Kaye Scholer has finalized a settlement with the U.S. Trustee's Office that requires the firm to forfeit a total of $1.5 million it was paid or expected to be paid for its work on the chapter 11 case of investment firm GSC Group and to revamp its procedures for applying for bankruptcy assignments, American Law Daily reported today. The settlement resolves claims brought by the trustee's office in January that accused Kaye Scholer of failing to disclose key details when it applied—and was chosen—to represent GSC as debtor's counsel in 2010. The U.S. Trustee's Office argued that both Kaye Scholer and GSC financial adviser Capstone Advisory Group neglected to report that a key employee listed on Capstone's application was actually a contractor who used a type of fee-sharing agreement barred by the bankruptcy code. The U.S. Trustee also faulted the firm for failing to mention that it had been employed previously by other entities owned by the contractor, Robert Manzo, creating a potential conflict of interest.
