Bankruptcy Judge Louis A. Scarcella imported the “disinterestedness” requirement into the approval of a chapter 7 trustee elected by creditors to supplant the interim trustee.
Section 701(a), governing appointment of an interim trustee, and Section 1104(b), controlling election of a chapter 11 trustee, both impose the requirement of disinterestedness defined in Section 101(14). In contrast, Section 702, the statute on election of a chapter 7 trustee, by its terms does not require disinterestedness.
Judge Scarcella, sitting in Central Islip, N.Y., said it would be “illogical” to impose disinterestedness on an interim trustee continuing to serve if the same rule were not applicable to an elected trustee, who would assume identical duties.
Imposing the disinterestedness standard, he said, would also be consistent with Section 327(a), under which a trustee’s counsel likewise must be free of potentially disabling connections as outlined in Section 101(14).
Judge Scarcella was elevated to the bench in 2014.