Two recent decisions by separate judges of the Delaware Bankruptcy Court have addressed the question of whether persons providing services to debtors relating to the disposition and monetization of inventory, real estate, intellectual property and other estate assets are “professionals” and must be retained under the strictures of Section 327(a) of the Bankruptcy Code. In both cases, the judges decided that the providers were neither auctioneers nor professionals within the meaning of Section 327(a) and did not have to comply the requirements of that section.

Section 327(a) governs the retention of general bankruptcy counsel, other attorneys, accountants, appraisers, auctioneers, and other professional persons, such as investment bankers and financial advisers, by trustees or debtors-in-possession to carry out their duties under the code. The retention of such persons must be requested and approved by the court based on a showing of the professional’s disinterestedness and lack of interests adverse to the estate. This requires the estate and the professional to disclose all connections and potential conflicts-of-interests, both at the time of the original application and on an ongoing basis. The professionals must also satisfy all requirements of applicable professional codes of conduct on a continuous basis. Finally, professionals must submit periodic, detailed fee applications that are subject to bankruptcy court approval and may result in significant delays in payment.