11 U.S.C. § 327

Employment of professional persons

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(a) Except as otherwise provided in this section, the trustee, with the court’s approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, 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 trustee’s duties under this title.(b) If the trustee is authorized to operate the business of the debtor under section 721, 1202, or 1108 of this title, and if the debtor has regularly employed attorneys, accountants, or other professional persons on salary, the trustee may retain or replace such professional persons if necessary in the operation of such business.(c) In a case under chapter 7, 12, or 11 of this title, a person is not disqualified for employment under this section solely because of such person’s employment by or representation of a creditor, unless there is objection by another creditor or the United States trustee, in which case the court shall disapprove such employment if there is an actual conflict of interest.(d) The court may authorize the trustee to act as attorney or accountant for the estate if such authorization is in the best interest of the estate.(e) The trustee, with the court’s approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed.(f) The trustee may not employ a person that has served as an examiner in the case.(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2563; Pub. L. 98–353, title III, § 430(c), July 10, 1984, 98 Stat. 370; Pub. L. 99–554, title II, §§ 210, 257(e), Oct. 27, 1986, 100 Stat. 3099, 3114.)Historical and Revision Noteslegislative statements

Section 327(a) of the House amendment contains a technical amendment indicating that attorneys, and perhaps other officers enumerated therein, represent, rather than assist, the trustee in carrying out the trustee’s duties.

Section 327(c) represents a compromise between H.R. 8200 as passed by the House and the Senate amendment. The provision states that former representation of a creditor, whether secured or unsecured, will not automatically disqualify a person from being employed by a trustee, but if such person is employed by the trustee, the person may no longer represent the creditor in connection with the case.

Section 327(f) prevents an examiner from being employed by the trustee.

senate report no. 95–989

This section authorizes the trustee, subject to the court’s approval, to employ professional persons, such as attorneys, accountants, appraisers, and auctioneers, to represent or perform services for the estate. The trustee may employ only disinterested persons that do not hold or represent an interest adverse to the estate.

Subsection (b) is an exception, and authorizes the trustee to retain or replace professional persons that the debtor has employed if necessary in the operation of the debtor’s business.

Subsection (c) provides a professional person is not disqualified for employment solely because of the person’s prior employment by or representation of a secured or unsecured creditor.

Subsection (d) permits the court to authorize the trustee, if qualified to act as his own counsel or accountant.

Subsection (e) permits the trustee, subject to the court’s approval, to employ for a specified special purpose an attorney that has represented the debtor, if such employment is in the best interest of the estate and if the attorney does not hold or represent an interest adverse to the debtor of the estate with respect to the matter on which he is to be employed. This subsection does not authorize the employment of the debtor’s attorney to represent the estate generally or to represent the trustee in the conduct of the bankruptcy case. The subsection will most likely be used when the debtor is involved in complex litigation, and changing attorneys in the middle of the case after the bankruptcy case has commenced would be detrimental to the progress of that other litigation.

house report no. 95–595

Subsection (c) is an additional exception. The trustee may employ as his counsel a nondisinterested person if the only reason that the attorney is not disinterested is because of his representation of an unsecured creditor.

Editorial NotesAmendments

1986—Subsec. (b). Pub. L. 99–554, § 257(e)(1), which directed the insertion of “, 1202,” after “section 721,” was executed by making the insertion after “section 721” to reflect the probable intent of Congress.

Subsec. (c). Pub. L. 99–554, § 257(e)(2), which directed the insertion of “, 12,” after “section 7,” was executed by making the insertion after “chapter 7” to reflect the probable intent of Congress.

Pub. L. 99–554, § 210, inserted “or the United States trustee” after “another creditor”.

1984—Subsec. (c). Pub. L. 98–353 substituted “In a case under chapter 7 or 11 of this title, a person is not disqualified for employment under this section solely because of such person’s employment by or representation of a creditor, unless there is objection by another creditor, in which case the court shall disapprove such employment if there is an actual conflict of interest.” for “In a case under chapter 7 or 11 of this title, a person is not disqualified for employment under this section solely because of such person’s employment by or representation of a creditor, but may not, while employed by the trustee, represent, in connection with the case, a creditor.”

Statutory Notes and Related SubsidiariesEffective Date of 1986 Amendment

Effective date and applicability of amendment by section 210 of Pub. L. 99–554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

Amendment by section 257 of Pub. L. 99–554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99–554.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.

Notes of Decisions

Cited in 1,861 cases (179 in the last 5 years), 1980–2026 · leading case: In re Costa Bonita Beach Resort Inc.

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In re Costa Bonita Beach Resort Inc. (2012) prb · cites it 16× “, Law Offices (hereinafter referred to as “Debtor’s counsel” or “Attorney Cuprill”) pursuant to 11 U.S.C. §§ 327 and 101(14)(C) and Fed. R.”

In Re B.E.S. Concrete Products, Inc. (1988) caeb · cites it 12× “The Ninth Circuit permits a retroactive award of fees for services rendered without court approval only in exceptional circumstances where an applicant can show both a satisfactory explanation for the failure to receive prior judicial approval pursuant to 11 U.”

In Re Carolina Sales Corp. (1985) nceb · cites it 15× “Strategic Options was unaware of the 11 U.S.C. § 327 (a) requirement that professional persons may only be employed with court approval.”

In Re Lee Way Holding Co. (1989) ohsb · cites it 21× “DISCUSSION OF LAW The standard for employment of professionals in bankruptcy proceedings is governed by 11 U.S.C. § 327 (a), which states: Except as otherwise provided in this section, the trustee [debtor-in-possession], with the court’s approval, may employ one or more…”

In Re Larry T. & Cynthia J. Martin D/B/A a & W Drive-In Restaurant & Martin's Exxon, Debtors. Appeal of Larry T. & Cynth (1987) ca1 · cites it 6× “that do not hold or represent an interest adverse to the estate, and that are disinterested persons,_” 11 U.S.C. § 327 (a) (1978). 1 The court concluded that V & D was not “disinterested” and “should not have been employed as attorney[ ] for the debtors in possession .”

Yosef A. Maiman & Merhav (M.N.F.) Ltd. v. Spizz (In re Ampal-American Israel Corp.) (2016) nysb · cites it 7× “Appellants argued below, and reiterate here, that the law firm is conflicted from representing the Trustee under 11 U.S.C. § 327 , and that the Trustee should have been removed for cause for various reasons.”

Lamie v. United States Trustee (2004) scotus · cites it 2× “See 11 U. S. C. §§ 327 and 701 et seq. Petitioner was not so appointed, and his fee request was denied.”

Furlough v. Cage (In Re Technicool Sys., Inc.) (2018) ca5 · cites it 4× “(SBPC), alleging that SBPC holds an interest "adverse to the estate" under 11 U.S.C. § 327 (a). Both the bankruptcy court and the district court held that Furlough lacked standing to object.”

In Re: William Engel, Debtor. Ferrara & Hantman Robert J. Hantman v. Jesus Antonio Alvarez Theodore J. Liscinski, Jr., T (1997) ca3 · cites it 7× “11 U.S.C. §§ 327 (a), 1103(a), 330; Bankruptcy Rules 2014(a) [pertaining to disclosure requirements imposed on trustee or debtor-in-possession seeking § 327 approval], 2016 [pertaining to application for compensation from the estate under § 330], 2017 [pertaining to bankruptcy…”

In Re Park Avenue Partners Ltd. Partnership (1988) wieb · cites it 15× “as the property management firm to manage the apartment complex, although the debtor has also argued that no approval is necessary because a property manager is not a “professional person” requiring court approval under 11 U.S.C. § 327 . Fannie Mae objected to the appointment.”

In Re Century Investment Fund VII Ltd. Partnership (1989) wieb · cites it 16× “as the property management firm to manage the apartment complex, although the debtor has also argued that no approval is necessary because a property manager is not a “professional person” requiring court approval under 11 U.S.C. § 327 . O & G and Minnesota Mutual objected to…”

In Re NRG Resources, Inc. (1986) lawd · cites it 7× “APPELLEES’ STATUS Appellant, the Unsecured Creditors’ Committee, initially argues that the bankruptcy court erred in awarding attorneys’ fees to Bertrand and Van Norman because they were never employed by the trustee with the approval of the bankruptcy court as required by 11…”

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— 11 U.S.C. § 327(a) — 19 cases

Official Committee of Unsecured Creditors of National Forge Co. v. Clark (In Re National Forge Co.) (2005) pawd

G & J Investments v. Zell (In Re Zell) (1989) ohsb

In re WM Distribution, Inc. (2017) nmb

In Re Automend, Inc. (1988) ganb

In Re Park Avenue Partners Ltd. Partnership (1988) wieb “as the property management firm to manage the apartment complex, although the debtor has also argued that no approval is necessary because a property manager is not a “professional person” requiring court approval under 11 U.S.C. § 327 . Fannie Mae objected to the appointment.”

— 11 U.S.C. § 327(c) — 1 case

Start Man Furniture LLC (2020) deb

— 11 U.S.C. § 327(e) — 2 cases

In Re B.E.S. Concrete Products, Inc. (1988) caeb “The Ninth Circuit permits a retroactive award of fees for services rendered without court approval only in exceptional circumstances where an applicant can show both a satisfactory explanation for the failure to receive prior judicial approval pursuant to 11 U.”

In Re Philadelphia Newspapers, LLC (2009) paeb

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