Page 30 - Bankruptcy Volume 1

Necessity

The court may deny some or all compensation or reimbursement of expenses to or seek damages from
any professional who is otherwise required to be disinterested and who at any time during his or her
employment is not disinterested. As a result, an accountant or financial adviser must continuously moni-
tor both new relationships and additional parties in interest to the bankruptcy proceedings. Any new re-
lationships should be promptly disclosed.

The Employment Process

Motion for Approval of Employment

Approval of the employment of an accountant or financial adviser by the trustee, debtor-in-possession,
or any official committee must be allowed by the court. An order approving employment is obtained
through a motion filed with the court and served on creditors and other parties in interest (the employ-
ment application) on behalf of the trustee, debtor-in-possession, or official committee seeking to hire the
accountant. The court may or may not conduct a hearing prior to issuing the order granting the employ-
ment application.

Failure to obtain approval from the court will generally result in a bar to payment of an accountant’s fees
and expenses; moreover, the court may also order that any fees paid to an accountant during the bank-
ruptcy case without court authorization of the accountant’s employment be returned.

The accountant or the financial adviser should consider retaining bankruptcy counsel to assist it with fil-
ing its retention application and its fee applications. Although counsel for the debtor or the trustee (or in
the case of an official committee, counsel for the official committee) may be helpful, it is not their job to
advise other professionals on retention and fee application issues and, in many jurisdictions, such coun-
sel cannot be compensated for providing such services.

The Employment Application

The employment application must contain the following:

A statement of the specific facts showing the need for employment. The petitioner (trustee, debtor-in-
possession or official committee) should demonstrate the need to employ an accountant or financial ad-
viser in a clear and concise fashion. The petitioner could cite the demand for assistance in areas such as
financial advisory, valuation, audit, income taxes, preferences, fraudulent conveyances, reporting to the
court, or other accounting-related matters.

Name of the person to be employed. Although Bankruptcy Rule 2014 specifically requests the "name of
the person to be employed," it is not necessary to list each individual in the firm separately. Once the
firm or its representative is employed, any member or employee can provide services.

Reasons for selection of the professional. The employment application must contain a statement by the
petitioner attesting that the accountant or the financial adviser has the requisite professional skills and
experience to provide the services listed in the application. The statement usually consists of one para-
graph and should not be confused with the accountant’s or financial adviser’s declaration or verified
statement referred to in the next section, which is a separate exhibit attached to the employment applica-
tion. In a number of bankruptcy districts, it is customary to attach resumes of the firm and of the indi-

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