Waste2Energy Bankruptcy: Counsel Seeks to Withdraw Due to Non-Payment, Management Resignations

Two law firms that had appeared on behalf of Waste2Energy Holdings, Inc. in the involuntary chapter 11 bankruptcy case filed against the company last month asked the Delaware bankruptcy court to allow them to withdraw from the firms' representation of the company.  Last week, the bankruptcy court entered orders (1) granting relief in the involuntary bankruptcy case and (2) authorizing and directing the appointment of a chapter 11 trustee for Waste2Energy.

More details after the jump.



According to the firms' court filings, they were retained by Waste2Energy to represent the company in the period between the involuntary filing and the entry of the order for relief.  While the firms each received a retainer, they assert that both retainers have now been exhausted and have not been replenished.  In addition, the motion states that "on or about September 8, 2011, all management of the Debtor resigned," leaving the firms without any known representatives of their client.  Engagement applications were not filed for either firm in the bankruptcy case; in fact, Waste2Energy only filed two substantive pleadings in the case: declarations of two members of the company's management (John Joseph Murphy II and Christopher D'Arnaud-Taylor).  Each declaration was captioned as being in support of Waste2Energy's opposition to the motion to appoint a trustee for the company; however, no such opposition was ever actually filed.

The law firms assert that they cannot now be retained as professionals under section 327 of the Bankruptcy Code because they are now creditors of Waste2Energy and, therefore, not disinterested.  They also argue that the court should permit them to withdraw from representation of Waste2Energy because the law firms "have no means to be paid, resulting in a profoundly unreasonable financial burden on the [firms]; and (2) the Debtor has no representative, which bars any functioning attorney-client relationship, has caused the Debtor to fail to fulfill all of its obligation to the [firms] regarding their legal services, and renders the representation unreasonably difficult."

For more on the Waste2Energy involuntary chapter 11 case, please see our earlier posts:

• Four Alleged Creditors File Involuntary Chapter 11 Bankruptcy Petition Against Waste2Energy Holdings, Inc.
• Waste2Energy Holdings Bankruptcy Update: Petitioning Creditors Ask Court to Remove Management & Appoint a Trustee
• Bankruptcy Court Sets Schedule for Consideration of Motion to Remove Waste2Energy's Management

To access copies of bankruptcy court filings from this case, please visit: http://www.chapter11cases.com/Waste2Energy-Holdings-Inc_c_27709.html