Case:12-24882-ABC Doc#:222 Filed:07/24/12

Entered:07/24/12 15:11:28 Page1 of 4

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO IN RE: Cordillera Golf Club, LLC Tax ID / EIN: 27-0331317 Debtor. ) ) ) ) ) ) )

Case No. 12-24882-ABC Chapter 11

UNITED STATES TRUSTEES OBJECTION TO APPLICATION TO EMPLOY FOLEY & LARDNER LLP AS ATTORNEYS FOR THE DEBTOR The United States Trustee (the UST) by and through undersigned counsel, hereby objects to the Application to Employ Foley & Lardner LLP as counsel for the Debtor dated July 10, 2012 [Docket # 115] (the Application), and as grounds therefore states as follows: 1. On June 26, 2012, Cordillera Golf Club, LLC (the Debtor) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the District of Delaware. The case was subsequently transferred to the District of Colorado on July 16, 2012. The Debtor remains a Debtor-in-Possession and an Unsecured Creditors Committee was appointed in the above-captioned case on July 6, 2012. On July 10, 2012, Foley & Lardner LLP (the Applicant) filed its request pursuant to 327(a) seeking Court authorization to represent the Debtor in the above-captioned Chapter 11 proceeding. Attached to the Application, was a Declaration of Attorney (the Celentino Declaration). Section 327(a) provides: Except as otherwise provided in this section, the trustee, with the courts approval, may employ one or more attorneys . . . that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustees duties under this title. A disinterested person is defined in 11 U.S.C. 101(14)(C) as a person who does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason. See also In re WVS, Inv. Joint Venture, 1990 U.S. Dist. LEXIS 2022, at *4 (D. Colo. Jan. 4, 1990) (noting that the standards of disinterestedness are to be rigidly applied and that the standard is a strict one, broad enough to include even the smallest relationship that would affect the attorneys impartiality). Moreover, the Tenth Circuit BAP has concluded that an actual conflict of interest or the appearance of impropriety remain as independent grounds for disqualification. Cook v. Cook (In re Cook), 223 B.R. 782, 789 (B.A.P. 10th Cir. 1998).

2. 3.

4.

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5.

The UST objects to the Application for the following reasons: A. The Application is overreaching. The Applicant is requesting the Court authorize not only representation of the Debtor, but also the continued representation, in some instances as special and/or advisory counsel in related matters, and other completely unrelated matters, of the Debtor, David Wilhelm, WFP Investments, LLC and certain of their respective affiliates and/or related entities. [See Application page 6, 14; See also, the Celentino Declaration page 8, 25]. The Court may authorize employment, under Section 327(a), but is limited only to the Debtor. It is unclear if this Debtor will have claims against David Wilhelm, the Debtors second largest secured creditor. Although Wilhelm has independent counsel to represent him in the Debtors bankruptcy, the Applicant wants to continue to represent both the Debtor and David Wilhelm in some capacity. [See Application page 6, 14; See also, the Celentino Declaration page 8, 25] The Debtors Schedule D lists David Wilhelms claim as contingent and disputed. It is difficult to understand how the Applicant can represent the interests of the Debtor in its bankruptcy case while at the same time representing the interests of David Wilhelm whose claim exceeds $7.5M. It is also unclear what role the Applicant has as Special Counsel to WFP Cordillera, Cordillera Golf Holdings, the Debtor and Wilhelm connection with the defense of the Member Lawsuit. [See the Celentino Declaration page 8, 23]. As debtor-in-possession, the debtor has a fiduciary duty not to act in his own best interest, but rather in the best interest of the entire estate, including creditors. Commodity Futures Trading Commission v. Weintraub, 471 U.S. 343, 105 S.Ct. 1986, 85 L.Ed.2d 372 (1985). The attorney for a debtor-in-possession is also a fiduciary to the estate. In re Doors and More, Inc., 126 B.R. 43 (Bankr. E.D. Mich. 1991). The attorney for the debtor-in-possession in not merely a mouthpiece for his client. In re Sky Valley, Inc., 135 B.R. 925, 939 (Bankr. N.D. Ga. 1992). If the Applicant places themselves squarely against club members, the very group they seek support from for reorganization, it becomes questionable whether Applicant is a disinterested person or that it does not hold or represent an interest adverse to the Debtors estate It is unclear from the Application who has paid the Debtors attorneys fees pre-petition, when fees were paid, the amount of the fees owed, if any, for pre-petition work.

B.

C.

D.

6.

Courts in this District have prohibited or disqualified a law firm from representing a debtor limited partner while at the same time representing the general partner of such entity and other related affiliates. See, In re Interstate Distribution Center Associates, Ltd., 137 B.R. 826 (Bankr. D. Colorado 1992); In re Royal Gorge Associates, 77 B.R. 277 (Bankr. D. Colorado 1987) In re TMA Associates, Ltd., 129 B.R. 643 (Bankr. D. Colorado 1991). Accordingly, Applicants employment should not be approved by the Court.

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7.

In the event that the Court concludes the Applicant is sufficiently disinterested and there is no appearance of impropriety, the UST reserves the right to object to the Applicants interim and final fee applications. Cook, 223 B.R. at 793 (citing Gray v. English, 30 F.3d 1319, 132324 (10th Cir. 1994)).

Wherefore, the UST requests that the Court deny the Application and grant any other and further relief as may be appropriate. Dated: July 24, 2012 Respectfully submitted, RICHARD A. WIELAND UNITED STATES TRUSTEE /s/ Paul V. Moss By: Paul V. Moss, #26903 Trial Attorney for the U.S. Trustee 999 18th Street, Suite 1551 Denver, Colorado 80202 (303) 312-7995 telephone (303) 312-7259 facsimile Paul.Moss@usdoj.gov

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CERTIFICATE OF SERVICE I hereby certify that on the date set forth below a copy of the UNITED STATES TRUSTEE'S OBJECTION TO APPLICATION TO EMPLOY FOLEY & LARDNER LLP AS ATTORNEYS FOR THE DEBTOR was served by deposit in the United States Mail, postage prepaid to the following parties: Dated: July 24, 2012 Cordillera Golf Club, LLC 97 Main Street Suite E202 Edwards, CO 81632 Brittany J. Nelson Erika L. Morabito 3000 K St., N.W. Ste. 600 Washington, DC 20007-5109 Christopher Celentino Dawn A. Messick Mikel R. Bristrow 402 W. Broadway Ste. 2100 San Diego, CA 92101-3542 Joseph M Barry Donald J. Bowman, Jr. 1000 N. King Street Wilmington, DE 19801 /s/ Beverly Smith Office of the United States Trustee Jay H. Ong Joseph J. Wielebinski Russell L. Munsch Munsch Hardt Kopf & Harr, PC 500 N. Akard Street Suite 3800 Dallas, TX 75201-6659 Harvey Sender David Wadsworth 1660 Lincoln St. Ste. 2200 Denver, CO 80264 Risa Lynn Wolf-Smith 555 17th St. Ste. 3200 Denver, CO 80201