Is representing the sponsor of the company filing for bankruptcy, and not the company itself, in the chapter 11 case a sign that the client (i.e the sponsor) does not trust you? During the acquisition, we represented the sponsor, and the company was represented by a firm which is now their counsel in the chapter 11 case.

likehelpful
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I’d say the opposite. And a sign that your firm cares about the sponsor and not the portfolio company.

No. By the time a sponsor owned company is insolvent, there could very well be conflicts between the company and the Sponsor. So it’s a sign that the firm is more interested in keeping the relationship with the Sponsor than the company, which is not atypical.

OP, as just some of many potential examples, sponsors typically want releases as part of the company’s plan. There will be an investigation into potential claims against the sponsor before that release is approved. The sponsor may also be contributing value to the plan, or that may be the end of its connection to the company. It will want its usual counsel representing it, and not the company.

Ok thanks guys, appreciate your help!

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