CALDOR LAWYERS FIGHT BACK AGAINST U.S. TRUSTEE OFFICE

NEW YORK — Otterbourg, Steindler, Houston & Rosen, the law firm that is embroiled in a controversy with the U.S. Trustee’s office over its plans to represent Caldor Inc.’s unsecured creditors, is turning up the heat against the Trustee’s office.
The law firm has filed papers in bankruptcy court seeking to have certain facts about the case admitted by the Trustee in preparation for a Dec. 20 hearing to decide the issue.
Mary Tom, Acting U.S. Trustee, is objecting to the proposed retention of the law firm and the accounting firm of Ernst & Young by Caldor’s creditors because both firms already represent the creditors of Caldor rival Bradlees, which, she contends, could cause a possible leak of non-public information from one side to the other.
Otterbourg noted that several firms represent both Caldor and Bradlees — without causing any problems for either side. Chemical Bank, for one, is providing the debtor-in-possession facilities for both companies, according to Otterbourg.
The law firm also pointed out that there are no statutory restrictions against the committees of two separate bankruptcy cases choosing the same professionals to represent them.
In addition, Otterbourg said an investigation by the Trustee has failed to turn up any prior objection by a Trustee to appointing a law firm in separate bankruptcy cases where the debtors were economic competitors.
Otterbourg added that no creditor of either Caldor or Bradlees has raised any objection to being represented by both committees.
The Trustee’s office filed papers of its own, contending that most of Otterbourg’s points are “irrelevant.” — Fairchild News Service

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