Vanderbilt Minerals, LLC

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THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
In re:
Vanderbilt Minerals, LLC,1
Debtor.
For Publication (WO)
Chapter 11
Case No. 26-60110 (WAK)
MEMORANDUM DECISION AND ORDER ON APPLICATION TO
EMPLOY AND RETAIN JONES DAY
Before the Court is the Retention Application2 for Jones Day (“Jones Day” or the “Firm”)
as proposed counsel for the Debtor that seeks authorization for employment under 11 U.S.C. §§
327(a) and 330.3 The United States Trustee (the “UST”) filed the UST Objection4 and the Official
1 The Debtor is Vanderbilt Minerals, LLC (EIN 13-1432885). The Debtor’s noticing address in this chapter 11 case
is 33 Winfield Street, Norwalk, Connecticut 06855.
2 Application to Retain and Employ Jones Day as Counsel for the Debtor and Debtor in Possession (the “Jones Day
Retention Application” at Doc. 115).
3 Unless otherwise indicated, all sectional references are to Title 11 of the United States Code and shall be referred to
as the “Bankruptcy Code.”
4 United States Trustee’s Omnibus Objection to the Proposed Retentions of: (I) Jones Day as Counsel for the Debtor;
(II) Bond, Schoeneck & King, PLLC as Co-Counsel to the Debtor; (III) Applied Business Strategy, LLC to Provide a
Chief Restructuring Officer for the Debtor, and Designating Dean Vomero as the Debtor’s Chief Restructuring
Signed this 27 day of April, 2026.
Wendy A. Kinsella
_______________________________
United States Bankruptcy Judge
So Ordered.
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Committee of Unsecured Creditors (the “UCC”) filed the UCC Objection5 (collectively, the
“Retention Objections”). Subsequently the Debtor filed the Jones Day Reply in further support of
the Retention Applications and in response to the Objections.6
Pursuant to a Notice of Hearing Concerning Applications to Employ and Retain Certain of
the Debtor's Professionals (Doc. 173) and Text Order of the Court (Doc. 255), a hearing was held
on various professional retention applications on April 9, 2026 (the “Hearing”)7. At the Hearing,
the Court approved the Debtor’s retention of Bond Schoeneck & King, PLLC, Katten Muchin
Rosenman LLP, Greenhill & Co., LLC and Kurtzman Carson Consultants, LLC dba Verita Global,
and approved Applied Business Strategy LLC’s Retention Application over the UST Objection.
The Court adjourned the Hearing to April 14, 2026, allowing additional supplements to be filed,8
and thereafter issued its oral ruling denying approval of the Jones Day Retention Application. The
Court advised that a written decision would be issued to memorialize its ruling.
Officer; (IV) Katten Muchin Roseman LLP as Counsel to the Debtor at the Sole Direction of the Independent Manager
and Sole Member of the Independent Special Committee of the Debtor; (V) Greenhill & Co., LLP as Investment Banker
to the Debtor; and (VI) Kurtzman Carson Consultants, LLC d/b/a Verita Global as Administrative Advisor (the “UST
Objection” at Doc. 223).
5 Objection of the Official Committee of Unsecured Creditors to the Application to Retain and Employ Jones Day As
Counsel for the Debtor and Debtor In Possession (the “UCC Objection” at Doc. 225) (collectively, with the UST
Objection, the “Retention Application Objections”).
6 Debtor’s Reply in Support of Debtor’s Application to Retain and Employ Jones Day as Counsel for the Debtor and
Debtor in Possession (the “Jones Day Reply” at Doc. 280) and Supplemental Declaration of Heather Lennox in
Support of the Application to Retain and Employ Jones Day as Counsel for the Debtor and Debtor in Possession (the
“Supplemental Lennox Declaration” at Doc. 281, collectively, the “Jones Day Reply”).
7 Prior to the Hearing, the UST filed a letter (Doc. 317) resolving objections to the retention of: 1) Bond, Schoeneck
& King, PLLC, 2) Katten Muchin Rosenman LLP, 3) Greenhill & Co., LLC and 4) Kurtzman Carson Consultants,
LLC d/b/a Verita Global. The objections to the Jones Day Retention Application and ABS Retention Application
remained outstanding.
8 See Motion to Supplement the Record (Doc. 346); Order Granting Motion to Supplement the Record (Doc. 373);
Debtor’s Notice of Supplemental Record (Doc. 381); Sealed Document (Doc. 382).
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I. Jurisdiction
The Court has jurisdiction to hear and decide these cases pursuant to 28 U.S.C. §§ 1334
and 157. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409, and this is a core proceeding
pursuant to 28 U.S.C. § 157(b)(2).
II. Background
The Court assumes the parties’ familiarity with the general background of the bankruptcy
case and will only set out the facts necessary for a resolution of the Jones Day Retention
Application and the Retention Objections.
The timeline of events and current posture of the case are critical to the analysis. Beginning
in 2011, Jones Day represented R.T. Vanderbilt Co. (“RTVC”) and subsequently assisted in a
corporate restructuring transaction that led RTVC to split into several entities, including the Debtor
and the Debtor's parent, R.T. Vanderbilt Holding Company Inc. (“Holdings”). See Supplemental
Lennox Declaration, at ¶ 4. After that restructuring, Jones Day represented the Debtor, Holdings,
and certain of its non-debtor affiliates in connection with corporate and corporate governance
matters. See, e.g., Lennox Declaration, at ¶¶ 10, 17.9
In addition to Jones Day’s historic representation of Holdings and its’ affiliates, the Firm
represented those companies on two specific projects leading up to the current filing. In October
2024 the Firm was retained by the Debtor, Holdings and Vanderbilt Chemicals, LLC
(“Chemicals”) in connection with a potential transfer of the VEEGUM® processing facility from
Chemicals to the Debtor. Supplemental Lennox Declaration, at ¶ 5. That “restructuring of
ownership of the VEEGUM® Facility” never occurred. Thereafter, in the spring of 2025, Jones
Day represented the Debtor and various affiliates in a historical global netting process (the “Global
9 The Declaration of Heather Lennox in Support of the Application to Retain and Employ Jones Day as Counsel for
the Debtor and Debtor in Possession was filed in support of the Jones Day Retention Application (the “Lennox
Declaration” at Doc. 115-3).
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Netting”) which resulted in a $127,292,745 due from Holdings to the Debtor to be reconciled and
offset against other balances owed by the Debtor to various affiliates.
Throughout the time of its involvement with Jones Day, the Debtor had been managing
talc litigation and claims until a $12.5M verdict was rendered against it in August 2025. See
Declaration of Dean Vomero, the Chief Restructuring Officer of Debtor Vanderbilt Minerals, LLC
in Support of First Day Motions of Debtor and Debtor in Possession (Doc. 3), at ¶ 54. In September
2025, Jones Day was engaged by the Debtor as bankruptcy counsel and its representation of
Holdings and the non-debtor affiliates concluded. See Supplemental Lennox Declaration, at ¶ 7.
At that time, the Debtor was facing more than 1,400 cases, with over 150 cases scheduled for trial
in 2026. See Declaration of Dean Vomero in Support of the Debtor’s Objection to the Committee’s
Motion to Dismiss the Chapter 11 case (Doc. 305), at ¶ 7.
After the case was commenced on February 16, 2026, the Debtor immediately filed the
DIP Motion seeking authority to obtain debtor-in-possession financing to fund Debtor’s day-to-
day operations, preserve relationships, continue to market assets and preserve value and pay the
costs associated with this case.10 The Debtor also filed the Sale Motion seeking entry of an order
approving bidding procedures, authorizing the Debtor to enter a Stalking Horse Agreement,
scheduling an auction, and authorizing the sale of the Debtor’s assets.11
10 Motion of the Debtor and Debtor In Possession Pursuant to Sections 105, 362, 363, 503, 507 and 552 of the
Bankruptcy Code, Bankruptcy Rules 2002, 4001, 6004 and 9014 and Local Rules 2002-1, 4001-2 and 9013-1 for
Interim and Final Orders (I) Authorizing the Debtor to Obtain Postpetition Financing, (II) Granting Liens and
Providing Superpriority Administrative Expense Status, (III) Modifying the Automatic Stay, (IV) Scheduling a Final
Hearing and (V) Granting Related Relief (the “DIP Motion” at Doc. 17).
11 Motion of the Debtor and Debtor in Possession for Entry of Orders (I)(A) Approving Bidding Procedures for the
Sale of Substantially all of the Debtor’s Assets, (B) Authorizing the Debtor to Enter into the Stalking Horse Agreement
and to Provide Bidding Protections Thereunder, (C) Scheduling an Auction and Approving the Form and Manner of
Notice Thereof, (D) Approving Assumption and Assignment Procedures, (E) Scheduling a Sale Hearing and
Approving the Form and Manner of Notice Thereof and (F) Granting Related Relief; and (II)(A) Approving the Sale
of the Debtor’s Assets Free and Clear of Liens, Claims, Interests and Encumbrances, (B) Approving the Assumption
and Assignment of Executory Contracts and Unexpired Leases and (C) Granting Related Relief (the Sale Motion” at
Doc. 16).
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On the same day, the “third leg” of the “three-legged stool” was filed, the highly contested
Settlement Motion.12 The Settlement Motion was filed by Ben Pickering, the Independent
Manager and Sole Member of the Independent Special Committee of the Debtor, who was engaged
by the Debtor to act as a fiduciary, with Katten Muchin Rosenblum LLC “(Katten)” serving as his
counsel. The Settlement Motion seeks approval of a global settlement (the “Global Settlement”),
wherein the Debtor gives broad releases of certain intercompany claims against Holdings and other
affiliates in exchange for their transfer of various assets to the Debtor to facilitate a sale of Debtor’s
assets as a going concern under section 363 of the Bankruptcy Code.13
III. Arguments
The Retention Objections assert that in light of the timeline above and Jones Day’s prior
relationships with Holdings and the other non-debtor affiliates, the Firm has extensive knowledge
and bias about the settlement and may have divided loyalties, thereby disqualifying the Firm from
representing the Debtor under section 327(a) of the Bankruptcy Code. The UST contends “The
appearance of a conflict is undeniable given the prior relationship Jones Day had with Holdings.”
UST Objection, at p. 17. The Firm has a fiduciary duty to “maximize [Holdings’] and its affiliates
(if applicable) contributions to the Debtor’s coffers – in exchange for the releases – and by
implication to maximize [Holdings’] and its affiliates share of the liability.” Id. This duty presents
a conflict because of Jones Day’s “capacity as current and former counsel and professionals to
[Holdings] and its affiliates, to minimize those same liabilities to the Debtor.” Id. In addition, the
UST asserts Jones Day has failed to provide clear and candid disclosures of its connections to the
Debtor and the Debtor’s affiliates under Bankruptcy Rule 2014(a) and “make[s] no mention of the
12 Motion of the Debtor at the Sole Direction of Independent Manager and Sole Member of the Independent Special
Committee of the Debtor for Entry of an Order (I) Approving the Global Settlement Between the Debtor and R.T.
Vanderbilt Holding Co., Inc. and Certain of Its Subsidiaries; and (II) Granting Related Relief (the “Settlement
Motion” at Doc. 22, collectively, with the DIP Motion and Sale Motion, are the “Motions”).
13 The Settlement Motion was subsequently approved by the Court on April 22, 2026.
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specific payments received and the invoices sent by them for the services that they performed.”
See UST Objection, at pp. 16–18.
The UCC also objects to the Debtor’s retention of Jones Day as counsel, sharing the same
concerns of the UST. See UCC Objection, at ¶ 1. Arguing that “[t]he receipt of releases for
[Holdings] is a (if not the) central objective of this bankruptcy,” the UCC alleges that Jones Day
has a current and ongoing conflict of interest as “Jones Day was entangled in the very matter that
the Settlement Motion contemplates, and in which the Debtor now finds itself directly adverse to
[Holdings].” Id. at ¶¶ 5, 20. The UCC further argues that the Firm’s prior representation of
Holdings results in disqualification due to a lack of disinterestedness. Id. at ¶ 38. Citing to Black
& White Stripes, the UCC asserts that “[e]ven if Jones Day’s representation of Vanderbilt has
concluded . . . the scope of the proposed retention is such that it is vital that there be no doubt as
to the faithfulness of counsel to the bankruptcy estate.” Id. at ¶ 43 (citing In re Black & White
Stripes, LLC, 623 B.R. 34, 52 (Bankr. S.D.N.Y. 2020)).
Jones Day counters that the Debtor is entitled to retain counsel of its choice. See Jones Day
Reply, at ¶ 12. The Firm’s representation of Holdings and the non-debtor affiliates concluded
September 1, 2025, and it has represented only the Debtor since that time. Id., at ¶ 19. The
prepetition termination of its representation of the non-debtor affiliates is sufficient to satisfy the
requirements of section 327(a) because the Firm does not presently hold or represent an interest
that is adverse to the estate, and it is otherwise disinterested. See id., at ¶¶ 24–29. Jones Day
contends the disinterestedness requirement only relates to the personal interests of the proposed
professional and prior representations do not impact that analysis. See id., at ¶¶ 30–31. Moreover,
with Mr. Pickering appointed as an independent fiduciary for the Debtor with Katten representing
him, the Firm has not been involved in any manner with the Settlement Motion. See id., at ¶¶ 40–
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44. Therefore, its prior representation of Holdings and the other settlement parties does not warrant
disqualification. Jones Day also clarified only the Debtor made payments to the Firm in connection
with this case. In light of the above, Jones Day maintains the Retention Objections should be
overruled.
a. The Hearing
At the Hearing, the Court heard testimony from Heather Lennox, Esq. (“Ms. Lennox”), a
partner at Jones Day. During her examination by the UCC, Ms. Lennox testified that Jones Day
had worked on several projects over the years with Holdings beginning in 2011. These projects
included the corporate restructuring in 2012-2013 and the two transactions with the Debtor
described above, the Global Netting transaction and the potential transfer of the VEEGUM®14
facility from Chemicals to the Debtor. Much of the testimony discussed the nature of these
transactions, the involvement of Jones Day, and the effect they had on the Debtor, talc liabilities,
and talc claimants. Ms. Lennox conceded that these transactions were not disclosed on Jones Day’s
original Retention Application, and that the Settlement Motion would allow for the transfer of the
VEEGUM facility to the Debtor.
During cross-examination, Ms. Lennox stated that these prior engagements did not result
in Jones Day possessing an adverse interest, or make the Firm an interested party warranting
disqualification. Further, Ms. Lennox testified that Jones Day did not have a present interest in
Holdings or the non-debtor affiliates and characterized the Firm’s representation regarding the
failed VEEGUM® facility transfer as complete.
14 The VEEGUM® facility is currently owned by Chemicals but based on the approval of the Settlement Motion,
should be transferred to the Debtor.
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IV. Legal Analysis
a. 327(a) Standard
Section 327(a) of the Bankruptcy Code authorizes the debtor in possession to employ
professionals to represent the estate during bankruptcy with court approval, and specifically
provides:
Except as otherwise provided in this section, the trustee, with the court's approval,
may employ one or more attorneys, accountants, appraisers, auctioneers, or other
professional persons, that do not hold or represent an interest adverse to the estate,
and that are disinterested persons, to represent or assist the trustee in carrying out
the trustee's duties under this title.
11 U.S.C. § 327(a) (emphasis added).
“When evaluating proposed retention, a bankruptcy court ‘should exercise its discretionary
powers over the approval of professionals in a manner which takes into account the particular facts
and circumstances surrounding each case and the proposed retention before making a decision.’”
Vouzianas v Ready & Pontisakos (In re Vouzianas), 259 F.3d 103, 107 (2d Cir. 2001) (quoting
Bank Brussels Lambert v. Coan (In re AroChem Corp.), 176 F.3d 610, 621 (2d Cir. 1999); 3
Lawrence P. King, et al., Collier on Bankruptcy, ¶ 327.04[1][a] (15th ed. rev. 1998)). “Relevant
considerations are ‘the protection of the interests of the bankruptcy estate and its creditors, and the
efficient, expeditious, and economical resolution of the bankruptcy proceeding.” Id. (internal
quotations omitted); see also In re Vebeliunas, 231 B.R. 181, 194–95 (Bankr. S.D.N.Y. 1999)
(holding that Section 327(a) vests discretion in bankruptcy courts to disapprove trustee’s choice
of special counsel not only for conflict of interest but also for other reasons serving the best interest
of the estate).
The general test is for professionals to “(1) hold no interest adverse to the estate; and (2)
be disinterested persons.” In re Vouzianas, 259 F.3d at 107 (emphasis added). While not defined
in the Bankruptcy Code, the Second Circuit has adopted the definition of “hold or represent an
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adverse interest” to mean: “(1) to possess or assert any economic interest that would tend to lessen
the value of the bankruptcy estate or that would create either an actual or potential dispute in which
the estate is a rival claimant; or (2) to possess a predisposition under circumstances that render
such a bias against the estate.” In re AroChem Corp., 176 F.3d at 623 (citations omitted). Section
101(14) defines “disinterested person” as an individual who “(C) does not have an interest
materially adverse to the interest of the estate . . . by reason of any direct or indirect relationship
to, connection with, or interest in, the debtor . . . .” 11 U.S.C. § 101(14)(C).
Courts have commonly held that “[t]he test is not retrospective; courts only examine
present interests when determining whether a party has an adverse interest.” In re JMK Constr.
Grp., Ltd., 441 B.R. 222, 229 (Bankr. S.D.N.Y. 2010). While the standard of looking to present
interests, rather than past, stems from the Second Circuit’s ruling in AroChem, it has been
expanded upon in recent case law. For example, the Court in Black & White Stripes disqualified
counsel for a prior representation of the debtor’s principals in a state court action. See In re Black
& White Stripes, LLC, 623 B.R. at 52; c.f. In re Vouzianas, 259 F.3d at 108 (“Pryor contends that
the bankruptcy court erred because it failed to apply the two-part test of Section 327(a) to the
retention of Ready as special counsel. According to the trustee, the bankruptcy court's scrutiny of
the special counsel nominee is limited to determining adverse interests and disinterest. Clearly, the
bankruptcy court is not so limited in its oversight of the trustee's actions.”). Judge Glenn in Black
& White Stripes noted that “part of what made the representation at issue in AroChem permissible
was the scope of representation for which the Firm was retained in the bankruptcy case.” Id. at 52.
“In AroChem, the special litigation counsel was retained to pursue the same narrow issues it had
already pursued on behalf of the creditor. It was not retained to represent all of the debtor’s
interests.” Id. (noting, as a further distinction, that AroChem was a chapter 7 case). Highlighting
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the need for the Debtor to have “reliable bankruptcy counsel to help shepherd the Debtors through
the chapter 11 process and to faithfully proceed on their behalf in marshalling estate assets and
pursuing any claims that the Debtors may have,” the Court in Black & White Stripes ultimately
disqualified counsel. Id.
Jones Day argues that the facts here are readily distinguishable from those in Black & White
Stripes as “the proposed counsel had represented both the debtor and the debtor’s principals in
prepetition litigation – which is not the case here,” and “debtor had not appointed an independent
estate fiduciary with independent counsel to address any potential claims or causes of action
between the debtor and its principal.” See Jones Day Supplement, at ¶ 31. The Court acknowledges
these differences, but nevertheless finds enough similarities between Black & White Stripes and
this case to follow Judge Glenn’s holding that prior employment may be grounds for
disqualification.
This Circuit places great deference on the right of a debtor to retain its choice of counsel,
and the Court does not take a request for disqualification lightly. See In re Enron Corp., No. 01-
16034(AJG), 2002 WL 32034346, at *4 (Bankr. S.D.N.Y. May 23, 2002), aff'd, No. 02 CIV. 5638
(BSJ), 2003 WL 223455 (S.D.N.Y. Feb. 3, 2003); In re Bennett Funding Grp., Inc., 213 B.R. 234,
250 (Bankr. N.D.N.Y. 1997). The Court is also aware that Jones Day’s institutional knowledge
regarding the background of the Debtor, its operations and financial situation is beneficial to the
Debtor and may impact the efficiency of this case, and the Firm’s continued involvement would
avoid a steep learning curve that would be faced by other counsel. Given the extremely tight
timeframes involved with the pending Motions, those factors weigh in favor of approving Jones
Day’s retention.
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These time frames, however, also weigh against the retention of Jones Day. The Firm
represented only the Debtor for bankruptcy work beginning in September 2025. The Debtor filed
the DIP Motion, the Sale Motion and the Settlement Motion only five months from the conclusion
of its decade-long representation of Holdings and the non-debtors, and agreed to the extremely
short timelines in those Motions. Although an expeditious resolution of a bankruptcy case is
preferable, the Court nevertheless recognizes the UCC’s concerns that the short timeframes that
led to the time crunch facing all parties may be of the Debtor’s own purposeful making.
The Court also emphasizes that the bankruptcy process is one that places great importance
on open and transparent disclosures, and this is continued in retention applications; “[t]he court
relies primarily on forthright disclosure to determine qualification under section 327.” In re
Granite Partners, L.P., 219 B.R. 22, 35 (Bankr. S.D.N.Y. 1998); In re Enron Corp, 2002 WL
32034346, at *5. The Court has concerns over Jones Day’s lack of disclosures that were brought
to light by the UCC; however, it understands the Firm’s lengthy history with the Debtor’s
predecessor, the Debtor itself, and the non-debtor affiliates may make detailed disclosures of 15
years of representation cumbersome. Nevertheless, the Court is troubled by the initial omissions
of significant transactions in the two years leading up to the filing, as Jones Day simply disclosed
it “historically” represented Holdings and the Debtor’s affiliates in general corporate and corporate
governance matters before September, 2025. See, e.g., Lennox Declaration, at ¶ 17. The Firm
failed to mention it advised Holdings, the Debtor and affiliates on the Global Netting transaction
and the potential transfer of the VEEGUM® plant.15 Despite assurances that those and all other
intercompany matters were investigated by Mr. Pickering without Jones Day’s involvement, which
this Court has no reason to doubt, the fact that the Firm advised on those transactions is
15 Although Jones Day claims the Debtor was still actively managing its talc liabilities at that point, given the
tremendous increase in those liabilities, it is reasonable to assume the restructuring contemplated a bankruptcy filing.
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problematic. Jones Day contends the Global Netting was an accounting exercise, and this may
very well be true. The Firm also submits that the Debtor was solvent when it engaged in those
setoffs which may also be accurate. But the Court should not have to evaluate the merits or the
propriety of those transactions and the solvency or insolvency of the Debtor to find the Firm free
from conflicts, or at least a considerable perception of conflicts. See, e.g., In re Black & White
Stripes, LLC, 623 B.R. at 51 ( “[t]he determining factor is whether counsel sought to be retained
can proceed faithfully on behalf of the Debtors and in the best interests of the estate”).
In addition, the Debtor through Jones Day, and not Mr. Pickering, is pursuing a section 363
sale of the VEEGUM® plant upon its transfer to the Debtor through the Global Settlement. Jones
Day represented Holdings, the Debtor and Chemicals in reviewing the potential for that transfer to
the Debtor in late 2024, which never occurred. It is irrelevant if there were legitimate business
reasons for that transaction not taking place. Again, the Court should not have to investigate the
facts underlying the potential transfer to find the Firm to be free from conflicts, or the appearance
of conflicts. The parties will never know if Jones Day made recommendations that benefited
Chemicals or Holdings over the Debtor and then moved to the Debtor’s side of the table.
The long history between Jones Day and incarnations of this Debtor and Holdings goes
back more than a decade, beginning in February 2011. See Supplemental Lennox Declaration, at
34¶ 4. Jones Day has detailed knowledge of the behind-the-scenes discussions, information
exchanged and decision-making process that took place. It is unknown if the Firm’s advice in
those transactions resulted in a disadvantage to the Debtor—nor would the Court expect Jones Day
to disclose its advice on those transactions that are protected by the attorney-client privilege.
Notwithstanding these two matters that have been focused on the parties, the long-term
relationship, knowledge, strategizing and influence that Jones Day had with, and over, Holdings
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and the other non-debtor affiliates during its time as their counsel cannot be ignored. See In re
Leslie Fay Companies, Inc., 175 B.R. 525, 532 (Bankr. S.D.N.Y. 1994) (noting that section 327
“serve[s] the important policy of ensuring that all professionals appointed pursuant to the section
tender undivided loyalty and provide untainted advice and assistance in furtherance of their
fiduciary responsibilities) (citation omitted). Simply stated, the Independent Manager does not fix
that problem, nor does he disentangle the relationship that Jones Day had with Holding and its
affiliates for over a decade.
Finally, the mass tort scenario facing the Debtor requires the bankruptcy process to be
devoid of any appearance of conflict. See In re Angelika Films 57th, Inc., 227 B.R. 29, 58 (Bankr.
S.D.N.Y. 1998), aff'd, 246 B.R. 176 (S.D.N.Y. 2000) (“The duty to avoid even the appearance of
impropriety is a persistent theme in disinterestedness cases”). There are over 1,400 known talc
claimants in this case. See Declaration of Dean Vomero, the Chief Restructuring Officer of Debtor
Vanderbilt Minerals, LLC, in Support of First Day Motions of Debtor and Debtor in Possession
(Doc. 3), at ¶ 53. These are not traditional business creditors, but creditors who face significant
health issues and even death, allegedly as a result of the Debtor’s operations. They must rely on
the Debtor and its counsel to have undivided loyalty and diligently work to maximize the value of
the estate in order to attain any form of monetary relief. That reliance is the only way this case will
be able to progress, which is not possible with Jones Day at the helm.
The Court is not questioning the competence or integrity of Jones Day, Ms. Lennox or any
of its professionals. The Court recognizes that simultaneous representation of corporate affiliates
outside of the bankruptcy context is commonplace. The resignation of Jones Day as counsel for
the affiliates and retention by only the Debtor is also a common scenario when a bankruptcy filing
becomes probable. In addition, the Debtor, with Jones Day’s support, may have taken the
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appropriate steps to appoint Mr. Pickering as a fiduciary to review all of the Debtor’s and the
Debtor’s affiliates’ transactions. The Court has no reason to believe that the Global Settlement was
not crafted by Mr. Pickering, or that Jones Day was not isolated from that investigation and
settlement negotiations. But under the circumstances of this case, these matters cannot be so easily
compartmentalized. The timeline demonstrates Jones Day was actively representing the Debtor’s
affiliates while exploring and recommending legal strategies and actions that may have negatively
impact this estate, including, and perhaps not limited to, setoffs and potential asset transfers. The
Court should not have to assess the merits and propriety of those transactions to find Jones Day
without conflict.
As the court in Angelika Films noted:
The determination of adverse interest is objective and is concerned with the
appearance of impropriety. See Rome, 19 F.3d at 58 (noting that “[t]he test is neither
subjective, nor significantly influenced by the court-appointed professional's
‘protestations of good faith,’ ... but contemplates an objective screening for even
the ‘appearance of impropriety’ ”). The duty to avoid even the appearance of
impropriety is a persistent theme in disinterestedness cases. It is also stated in the
New York Code of Professional Responsibility, Canon 9. See Granite, 219 B.R. at
34. Several courts have argued that the disinterestedness requirement was intended
to “prevent even the appearance of conflict irrespective of the integrity of the person
or firm under consideration.” Martin, 817 F.2d at 180–81 (quoting, Codesco, 18
B.R. at 999.) The court in Rancourt, 207 B.R. 338, 359 (Bankr.D.N.H.1997), went
so far as to say that, because “section 327(a) is designed to limit even appearances
of impropriety to the extent reasonably practicable, doubt as to whether a particular
set of facts gives rise to a disqualifying conflict of interest normally should be
resolved in favor of disqualification.”
In re Angelika Films 57th, Inc., 227 B.R. at 38.
Here, Jones Day is so intertwined with the Debtor’s affiliates that it creates a clear
appearance of impropriety and divided loyalties. If retained as counsel, there would be continuous
doubts about whether Jones Day possessed a predisposition that rendered a bias against the estate
and whether the Firm could carry out its fiduciary duty to maximize the Debtor’s recovery for the
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benefit of the estate and its creditors, thereby undermining the Firm’s ability to perform as faithful
bankruptcy counsel. See Black & White Stripes, 623 B.R. at 52. Indeed, approving the retention
would compromise the integrity of the bankruptcy process, which the Court is not willing to do.
V. Conclusion
Based on the record before it, the Court sustains the UST Objection and UCC Objection
and denies the Jones Day Retention Application.
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Case 26-60110-5-wak Doc 479 Filed 04/27/26 Entered 04/27/26 12:58:07 Desc
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