In re: JOTAN, INC. and SOUTHLAND CONTAINER CORP., Debtors., 236 B.R. 79

Summary

In debtors' Chapter 7 bankruptcy proceeding, agent, an agent for creditor banks, requested a trustee election. Creditor banks nominated, and voted for, an individual. A number of other creditors spoke in favor of retaining the interim trustee as the Chapter 7 trustee. Agent filed a motion to resolve the election disputes, pursuant to 11 U.S.C.S. § 702, and to confirm the election of the individual that creditor banks nominated. The court stated that the evidence suggested that agent was primarily concerned with its secured claims and with protecting the secured claims with respect to debtors' assets. The fact that agent was to receive all of the assets to which agent was secured, but only a fraction on the unsecured claims, created a conflict with the general unsecured creditors. After reviewing the totality of the circumstances, the court held that agent had an interest that was materially adverse to the interest of other creditors, in conflict with § 702(a)(2). Therefore, agent's ...