Woodcraft applied to the Bankruptcy Court for Appellant Kun’s employment as bankruptcy counsel “under a general retainer to represent them as debtors in possession.” Docket No. 16-27 (order approving employment); 16-13 (application for employment); 16-14 (affidavit in supрort of application); 16-15 (amended application for employment). The amended application states that Mr. Kun “has never represented Woodcraft Studios, Inc. before,” and that Mr. Kun “represents no interest adverse to debtor as debtor in possession of the estate in the matters upon which he is to be engaged for the debtor in possession, and his employment would be in the best interest of the estate.” Docket No. 16-15 ¶¶ 6, 9. In conjunction with that application, Mr. Kun filed an affidavit stating that he “ha[d] no connection to any party interest.” Docket No. 16-14 at 1. The affidavit included the attorney-client fee contract, which provided for an hourly fee of $250 and a “non-refundable retainer” in the amount of $5,000. Id. at 3. The contract also gave Appellаnt a lien on any recovery obtained by Woodcraft. Id. The contract is dated December 29, 2010, seven days after the filing of the *5 bankruptcy petition. Id. at 4. Based on the application and affidavit, the Bankruptcy Court approved Appellant’s employment under a “general retainer” without objection. Docket No. 16-27. The order approving employment notes that “[r]e-ceipt of any compensation is subject to prior court approval after notice of hearing.” Id.
On May 4, 2011, the Chapter 11 case was converted to Chapter 7. Docket No. 16-58. On May 10, 2011, Appellant Kun filed an interim application for attorney’s fees and reimbursement of expenses for $8,250 and expenses of $56.11, 3 over and above the $5,000 retainer. Docket No. 16-51. The application indicated that Mr. Kun had performed $3,950 worth of work as Woodcraft’s attorney prior to Woodcraft’s filing for bankruptcy, in preparing the case for filing. Id. at 4; see Docket No. 16-73 at 4. Appellant had not disclosed this work in his affidavit accompanying the application for employment. At the hearing regarding the fee application, Bankruptcy Judge Efremsky found that Appellant had failed to adequately disclose his connections to the debtor as required by 11 U.S.C. § 327 and Bankruptcy Rule 2014. Docket No. 16-73 at 5. Judge Efremsky denied all fees and ordered the disgorgement of the $5,000 retainer. Docket No. 16-64. After Judge Efremsky stated his order, Appellant revealed that he had already spent the retainer and averred that he was unable to return it. Docket No. 16-73 at 12-13. This appeal followed.
II. DISCUSSION
A. Standard of Review
A bankruptсy court’s conclusions of law, including its interpretation of the Bankruptcy Code, are reviewed
de novo. In re S. Cal. Sunbelt Developers, Inc.,
B. Denial of Fees and Disgorgement
The Bankruptcy Court denied Mr. Kun’s requested fees and ordered disgorgement of his retainer because he had failed to disclose to the Court that he was a pre-petition creditor of the estаte. The Bankruptcy Court summarized the problem as follows:
If you represent somebody before the filing, either you have a retainer, which apparently you obtained some sort of a retainer, $5,000, what attorneys do is they draw down on those fees that were incurred pre-petition, advise the Court that from, say, a $5,000 retainer, I provided services of $3,950. I’ve deducted that, and I have a remaining retainer of $1,050. You didn’t do that here, so you were not disinterested. You had fees *6 that were owed pre-petition. You didn’t draw down on the retainer; you didn’t waive those fees; and you didn’t even bring it to the Court’s attention. There’s a total failure of candor to the tribunal. You know, on that basis alone, I can deny your fee application in total.
Docket No. 16-73 at 5. The Bankruptcy Court dеnied his fee application and disgorged his $5,000 retainer on the ground that he failed to disclose his status as a pre-petition creditor and, more generally, for his lack of “candor to the tribunal.” Id. at 10-11. The Bankruptcy Court further noted that Mr. Kun had failed to provide services that benefitted the estate, as the Court “d[id]n’t think [he] really understood what was going on in this Chapter 11 case,” and commented that he “clearly d[id]n’t understand what the law is.” Id. Upon learning that Mr. Kun had spent the $5,000 retainer, the Bankruptcy Court stated, “If you received a $5,000 retainer from the Debtor, pre-petition, you had no authority to use that retainer.... [Y]ou had no authority to use that money because you didn’t draw down on it. I never approved the fees.” Id. at 12. On appeal, Appellant argues that the Bankruptcy Court erred in denying his fees and that the Court lacked authority to disgorge his retainer.
1. Waiver
As a preliminary matter, Appellee U.S. Trustee argues that Appellant has waived four of his arguments on appeal: (1) that he had a security interest in the retainer; (2) that the retainer was nonrefundable under state law; (3) that the law does not provide for return of the retainer; and (4) that the court can only order the retainer to be returned to the extent it is determined to be excessive. U.S. Trustee Brief at 15. U.S. Trustee argues that Appellant failed to present these arguments to the Bankruptcy Court.
As Appellant’s fee application and comments at the fee hearing indicate, it is unclear whether Appellant appreciated the fact that disgorgement of his retainer was a possibility.
See
Docket No. 16-51 at 5 (deducting retainer from total fee request as if that amount had already been paid). However, disgorgement was nonetheless squarely presented by the Trustees’ oppositions to his fee application.
See
Docket No. 16-59 at 4 (Trustee Mansdorf s opposition, requesting at least partial disgorgement); 16-61 at 5 (U.S. Trustee’s opposition, requesting that “any retainer be disgorged”). It is apparent from the record that Mr. Kun failed to respond to the these requests and failed to raise the above arguments in the Bankruptcy Court.
See
Docket No. 16-51 (fee application); 16-60 (reply brief)
4
; 16-73 (transcript of fee hearing). Accordingly, he has waived them.
See In re Van Upp,
No. C 11-00178 SI,
2. Attorney’s Fees & Disclosure Rules
Mr. Kun’s employment as an attorney for the debtor in possession in a
*7
Chapter 11 case is governed by § 327(a) of the Bankruptcy Code,
5
which requires court approval for the attorney’s employment. The bankruptcy court is charged with “ensur[ing] that attorneys who represent the debtor do so in the best interests of the bankruptcy estate.”
In re Park-Helena Corp.,
To enable the Bankruptcy Court to evaluate an attorney’s potential employment, Rule 2014(a) requires that an application for employment of an attorney under § 327 “shall be accompanied by a verified statement of the person to be employed setting forth the person’s connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee.” Fed. R. Bankr.P. 2014(a). This disclosure requirement is applied “strictly.”
Park-Helena,
An attorney approved for employment under § 327 must apply for interim or final compеnsation, which is subject to approval of the Bankruptcy Court. 11 U.S.C. §§ 328-31;
see also In re Chapel Gate Apartments, Ltd.,
Separate from and in addition to a fee application, § 329(a) further requires a debtor’s attorney to “file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation.” Rule 2016(b) requires the attorney to file such a statement “within 14 days after [a petition is filed],” *8 along with supplemental statements “within 14 days after any payment or agreement not previously disclosed.” The court may approve any reasonable compensation agreement, including on a retainer and/or hourly basis. § 328(a). However, once an attorney has disclosed his or her “compensation paid or agreed to be paid,” the court may “cancel any such agreement, or order the return of any such payment” if the court determines that it “exceeds the reasonable value of any such services.” § 329(b). The court may also “deny allowance of compensation for services and reimbursement of expenses ... if, at any time ..., such professional person is not a disinterested person, or represents or holds an interest adverse to the interest of the estate with respect to the matter on which such professional person is employed.” § 328(c).
Pursuant to the disclosure rules of §§ 327 and 329 and Rules 2014 and 2016, the attorney has the duty to disclose all relevant information to the court, and may not exercise any discretion to withhold information.
See Park-Helena,
Applying the disclosure rules to a request for fees, “[i]f [] an attorney holds an undisclosed adverse interest, the court is empowered to deny all compensation and reimbursement of expenses.”
Coastal Equities,
Accordingly, the duty to disclose extends to “[a]ll facts that
may be pertinent
to a court’s determination of whether an attorney is disinterested or holds an adverse interest to the estate,” regardless of whether the attorney thinks the information is sufficient to render him adversely interested.
Park-Helena,
3. Appellant’s Disclosure Violations
In the instant case, Appellant Kun’s failure to inform the Bankruptcy Court of his pre-petition relationship with the debtor and the full circumstances surrounding his receipt and use of the $5,000 retainer provided the Bankruptcy Court discretion to deny all of his fees, including his $5,000 retainer. Appellant’s disclosure violations were substantial. Although his employment application included debtor’s agreement to pay him a $5,000 retainer, Appellant failed to disclose any pre-petition work that he had done for debtor and the fact that he had alrеady incurred fees. Such information was relevant to the court’s determination of whether Mr. Kun was disinterested under § 327, and was required by Rule 2014(a). In addition, Mr. Kun failed to file a disclosure under § 329 and Rule 2016 describing the compensation he had received or debtor had agreed to pay him within one year prior to filing the petition, what services had been rendered, and the source of any compensation. Such disclosures were required within 14 days of filing the bankruptcy petition on December 22, 2010 (and supplemental disclosures were required 14 days after any additional payment was received). See Rule 2016(b). Yet Mr. Kun made no description of any services rendered until his fee application in May 2011, and he did not reveal that he had used the retainer until the hearing itself. Nor did he ever disclose whеn he had received the retainer. 7
*10
Based on these disclosure violations, the Bankruptcy Court was well within its discretion to deny all fees to Mr. Kun and order disgorgement of his retainer. Such orders have been affirmed in similar circumstances.
See Park-Helena,
ed where attorney failed to disclose pre-petition contingent fee arrangement);
Hal-bert v. Yousif,
Appellant’s arguments against the Bankruptcy Court’s order lack merit. For example, contrary to Appellant’s contention, a finding of excessiveness under § 329 is not a necessary predicate to disgorgement or denial of fees.
See Lewis,
Mr. Kun’s next argument, that he was not actually a creditor of the estate or otherwise adversely interested, is inappo-site. As thе Ninth Circuit has made clear, “failure to comply with the disclosure rules is a sanctionable violation, even if proper disclosure would have shown that the attorney had not actually violated any Bankruptcy Code provision or any Bankruptcy Rule.”
Park-Helena,
Appellant next argues that the Bankruptcy Court had no authority to disgorge his $5,000 retainer. Appellant claims the Bankruptcy Court lacked this authority because he received a pre-petition retainer, which is not property of the estate, and in which he has a valid sеcurity interest under state law. Docket No. 16-14 at 3 (attorney-client agreement providing for a “non-refundable” retainer). As a factual matter, it is unclear from the record exactly when Mr. Kun received the retainer 8 and what type of retainer it was. 9 However, for purposes of the Bank *12 ruptcy Court’s ruling in the case at bar, these uncertainties are immaterial because no retainer—whether pre-petition or post-petition, and whether classic, security, or advance payment—would be immune from Bankruptcy Court review for two reasons.
First,
all
retainer agreements—-and fee arrangements in general—are subject to the Bankruptcy Court’s approval and modification, regardless of how those arrangements are treated under state law. “The court’s approval is required whether or not the terms and conditions [of employment] (e.g., a retainer) are permissible under state law.” 3 Collier on Bankruptcy ¶ 328.02. Even if a pre-petition earned on receipt retainer (where ownership of funds is intended to pass to the attorney on payment) is permissible under state law, section 328(a) mandates that the court review the reasonableness of any fee arrangement between a debtor and its attorney.
In re Dividend Dev. Corp.,
In the instant case, it is undisputed that Judge Efremsky did not approve a retainer arrangemеnt by which Mr. Kun could use the retainer funds without additional court authorization. To the contrary, the Bankruptcy Court’s order explicitly required Mr. Kun to seek “prior court approval after notice of hearing” before receiving “any compensation.” Docket No. 16-27 at 2.
10
Such an order was well within
*13
the Bankruptcy Court’s power.
See
3 Collier on Bankruptcy ¶ 328.02 (“A court may approve employment of a professional either on terms and conditions requested or any
terms and conditions that the court finds necessary
to satisfy the requirement of reasonableness in section 328(a).”) (emphasis added);
In re Hathaway Ranch Partnership,
Second,
all
retainers, regardless of type and when they are received, are subject to disgorgement in response to disclosure violations.
See Park-Helena,
Appellant mistakenly relies on inappo-site cases to support his argument that pre-petition security retainers are not subject to disgorgement. For example, in
Dick Cepek,
the Bankruptcy Appellate Panel merely held that where an attorney holds a pre-petition security retainer that is valid, “properly documented, disclosed, and approved by the bankruptcy court,” that retainer is not subject to disgorgement
solely
“in the interest of equal treatment under section 726(b).”
Other authority on which Appellant relies to suggest that state law should control over bankruptcy law is even further afield. For example,
Travelers Casualty
addresses the claims of
creditors
to the bankruptcy estate, not debtors’ attorneys in the bankruptcy matter itself.
Travelers Cas. & Sur. Co. of America v. Pacific Gas & Elec. Co.,
Accordingly, Appellant’s argument that his retainer is immune from disgorgement based on state-law interpretations of his contract fails.
Mr. Kun’s due process argument is likewise without merit. Appellant claims that the Bankruptcy Court violated his substantive due process rights 11 because it was without authority to disgorge his retainer. Yet, as discussed above, Mr. Kun had no right to use the retainer funds absent a court order. Accordingly, the Bankruptcy Court had ample authority to deny his fees and disgorge his retainer. Similarly, whether he was required to keep the retainer in a trust account is immaterial; pursuant to the Bankruptcy Code and Rules and was explained in the order approving Mr. Kun’s employment, all fees were subject to the Bankruptcy Court’s approval and modification.
Finally, Appellant Kun appears to make a policy-based argument that the Bankruptcy Judge’s order would preclude attorneys from being compensated for the pre-petition work they are required by law to do. However, as Judge Efremsky explained at the hearing, such an outcome is not required by the bankruptcy rules. Rather, attorneys properly receive pre-fil-ing compensation that they draw down prior to filing—so as to avoid the potential of being a pre-petition creditor of the estate—and which are fully disclosed so as to comply with disclosure lаws. As Judge Efremsky properly noted, “[Attorneys] provided services pre-petition. They drew down on the retainer, and they advised the Court that they had provided service pre-petition. From the retainer, they paid themselves for those services, and they said, and here’s what we have left of that retainer going forward.... You didn’t do that.” Docket No. 16-73 at 6. Appellant faced the denial and disgorgement of his fees due to his own failure to comply with this process, not because of any draconian rule against pre-petition attorney’s fees.
See, e.g., Maui,
The Bankruptcy Court did not abuse its discretion in denying Appellant’s requested fees and disgorging his retainer due to his disclosure violations.
4. Alternative Grounds for Affirming
While the Bankruptcy Court was justified in denying fees based solely on Appellant’s disclosure violations, his decision was also supported by the conclusion that Appellant was, in fact, not disinterested under § 327. The court concluded that Appellant was a pre-petition creditor based on the fact that he had done work for debtor before the bankruptcy petition was filed for which he had not yet been paid. Armed with this information, the Court determined that had it known these facts, it would never have approved Mr. Kun’s employment. Docket No. 16-73 at 3-4. Based on the factual record, which included a contract for payment оf a $5,000 retainer signed seven days
after
the petition was filed and a fee application indicating that Mr. Kun had done work for the debtor pre-petition, the Court’s finding that Mr. Kun was not disinterested was not clearly erroneous.
See, e.g., Dick Cepek,
Accordingly, the Court finds that the Bankruptcy Court did not abuse its discretion, nor did it mis-apply the law, in denying the application for fees and ordering disgorgement of the retainer.
III. CONCLUSION
For the foregoing reasons, the Bankruptcy Court’s order denying Appellant all attorney’s fees and expenses, and ordering disgorgement of his $5,000 retainer, is AFFIRMED.
IT IS SO ORDERED.
Notes
. Appellant states in various papers filed with both the Bankruptcy Court and this Court that the bankruptcy petition was filed on December 29, 2010. That is incorrect. According to the petition itself, it was filed on December 22, 2010. See Docket No. 16-5.
. All Bankruptcy Court documents are attached to Docket No. 16 in this case. The Court refers to any bankruptcy docket numbers as “Docket No. 16-_"
. Although Mr. Kun does not provide a detailed line-item list for these expenses, his application indicates that the costs incurred were to cover "faxes and telephone calls to Hungary where [the principal of Woodcraft] is currently located.” Docket No. 16-51 at 7.
. Mr. Kun’s reply brief raises only the following arguments: (1) Notice was proper; (2) Mr. Kun is not a creditor; (3) Trustee has no standing to object; (4) Trustee has a conflict of interest; (5) Trustee uses the wrong standard for small fee applications (regarding the level of detail necessary in describing the services rendered); (6) Mr. Kun should be allowed to amend any services inadequately described; and (7) Trustee’s objections are based on improper grounds (he., the Chapter under which debtor filed for bankruptcy is irrelevant to the fee award, and the proper basis for evaluation is the reasonableness of the fee request).
. Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
. Commencement of a voluntary bankruptcy case "constitutes an order for relief.” 11 U.S.C. § 301(b).
. It is unclear when Mr. Kun actually received the retainer. Mr. Kun states that it was a pre-petition retainer, and Woodcraft's financial filings with the Bankruptcy Court indicate that $1,050 was paid in professional services post-filing, which would match the $3,950 in fees Mr. Kun claims he incurred pre-petition to reach a total of $5,000. See Docket No. 16-33 at 3 (monthly operating report of Marсh 2011). Yet, the contract submitted to the Bankruptcy Court in conjunction with the application for Mr. Kun’s employment suggests the retainer had not yet been paid when the petition was filed, because the contract was not signed until a week after the petition was filed. See Docket No. 16-14 at 3 (signed December 29, 2010, stating, "Client shall tender the sum of $5,000”). In addition, as the U.S. Trustee noted in briefing in the court below, the fact that Mr. Kun’s fee application includes costs incurred pre-filing indicates that the retainer was not paid or drawn down pre-filing. See Docket No. 16-61 at 5.
Regardless of which scenario is correct, Mr. Kun failed to adequately disclose the facts related to his representation of, and compensation from, debtor. If the retainer was pre-petition, as Mr. Kun avers, then Mr. Kun was required to disclose any amount drawn down from that retainer and provide a description of any services rendered for which he had already been paid.
See
§ 329(a); Rule 2016(b);
see also In re Plaza Hotel Corp.,
. There is a dispute as to when Mr. Kun received the retainer. Although Appellant claims he received the retainer pre-petition, his retainer agreement was not signed until one week after the bankruptcy petition was filed. Under § 541 of the Bankruptcy Code, the filing of a bankruptcy petition creates a bankruptcy estate consisting of all the debt- or's property, and § 362(a)(4) provides that filing the petition stays all liens against any estate property. Thus, to the extent Appellant actuаlly received the retainer post-petition, it would be part of the estate. See
In re Plaza Hotel Corp.,
. "In general, three types of retainers exist: (1) classic or true retainers, (2) security retainers, and (3) advance payment retainers.”
In re Dick Cepek, Inc.,
Classic retainers refer to the payment of a sum of money to secure availability over a period of time. The attorney is entitled to the retainer whether or not services are needed. The advance payment retainer occurs when a client pre-pays for expected services; ownership of the funds in the retainer is intended to pass to the attorney at the time of payment, although California law is unclear whether ownership does indeed pass at that time.
A security retainer is generally held as security for payment of fees for future services to be rendered by the attorney. The retainer remains property of the client (in this case, the estate) until the attorney applies it to charges for services actually rendered. Any unearned funds are returned to the client.
A security retainer is per se property of the estate, even when paid pre-petition (to the extent it has not been drawn down), and cannot be used absent a court order approving fees.
Id.
at 736 n. 5 (internal citations and quotation marks omitted). Different courts may use different names for these retainers. For example, a classic retainer is also frequently referred to as an "earned on receipt” retain
*12
er.
See
3 Collier on Bankruptcy V 328.02[3][a] (16th ed. 2011). In addition, there is some dispute among courts аs to whether an advance payment, non-refundable retainer is enforceable in bankruptcy.
Compare, e.g., C & P Auto Transport,
In the instant case, it is also not clear exactly what kind of retainer Appellant claims he has. For example, Appellant states in one section of his brief that, like the attorney in
Dick Cepek,
he too holds a “security interest in the retainer.” Opening Brf. at 5. Yet elsewhere in his brief, Appellant states that the retainer was not property of the estate and that it was a "non-refundable,” "classic retainer.”
Id.
at 6 (citing
In re Bigelow,
For purposes of this review, this Court need not resolve these questions.
. It is true that the Bankruptcy Court's order approving Mr. Kun's employment stated that Mr. Kun was approved under a "general retainer.” However, a general retainer does not give an attorney authority to use retainer funds without court approval. Docket No. 16-27 at 1-2. As C & P Auto Transport explained,
When a bankruptcy court approves employment under a "general retainer,” it is using *13 that term in the sense that the professional will provide services when requested or required, will provide no services that are not requested or required, will not accept a conflicting representation, and will be paid separately for actual, necessary services rendered at lodestar rates pursuant to sections 330 and 331. Any variations in that meaning must be evident on the face of the order.
. Appellant expressly waives any procedural due process argument. See Reply to U.S. Trustee at 4.