(Published) - In re Sun River Energy, Inc., Ch. 7 Case No. 15-15610 MER, Opinion issued August 13, 2015 (Chapter 7 Trustee May Employ Own Firm as Counsel Under 11 U.S.C. § 327).

The Chapter 7 trustee filed an application to employ his own firm as counsel, and after an independent review the Court approved the application. Thereafter, a creditor filed an objection. Noting that the application was not required to be sent out on notice by Fed. R. Bankr. P. 2014(a) and Local Bankruptcy Rule 2014-1, the Court treated the objection as a motion to alter or amend under Fed. R. Civ. P. 59(e) as incorporated by Fed. R. Bankr. P. 9023.

After addressing the general requirements for employment under 11 U.S.C. § 327(a), the Court held the Trustee's firm did not hold or represent an interest adverse to the estate, and was a disinterested person. However, when a trustee seeks to hire his or her own law firm, the trustee must also satisfy 11 U.S.C. § 327(d), which authorizes such employment "if such authorization is the in the best interest of the estate." The Court recognized determinations under § 327(d) turn on the particular circumstances of each case. Thus, the Court ultimately adopted the flexible approach articulated in In re SONICblue, Inc., 2007 WL 3342662, at *6 (N.D. Cal. Nov. 9, 2007) (Not Reported in F.Supp.2d) ("[A]bsent a showing of substantial savings and/or efficiencies, appointment of a trustee's own law firm as counsel is not in the estate's best interest."). Here, the trustee demonstrated that hiring his own firm was in the best interests of the estate based on the Trustee's immediate need for representation on multiple forums, the lack of a retainer, the contingent nature of payment to his firm and his firm's willingness to provide the representation despite the risk of nonpayment inherent in the type of litigation at issue. Lastly, the Court concluded the creditor failed to demonstrate how approving the trustee's own firm would result in any manifest injustice warranting reconsideration of its order approving the application. Therefore, the Court's order approving the application stood as originally entered.