In re SLC Ltd. V
APPEAL
147 B.R. 586 (D.Utah)
See 364.pdf
The chapter 11 debtor sought to disqualify creditor's law firm due to a conflict of interest with an individual attorney of the creditor's law firm, asserting a conflict of interest based on the attorney's representation of the debtor's general
partner in prior commercial transactions while working at a different law firm. The bankruptcy court disqualified the attorney but refused to disqualify the firm. The district court on appeal held that: (1) the law firm may not sufficiently remedy a conflict of interest by building a "Chinese Wall" to screen the tainted attorney after potential for improper disclosure has existed; and (2) disqualification of creditor's attorney was required under U.P.C.R. imputed disqualification provision when individual attorney at the firm had represented debtor's general partner in prior commercial transactions while attorney worked at a different firm, since neither the firm nor attorney produced any evidence indicating that the firm instituted screening mechanisms prior to the attorney's arrival at the firm.