United States Bankruptcy Court 

Eastern District of Virginia 

Alexandria Division 

In re: 

Champagne Services, LLC. Case No. 16-11683-RGM 

 Debtor. Chapter 11 

 Hearing: September 27, 2016, at 11:00 am 

 Courtroom I, 2nd Floor 

Supplemental Objection to Application to Employ Counsel to the Debtor 

Comes Now, the United States Trustee, Judy A. Robbins, and files this 

Supplemental Objection to the Application to Employ Counsel to the Debtor, 

Thomas K. Plofchan, Jr., and Westlake Legal Group (“Westlake”) as counsel for 

the Debtor. Westlake failed to disclose all its connections with parties in interest 

as required by Bankruptcy Rule 2014(a). Westlake failed to disclose that its fees 

were being guaranteed by the Debtor’s principal, and that Westlake’s fees would 

have to be reaffirmed. The Application should be denied. 

 In support of this supplemental objection, the following representations are 

made: 

1. On May 12, 2016, the Debtor, Champage Services, LLC, filed a petition for 

relief under chapter 7 of the Bankruptcy Code. Docket No. 1. 

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2. The petition was signed by Geoff Crawley, Director of Operations. 

Voluntary Petition for Non-Individuals Filing for Bankruptcy. Docket No. 1, 

page 4. 

3. On June 2, 2016, the Debtor filed an Application to Employ Counsel to the 

Debtor, Thomas K. Plofchan, Jr. and Westlake Legal Group. Docket No. 14. 

4. Accompanying the Application was a Verified Statement signed by Thomas 

K. Plofchan, Jr. Docket No. 14-1. 

5. Among other things, the Verified Statement disclosed that counsel had 

previously represented the Debtor in various unrelated matters. 

6. The Verified Statement also disclosed that counsel had no connections with 

creditors and other parties in interest. 

7. On June 17, 2016, the United States Trustee filed a Response to Application 

to Employ Counsel to the Debtor. Docket No. 16. 

8. Among other things, the Response stated “[I]f the Applicant and the Debtor 

have entered into a retainer agreement, the retainer agreement should be 

filed in accordance with full disclosure.” 

9. No retainer agreement was filed. 

10. On July 21, 2016, the United States Trustee filed a Notice of Objection and 

Notice of Hearing for the Application to Approve the Employment of 

Thomas K. Plofchan, Jr. and Westlake Legal Group. 

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11. The hearing was scheduled for September 6, 2016. Docket No. 26. 

12. A hearing was held on September 6, 2016. 

13. The employment of Thomas K. Polfchan, Jr. and Westlake Legal Group 

was approved upon Unted States Trustee review of the retainer agreement. 

Docket No. 38. 

14. On September 7, 2016, Westlake Legal Group e-mailed to the United States 

Trustee the retainer agreement. 

15. The United States Trustee has reviewed the retainer agreement. 

16. Not disclosed in the Verified Statement but in the retainer agreement are 

the following provisions: 

(A) The Debtor Designee, Geoff Crawley, is a guarantor for the fees of Debtor. 

page 1, retainer agreement. 

(B) The Debtor Designee, Geoff Crawley, is a codebtor of the Debtor. Schedule 

H, No. 2.1-2.4, Docket No. 1, page 18. 

(C) The Debtor Designee, Geoff Crawley, received $167,088 within one year of 

the filing. Statement of Financial Affairs, Docket No. 1, page 21. 

(D) “Client [Debtor] and Guarantor [Debtor Designee] hereby irrevocably 

guarantees that the Client shall not declare the Firm [Westlake] as a creditor 

in any possible bankruptcy proceeding and that the obligation for payment 

of any fees shall be reaffirmed after any discharge in bankruptcy.” ¶ 16, 

page 8, retainer agreement. 

(E) “Client and Guarantor hereby grant us a lien on any and all claims or causes 

of action that are subject to our representation under this Agreement. Our 

lien will be for any and all sums owing to us. The lien will attach to any 

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recovery you may obtain, whether by arbitration award, judgment, 

settlement or otherwise. ¶ 17, page 8, retainer agreement. 

17. Bankruptcy Rule 2014(a) states, in part: 

The [employment] application shall state the specific facts 

showing the necessity for the employment, the name of the 

person to be employed, the reasons for the selection, the 

professional services to be rendered, any proposed 

arrangement for compensation, and, to the best of the 

applicant’s knowledge, all of the person’s connections with 

the debtor, creditors, any other party in interest, their 

respective attorneys and accountants, the United States 

trustee or any person employed in the office of the United 

States trustee. 

(emphasis added) 

18. The failure to disclose all connections pursuant to Section 327(a) is a 

serious omission and undermines the integrity of the bankruptcy process. As 

one court stated: 

“Published bankruptcy court decisions are quite consistent in 

requiring that debtors-in-possession and their attorneys, whose 

employment is sought to be approved, be meticulous in disclosing 

‘all connections' with the debtor and other parties in interest, the 

failure to do so justifying a court's taking significant punitive or 

corrective action.” In re Byington, 454 B.R. 648, 657 

(Bankr.W.D.Va.2011); see also In re Dickson Prop. ., LLC, 2012 

WL 2026760, at *8 (E.D. Va. June 5, 2012) (“Bankruptcy Rule 

2014 disclosure is not optional; it's mandatory.”); In re Matco Elec. 

Group, Inc., 383 B.R. 848, 853 (Bankr.N.D.N.Y.2008) (“It is also 

apparent that the obligation to disclose is not a subjective one, 

whereby the professional discloses only those ‘connections' that 

he/she/it concludes are relevant.”); In re Granite Partners, L.P., 219 

B.R. 22, 35 (Bankr.S.D.N.Y.1998) (noting a bankruptcy court 

“relies primarily on forthright disclosure to determine qualification 

under section 327” and “should not have to rummage through files 

or conduct independent factfinding investigations to determine if 

the professional is disqualified”) (internal quotation marks and 

citation omitted)). 

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In re Biddle, No. CA 12-05171-DD, 2012 WL 6093926, at *4 

(Bankr. D.S.C. Dec. 6, 2012) 

19. As this Court stated in Gordon Properties: 

One critical aspect of small corporate cases is that the owners 

understand the difference between their personal interests and the 

interests of the debtor. In this case, that can best be achieved by 

separate counsel. It is true that the owners will make the decisions 

for the debtor in their capacity as managers of the limited liability 

company, but requiring separate counsel enables each counsel to 

give candid advice in light of the client he represents and not be 

concerned or affected by the competing roles the owners have in 

the case. In the end, if the owners cannot distinguish between their 

roles as individual owners or creditors and as managers of a debtor 

in possession, the appropriate remedy is the appointment of a 

chapter 11 trustee or conversion of the case to chapter 7 

In re Gordon Properties, LLC, 504 B.R. 807, 815 (Bankr. E.D. Va. 

2013) 

20. In the present case, Westlake is not representing the Debtor Designee, but 

its fees are being guaranteed by the Debtor Designee. This connection 

hinders the required independence and undivided loyalty of Debtor’s 

counsel. More importantly, this connection should have been disclosed. 

21. The reaffirmations provisions in the retainer agreement are a concern of the 

United States Trustee. 

22. Section 524(c) of the Code permits a debtor to reaffirm personal liability 

for prepetition debt. The statute applies equally to individual and corporate 

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debtors. In re American Rice, Inc. 448 Fed. Appx. 415, Bank. L. Rep. 

(CCH) P 82084 (5th Cir. 2011) 

23. The reaffirmation rules are intended to protect debtors from compromising 

their fresh start. 

24. The retainer agreement’s mandate that the Debtor and the guarantor 

reaffirm Westlake’s fees is troubling. 

Wherefore, the United States Trustee moves the Court to deny the 

employment application of Westlake. 

 Judy A. Robbins 

 United States Trustee 

 /s/ Jack Frankel 

 Jack Frankel, Attorney 

 Office of United States Trustee 

 115 S Union Street 

 Alexandria, VA 22314 

 (703) 557-7229 

Certificate of Service 

 I hereby certify that on the 15th day of September, 2016, I e-mailed a copy of 

this supplemental objection and notice of hearing to wlawrimore@westlakelegal.com.

        /s/ Jack Frankel 

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