The following excerpt is from In re Sundance Self Storage–El Dorado LP, 482 B.R. 613 (Bankr. E.D. Cal. 2012):
The dual requirement that professionals representing trustees and debtors-in-possession may not hold or represent an interest adverse to the estate and must be disinterested persons does not evaporate once the attorney's employment is approved.32 In fact, the court may deny allowance of compensation for services and reimbursement of expenses of a professional person employed under section 327 ... if, at any time during such professional person's employment ..., such professional person is not a disinterested person, or represents or holds an interest adverse to the interest of the estate.... 328(c) (emphasis added). Essentially, 328(c) operates as a penalty for a professional's failure to avoid a disqualifying conflict of interest. See Rome v. Braunstein, 19 F.3d 54, 58 (1st Cir.1994).
The above passage should not be considered legal advice. Reliable answers to complex legal questions require comprehensive research memos. To learn more visit www.alexi.com.