Court Opinion

ID: 9840491
Source: CourtListenerOpinion
Date Created: 2023-09-18 20:00:40.138593+00
Date Added: 2024-06-11T10:46:37.487690
License: Public Domain

USCA11 Case: 21-10587   Document: 47-1    Date Filed: 09/18/2023   Page: 1 of 139

                                                            [PUBLISH]
                                    In the
                 United States Court of Appeals
                         For the Eleventh Circuit

                           ____________________

                                 No. 21-10587
                           ____________________

        In re: Fundamental Long Term Care, Inc.,
                                                                Debtor.
        ___________________________________________________
        ESTATE OF ARLENE TOWNSEND,
        ESTATE OF ELVIRA NUNZIATA,
        ESTATE OF JAMES HENRY JONES,
        ESTATE OF JOSEPH WEBB,
        ESTATE OF OPAL LEE SASSER,
        ESTATE OF JUANITA JACKSON,
        Petitioning Creditor,
                                                   Plaintiﬀs-Appellants,
        versus
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        2                      Opinion of the Court                21-10587

        STEVEN M. BERMAN, Esq.,
        SHUMAKER, LOOP & KENDRICK, LLP,

                                                      Defendants-Appellees.

                             ____________________

                   Appeal from the United States District Court
                        for the Middle District of Florida
                      D.C. Docket No. 8:20-cv-00956-VMC,
                          Bkcy No. 8:11-bk-22258-MGW
                            ____________________

        Before LAGOA, BRASHER, and TJOFLAT, Circuit Judges.
        TJOFLAT, Circuit Judge:
               Section 327(a) of the United States Bankruptcy Code, titled
        “Employment of professional persons,” states that “the trustee,
        with the court’s approval, may employ one or more attorneys, ac-
        countants, appraisers, auctioneers, or other professional persons,
        that do not hold or represent an interest adverse to the estate, and
        that are disinterested persons, to represent or assist the trustee in
        carrying out the trustee’s duties.” 11 U.S.C. § 327(a). Rule 2014 of
        the Federal Rules of Bankruptcy Procedure implements the disin-
        terestedness provision of this section by requiring the trustee, in
        seeking court approval of the employment of a professional, to
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        21-10587                   Opinion of the Court                                 3

        disclose “the person’s connections with the debtor, creditors, [or]
        any other party in interest.” 1 Fed. R. Bankr. P. 2014(a).
               The bankruptcy proceeding underlying this case, In re Fun-
        damental Long Term Care, Inc., was initiated by Wilkes & McHugh,
        P.A. (“Wilkes”), on December 5, 2011, when it ﬁled an involuntary
        petition in the Bankruptcy Court for the Middle District of Florida
        under Chapter 7 of the Bankruptcy Code for relief against Funda-
        mental Long Term Care, Inc. (“FLTCI”) on behalf of the Estate of
        Juanita Jackson, deceased. The Jackson Estate, in a wrongful death
        tort action, had obtained judgments of $55 million against Trans
        Health, Inc. (“THI”) and Trans Health Management, Inc.
        (“THMI”) each, on July 22, 2010. In a post-judgment motion, the
        Jackson Estate obtained a default amended judgment on

        1 Fed. R. Bankr P. 2014(a) states that the trustee, in applying for court approval
        of the employment of a professional, must state:
                to the best of the applicant’s knowledge, all of the person’s
                connections with the debtor, creditors, any other party in in-
                terest, their respective attorneys and accountants, the United
                States trustee, or any person employed in the office of the
                United States trustee. The application shall be accompanied
                by a verified statement of the person to be employed setting
                forth the person’s connections with the debtor, creditors, any
                other party in interest, their respective attorneys and account-
                ants, the United States trustee, or any person employed in the
                office of the United States trustee.
        A professional must disclose all connections to parties in interest “that are not
        so remote as to be de minimis.” In re Fullenkamp, 477 B.R. 826, 834 (Bankr. M.D.
        Fla. 2011) (quoting In re Leslie Fay Cos., 175 B.R. 525, 536 (Bankr. S.D.N.Y.
        1994)).
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        4                          Opinion of the Court                        21-10587

        September 13, 2011, making FLTCI liable for the total $110 million
        award, along with THI and THMI—which were each liable for
        their respective $55 million judgment. But the Jackson Estate was
        unable to collect on the judgments due to a massive “bust-out”
        scheme 2 designed and executed in March 2006 to avoid paying the
        judgments. 3
               The Chapter 7 case became operative on January 12, 2012,
        when the Bankruptcy Court issued an “Order of Relief ” after
        FLTCI—now the Debtor—failed to respond to the Jackson Estate’s
        Chapter 7 petition. In June 2012, the trustee of the Debtor’s estate
        (the “Trustee”) employed Steven M. Berman and Shumaker, Loop
        & Kendrick, LLP (“Shumaker”) 4 as special litigation counsel. They
        served in that capacity until December 2015, following the distri-
        bution of the proceeds of a compromise presented to the Bank-
        ruptcy Court for approval in March 2015.

        2 While this opinion later explains the bust-out scheme in detail, see infra part
        II.B, the gist of the scheme is that, in a series of transactions, THI separated
        THMI’s assets and liabilities, and then hid those assets.
        3 Why Wilkes had the Jackson Estate file a petition for Chapter 7 bankruptcy
        relief against FLTCI and not THMI and THI will become apparent as this
        opinion unfolds.
        4 Berman was a Shumaker partner. Rule 2014(b) provides in relevant part:
                If, under the Code and this rule, a law partnership . . . is em-
                ployed as an attorney . . . or if a named attorney . . . is em-
                ployed, any partner, member, or regular associate of the part-
                nership . . . or individual may act as attorney . . . without fur-
                ther order of the court.
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        21-10587                   Opinion of the Court                                5

               On June 4, 2018, Wilkes, representing the creditors of the
        Debtor’s estate—namely the Jackson Estate and ﬁve other Probate
        Estates (collectively, the “Probate Estates”)—moved the Bank-
        ruptcy Court nunc pro tunc to disqualify Shumaker as special litiga-
        tion counsel and require it to disgorge the compensation it had re-
        ceived for its services. According to Wilkes, when the Trustee em-
        ployed Shumaker in June 2012, it was not disinterested as required
        by § 327(a). Moreover, Shumaker failed to timely disclose its “con-
        nections with the debtor, creditors, [or] any other party in inter-
        est”—connections that revealed its disinterestedness—as required
        by Rule 2014. The Bankruptcy Court denied Wilkes’s motion. It
        did so without an evidentiary hearing and based on the record of
        the bankruptcy case. 5

        5 The Bankruptcy Court described the record of the case prior to March 20,
        2014, in a Memorandum Opinion on Motion to Compromise and Motions for
        Permanent Injunctive Relief as “exceedingly complex.” In re Fundamental Long
        Term Care, Inc., 527 B.R. 497, 501 n.5 (Bankr. M.D. Fla. 2015). “The Court had
        nearly 80 days of hearings in this case.” Id. The issues raised in those hearings
        resulted in 17 reported decisions: In re Fundamental Long Term Care, Inc., 489
        B.R. 451 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 492
        B.R. 571 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 493
        B.R. 613 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 493
        B.R. 620 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 494
        B.R. 548 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 500
        B.R. 140 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 500
        B.R. 147 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 501
        B.R. 770 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 501
        B.R. 784 (Bankr. M.D. Fla. 2013); In re Fundamental Long Term Care, Inc., 507
        B.R. 359 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 508
        B.R. 224 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 509
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        6                        Opinion of the Court                     21-10587

               The Probate Estates appealed the Bankruptcy Court’s deci-
        sion. On February 27, 2020, the District Court aﬃrmed the Bank-
        ruptcy Court’s order except on the issue of whether Berman had
        committed a disclosure violation pursuant to Rule 2014. The Dis-
        trict Court then remanded the case to the Bankruptcy Court so it
        could decide whether Berman violated Rule 2014’s disclosure re-
        quirements. On remand, the Bankruptcy Court held that Berman’s
        omissions did not warrant sanctions under Rule 2014. In re Funda-
        mental Long Term Care, Inc., 614 B.R. 753 (Bankr. M.D. Fla. 2020).
        On the Probate Estates’ appeal, the District Court aﬃrmed. In re
        Fundamental Long Term Care, Inc., No. 8:20-cv-956, 2021 WL 222779
        (M.D. Fla. Jan. 22, 2021).
               The Probate Estates now appeal the District Court’s deci-
        sion, contending that the Bankruptcy Court abused its discretion in
        denying their motion. With the beneﬁt of oral argument and hav-
        ing examined the record before the Bankruptcy Court, we aﬃrm.
               We divide our discussion as follows. In part I, we consider
        the relevant events that took place prior to the Chapter 7 Trustee’s
        appointment and the administration of the bankruptcy estate prior
        to Berman and Shumaker’s employment as special litigation

        B.R. 387 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 509
        B.R. 956 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 512
        B.R. 690 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 515
        B.R. 352 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 515
        B.R. 857 (Bankr. M.D. Fla. 2014); In re Fundamental Long Term Care, Inc., 515
        B.R. 874 (Bankr. M.D. Fla. 2014).
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        21-10587                 Opinion of the Court                           7

        counsel. 6 Part II begins with the Trustee’s application to employ
        Berman and Shumaker; it then describes what they learned about
        the bust-out scheme, Wilkes’s litigation in response to the scheme,
        and the conﬂict between the Trustee and counsel for the fraudu-
        lent transferees over control of the defense strategy in state court.
        Part III deals with the principal adversary proceedings held in the
        case, including the Bankruptcy Court’s decision to treat THMI as
        if it had been included as a debtor in the Jackson Estate’s petition
        for Chapter 7 relief against FLTCI and the compromises that re-
        solved those proceedings. Part IV takes up Wilkes’s motion to dis-
        qualify Shumaker and for disgorgement of the attorney’s fees Shu-
        maker received, the Bankruptcy Court’s rulings on the motion, and
        the District Court’s review of those rulings. Part V concerns the
        present appeal.
                                            I.
                On January 23, 2012, the Bankruptcy Court appointed Beth
        Ann Scharrer Trustee of the Debtor’s (FLTCI’s) estate. Two days
        later, the Bankruptcy Court approved her application to employ Al-
        lan C. Watkins as her general counsel. On February 22, the Trus-
        tee, through Watkins, moved the Bankruptcy Court to enter an or-
        der “authorizing the Trustee, on behalf of the [C]hapter 7 estate . .
        . to borrow up to Ten Thousand Dollars . . . from Wilkes &
        McHugh, P.A. . . . under 11 U.S.C. § 503(b)(1) as an administrative
        expense.” The motion stated in relevant part:

        6 In this opinion, we refer to Berman and Shumaker interchangeably.
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        8                     Opinion of the Court                 21-10587

              No schedules have been ﬁled by the Debtor, and no
              appearance has been made by counsel for the Debtor.
              No response was made by or on behalf of the Debtor,
              and no schedules or statement of ﬁnancial aﬀairs have
              been ﬁled. As such, there is little information in the
              record upon which the Trustee can rely to determine
              the assets and liabilities of the Debtor.
              ...
              Wilkes & McHugh represents a number of creditors
              asserting claims against the Debtor, including the Es-
              tate of Juanita Jackson, the petitioning creditor. The
              Lender [Wilkes] has agreed to loan to the [Debtor’s]
              Estate up to $10,000.00, allowable as an administra-
              tive expense under § 503(c)(1) of the Bankruptcy
              Code.
              ...
              The Debtor has not prepared any schedules, list of
              creditors, or statement of ﬁnancial aﬀairs. The Trus-
              tee needs to conduct discovery, including by deposi-
              tion testimony as necessary, to produce the infor-
              mation necessary or available. The likely witnesses
              with knowledge of the Debtor’s business aﬀairs are
              located out of the State of Florida, so expenses would
              include travel costs, lodging, and meals as well.
        Trustee’s Motion for Final Approval of Postpetition Financing at 2–
        3, In re Fundamental Long Term Care, Inc., No. 8:11-bk-22258 (Bankr.
        M.D. Fla. Feb. 22, 2012). The Bankruptcy Court held a hearing on
        the motion on March 28, 2012, and approved it in an order dated
        April 6, 2012.
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        21-10587                    Opinion of the Court                                  9

                At the same time, Wilkes was involved in the prosecution of,
        or in post-judgment proceedings in, ﬁve of the six wrongful death
        cases it had brought on behalf of the Probate Estates in state
        courts—ﬁve in Florida and one in Pennsylvania. 7 The six Probate
        Estate plaintiﬀs were the Probate Estate of Juanita Jackson, 8 whose
        case had been prosecuted to ﬁnal judgment pre-petition, and the
        Probate Estates of Elvira Nunziata, 9 Joseph Webb, 10 James Henry
        Jones, 11 Opal Lee Sasser, 12 and Arlene Townsend, 13 whose cases
        were pending trial in state court. 14 THMI was a defendant in all six
        cases, while THI was a defendant in all the cases except Nunziata.

        7 The lawsuits alleged negligence and frequently other tort law theories of
        recovery. We refer to the theories collectively under a wrongful death rubric.
        8 Estate of Juanita Jackson v. Briar Hill, Inc., No. 53-2004CA-003229 (Fla. Cir. Ct.
        filed July 30, 2004), in the Circuit Court of Polk County, Florida.
        9 Estate of Elvira Nunziata v. Pinellas Park Nursing Home, Inc., No. 05-8540CI (Fla.
        Cir. Ct. filed Dec. 23, 2005), in the Circuit Court of Pinellas County, Florida.
        10 Estate of Joseph Webb v. Gainesville Health Center, Inc., No. 01-06-CA-2418 (Fla.
        Cir. Ct. filed June 16, 2006), in the Circuit Court of Alachua County, Florida.
        11 Estate of James Henry Jones v. TFN Health Care Investors, Inc., No. 06-06672 (Pa.
        Ct. Com. Pl. filed July 17, 2006), in the Court of Common Pleas of Montgom-
        ery County, Pennsylvania.
        12 Estate of Opal Lee Sasser v. Briar Hill, Inc., No. 06CA-3511 (Fla. Cir. Ct. filed
        Sept. 6, 2006), in the Circuit Court of Polk County, Florida.
        13 Estate of Arlene Townsend v. Briar Hill, Inc., No. 53-2009CA-001025 (Fla. Cir.
        Ct. filed January 29, 2009), in the Circuit Court of Polk County, Florida.
        14 We refer to the cases in short-hand, e.g., Jackson, Nunziata, etc.
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         10                          Opinion of the Court                        21-10587

                Within a matter of weeks of her appointment, the Trustee
         became aware of the circumstances that led to Wilkes ﬁling the
         Chapter 7 petition against FLTCI on December 5, 2011, and some
         of the untoward legal consequences that resulted from ﬁling the
         petition against FLTCI instead of THMI. Importantly, the Trustee
         learned:
         (1)    On July 22, 2010, an “empty-chair” jury trial 15 was held in
         Jackson, 16 and the plaintiﬀ obtained verdicts—and then judg-
         ments—of $55 million against each of THI and THMI. 17 Three

         15 An empty-chair trial occurs when the defendant does not participate in the
         trial. In Jackson, defense counsel for THI and THMI—Quintairos, Prieto,
         Wood & Boyer, P.A.—moved the court on April 29, 2010, for leave to with-
         draw as counsel for THI and THMI. The state trial court heard their motion
         at a pretrial conference on May 18 and granted the motion on June 4.
         16 The case was tried on the Jackson Estate’s ﬁfth amended complaint ﬁled on
         July 31, 2009. The defendants were: Briar Hill, Inc. (the owner and operator
         of Integrated Health Services at Auburndale a/k/a Auburndale Oaks
         Healthcare Center, the nursing home in which Juanita Jackson once resided);
         Lyric Health Care Holdings III, Inc; Lyric Health Care LLC; TFN Healthcare
         Investors, LLC; IHS Acquisition No. 153, Inc.; Alliance Health Services, Inc.;
         Integrated Health Services, Inc.; THMI; THI; Daniel H. Beeler; Richard
         Kuhlmeyer; Rebecca Bachman; and Barbara Brown (the director of nursing at
         Auburndale Oaks Healthcare Center). Auburndale Oaks and Lyric played a
         role in the Probate Estates’ motion to disqualify Shumaker as discussed infra
         part IV.
         17 The Florida Second District Court of Appeal subsequently referred to the
         judgments as “default judgment[s]” handed down “[a]fter [the plaintiff]
         settl[ed] with eleven defendants.” Fundamental Long Term Care Holdings, LLC
         v. Estate of Jackson ex rel. Jackson-Platts, 110 So. 3d 6, 7 (Fla. 2d Dist. Ct. App.
         2012).
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         21-10587                   Opinion of the Court                              11

         weeks later, on August 13, Wilkes, in an eﬀort to discover THI and
         THMI’s assets to satisfy the $55 million judgments, moved the trial
         court pursuant to Florida Rule of Civil Procedure 1.560(b) 18 for an
         order requiring THI and THMI to complete Form 1.977 as required
         by that rule. The state trial court granted the motion four days
         later. Over the next three months, Wilkes noticed several deposi-
         tions in aid of execution but was unable to discover enough assets
         to satisfy the judgments.
         (2)     By December 2010, Wilkes discovered why it was unable to
         obtain satisfaction of the Jackson Estate’s $55 million judgment
         against THMI. Those in control of THMI had THMI transfer its
         assets to Fundamental Long Term Care Holdings, LLC (“FLTCH”)
         in March 2006, in the execution of a fraudulent “bust-out” scheme

         18 Rule 1.560 states in pertinent part:
                 (a) In General. In aid of . . . execution the judgment creditor
                 or the successor in interest, when the interest appears of rec-
                 ord, may obtain discovery from any person, including the
                 judgment debtor, in the manner provided in these rules.
                 (b) Fact Information Sheet. In addition to any other discov-
                 ery available to a judgment creditor under this rule, the court,
                 at the request of the judgment creditor, shall order the judg-
                 ment debtor . . . to complete form 1.977, including all required
                 attachments, within 45 days of the order or such other reason-
                 able time as determined by the court. Failure to obey the order
                 may be considered contempt of court.
         Fla. R. Civ. P. 1.560.
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         12                          Opinion of the Court                            21-10587

         that rendered THMI judgment-proof. 19 To obtain satisfaction of
         the $55 million judgment against THMI, the Jackson Estate would
         have to sue FLTCH and any other entities that received THMI’s
         assets as part of the bust-out scheme (collectively, the “Targets”) as
         fraudulent transferees under Florida’s version of the Uniform
         Fraudulent Transfer Act (the “UFTA”). 20
         (3)    The prescriptive period for bringing an action under Flor-
         ida’s UFTA is four years. See Fla. Stat. § 726.110. 21 Florida’s UFTA

         19 The bust-out scheme is discussed at length infra part II.B.
         20 Florida’s UFTA, Fla. Stat. § 726.101 et seq., states in relevant part:
                 (1) A transfer made . . . by a debtor is fraudulent as to a credi-
                 tor, whether the creditor’s claim arose before or after the trans-
                 fer was made . . . if the debtor made the transfer . . . :
                 (a) With actual intent to hinder, delay, or defraud any creditor
                 of the debtor; or
                 (b) Without receiving a reasonably equivalent value in ex-
                 change for the transfer . . . and the debtor:
                 ...
                 2. Intended to incur, or believed or reasonably should have be-
                 lieved that he or she would incur, debts beyond his or her abil-
                 ity to pay as they became due.
         Fla. Stat. § 726.105. As indicated infra, the parties and the Bankruptcy Court
         agreed to apply the Florida UFTA rather than the comparable statutes of New
         York, Pennsylvania, Delaware, or Maryland.
         21 Section 726.110 states in relevant part:
                 A cause of action with respect to a fraudulent transfer . . . un-
                 der ss. 726.101-726.112 is extinguished unless action is
                 brought:
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         21-10587                    Opinion of the Court                                   13

                                                                          22
         has a statute of repose, not a statute of limitations. The four-year
         period in which the Jackson Estate could sue FLTCH and the Tar-
         gets expired in March 2010. Nonetheless, under Florida’s UFTA,
         the prescriptive period would extend for one year following the

                 (1) Under s. 726.105(1)(a), within 4 years after the transfer was
                 made . . . or, if later, within 1 year after the transfer . . . was or
                 could reasonably have been discovered by the claimant.
         22 In National Auto Service Centers, Inc. v. F/R 550, LLC, the Florida Second Dis-
         trict Court of Appeal characterized Fla. Stat. § 726.110 as a statute of repose.
         192 So. 3d 498, 509 (Fla. 2d Dist. Ct. App. 2016). Because the text of Fla. Stat.
         § 726.110 refers to extinguishing a cause of action rather than barring the rem-
         edy, the court of appeal concluded that Fla. Stat. § 726.110 is a statute of repose
         based on its plain text. Id. at 510. In CTS Corp. v. Waldburger, the United States
         Supreme Court noted that statutes of limitations are subject to equitable toll-
         ing, but statutes of repose are not and “generally may not be tolled, even in
         cases of extraordinary circumstances beyond a plaintiff’s control.” 573 U.S. 1,
         9, 134 S. Ct. 2175, 2183 (2014). The Supreme Court explained that because
         statutes of repose dictate the time period after which a defendant will not face
         liability, equitable tolling is not applicable:
                 Equitable tolling is applicable to statutes of limitations because
                 their main thrust is to encourage the plaintiff to pursu[e] his
                 rights diligently, and when an extraordinary circumstance pre-
                 vents him from bringing a timely action, the restriction im-
                 posed by the statute of limitations does not further the stat-
                 ute’s purpose. . . . But a statute of repose is a judgment that
                 defendants should be free from liability after the legislatively
                 determined period of time, beyond which the liability will no
                 longer exist and will not be tolled for any reason.
         Id. at 10, 134 S. Ct. at 2183 (alteration in original) (internal quotation marks
         and citations omitted). This Court has cited Waldburger favorably for the prop-
         osition that statutes of repose are not subject to equitable tolling. See Sec’y,
         U.S. Dep’t of Labor v. Preston, 873 F.3d 877, 883–84 (11th Cir. 2017).
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         14                        Opinion of the Court                       21-10587

         Jackson Estate’s discovery of the fraudulent transfer. Wilkes dis-
         covered the bust-out scheme on or before December 10, 2010, so
         the Jackson Estate had—at the latest—until December 10, 2011, to
         sue FLTCH and the Targets to obtain satisfaction of the Estate’s
         $55 million judgment against THMI. 23

         23 The fraudulent transfer occurred in New York City on March 28, 2006. A
         New York statute provided a cause of action for voiding the transfer. N.Y.
         Debt. & Cred. Law § 273. The statute did not have a prescriptive period, so
         New York courts used the prescriptive period applicable to actions based on
         fraud, N.Y. C.P.L.R. § 213, as the time bar. Under § 213, suit had to be brought
         “six years from the date the cause of action accrued” or, if later, “two years
         from the time the plaintiff . . . discovered the fraud, or could with reasonable
         diligence have discovered it.” N.Y. C.P.L.R. § 213(8). Unlike Florida, where
         the UFTA prescriptive period was a statute of repose, New York courts con-
         sidered the § 213 prescriptive period to be a statute of limitations. See In re
         Borriello, 329 B.R. 367, 372 (Bankr. E.D.N.Y. 2005). As it turned out, the Bank-
         ruptcy Court applied the Florida UFTA to THMI’s fraudulent transfer of its
         assets.
                 The Bankruptcy Court did so on March 20, 2014, in ruling on the suf-
         ficiency of the fraudulent transfer claims asserted in the second amended com-
         plaint which the Probate Estates filed in the adversary proceeding they initi-
         ated against FLTCH and 15 defendants on October 1, 2013. See infra part III.
         One of the Bankruptcy Court’s rulings denied the defendants’ motions to dis-
         miss the claims as time-barred. The Bankruptcy Court treated the time bar as
         an affirmative defense and thus upheld the sufficiency of the Probate Estates’
         fraudulent transfer claims. In deciding which state law governed the period
         for bringing fraudulent transfer claims, the Bankruptcy Court said:
                There appears to be a dispute about which law applies to the
                Plaintiffs’ fraudulent transfer claims. According to the Plain-
                tiffs, the law of Delaware, Florida, Maryland, and New York
                apply. But the Plaintiffs acknowledge the laws of those states
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         21-10587                  Opinion of the Court                               15

         (4)     Once Wilkes discovered that it had been unable to obtain
         satisfaction of the Jackson Estate’s judgment against THMI be-
         cause of the bust-out scheme, it had two options. Either the Jack-
         son Estate, as a THMI judgment creditor, could sue FLTCH and
         the Targets pursuant to the applicable state fraudulent transfer law,
         or it could put THMI into Chapter 7 bankruptcy. A trustee of
         THMI’s estate, then, as a hypothetical THMI judgment creditor,
         could utilize the “strong arm” power provided by the Bankruptcy
         Code 24 and sue the transferees of THMI’s assets pursuant to the
         same state fraudulent transfer law.

                contain substantially similar elements. So the Court will, as
                Ventas suggests, analyze the claims under Florida law.
         In re Fundamental Long Term Care, Inc., 507 B.R. 359, 380 n.25 (Bankr. M.D. Fla.
         2014). The Bankruptcy Court applied Florida law without objection. In the
         end, it did not matter whether Florida or New York law governed. The fraud-
         ulent transfer claims were either extinguished (under Florida law) or time-
         barred (under New York law).
         2411 U.S.C. § 544 provides in relevant part:
                (a) The trustee shall have, as of the commencement of the
                case, and without regard to any knowledge of the trustee or of
                any creditor, the rights and powers of, or may avoid any trans-
                fer of property of the debtor or any obligation incurred by the
                debtor that is voidable by–
                (1) a creditor that extends credit to the debtor at the time of
                the commencement of the case, and that obtains, at such time
                and with respect to such credit, a judicial lien on all property
                on which a creditor on a simple contract could have obtained
                such a judicial lien, whether or not such a creditor exists.
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         16                          Opinion of the Court                         21-10587

                Wilkes pursued neither option. Instead, on December 10,
         2010, Wilkes moved the Jackson state court for leave to implead two
         of the Targets—Rubin Schron and General Electric Capital Corpo-
         ration (“GECC”) 25—pursuant to Fla. Stat. § 56.29, 26 for the purpose

         As the Bankruptcy Court for the Southern District of New York previously
         explained,
                 Section 544(a) of the [Bankruptcy] Code clothes the trustee
                 with the mantle of a hypothetical judicial lien creditor, unsat-
                 isﬁed execution creditor, and a bona ﬁde purchase for value as
                 of the date of the ﬁling of the bankruptcy petition. While it is
                 federal law which provides the trustee with his “strong arm”
                 powers, his exercise of those powers is controlled by the sub-
                 stantive law of the jurisdiction governing the property in ques-
                 tion; here, the law of New York.
         In re Roman Crest Fruit, Inc., 35 B.R. 939, 946–47 (Bankr. S.D.N.Y. 1983) (empha-
         sis added) (citing In re Euro-Swiss Int’l Corp., 33 B.R. 872, (Bankr. S.D.N.Y. 1983).
         25 Wilkes believed that GECC, which was a secured creditor of THI and
         THMI, may have received loan payments from FLTCH and that Schron was
         one of FLTCH’s owners.
         26 In 2010, § 56.29 provided in relevant part:
                 (1) When any person or entity holds an unsatisﬁed judgment
                 or judgment lien obtained under chapter 55, the judgment
                 holder or judgment lienholder may ﬁle an aﬃdavit so stating,
                 identifying, if applicable, the issuing court, the case number,
                 and the unsatisﬁed amount of the judgment or judgment lien,
                 including accrued costs and interest, and stating that the exe-
                 cution is valid and outstanding, and thereupon the judgment
                 holder or judgment lienholder is entitled to these proceedings
                 supplementary to execution.
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         21-10587                   Opinion of the Court                                 17

         of pursuing THMI’s assets. The state court granted the motion
         and entered an order on December 21, 2010, requiring Schron and
         GECC to show cause why they should not be held liable for the
         payment of the $55 million judgment entered against THMI.
         Schron and GECC removed the § 56.29 proceeding to the United

                (2) On such plaintiﬀ’s motion the court shall require the de-
                fendant in execution to appear before it . . . at a time and place
                speciﬁed by the order in the county of the defendant’s resi-
                dence to be examined concerning his or her property.
                ...
                (4) Testimony shall be under oath, shall be comprehensive and
                cover all matters and things pertaining to the business and ﬁ-
                nancial interests of defendant which may tend to show what
                property he or she has and its location. Any testimony tending
                directly or indirectly to aid in satisfying the execution is admis-
                sible. A corporation must attend and answer by an oﬃcer who
                may be speciﬁed in the order. Examination of witnesses shall
                be as at trial and any party may call other witnesses.
                (5) The judge may order any property of the judgment debtor,
                not exempt from execution, in the hands of any person or due
                to the judgment debtor to be applied toward the satisfaction
                of the judgment debt.
                (6)
                ...
                (b) When any . . . transfer . . . of personal property has been made
                or contrived by defendant to delay, hinder or defraud creditors,
                the court shall order the . . . transfer . . . to be void and direct
                the sheriﬀ to take the property to satisfy the execution.
         Fla. Stat. § 56.29 (eﬀective June 17, 2005–June 30, 2014) (emphasis
         added).
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         18                        Opinion of the Court                      21-10587

         States District Court for the Middle District of Florida on Decem-
         ber 30, 2010, on the ground that the proceeding was a separate
         cause of action, not a proceeding ancillary to Jackson. 27
                Wilkes moved to remand the case under the theory that, un-
         der Florida law, a § 56.29 proceeding was “a supplementary pro-
         ceeding . . . and thus was not removable.” Jackson-Platts v. Gen. Elec.
         Cap. Corp., 727 F.3d 1127, 1132 (11th Cir. 2013). On September 16,
         2011, the District Court, on Wilkes’s motion, remanded the pro-
         ceeding to the state trial court. Schron and GECC timely appealed.
         Id.at 1133. We reversed the District Court. Id. at 1140. 28
                On May 16, 2011, Wilkes moved the Jackson state court for
         leave to implead FLTCH and 14 other Targets under § 56.29 for the

         27 The defendants removed the case under 28 U.S.C. § 1441, asserting diversity
         jurisdiction under 28 U.S.C. § 1332.
         28 The question presented to this Court in Jackson-Platts was whether a § 56.29
         proceeding was ancillary to the underlying case, as Wilkes argued, or an inde-
         pendent cause of action like a case brought under Florida’s UFTA. Jackson-
         Platts v. Gen. Elec. Cap. Corp., 727 F.3d 1127, 1130 (11th Cir. 2013). We con-
         cluded that the Florida courts treated a § 56.29 proceeding as a separate cause
         of action as if brought under Florida’s UFTA:
                 [T]he substance of the [Jackson] Estate’s legal claims is gov-
                 erned by Florida’s [UFTA], which is undoubtedly a substantive
                 statute that imposes liability. . . .
                 Indeed, had the Estate sued [GECC] and Schron in state court
                 under the [UFTA], the lawsuit plainly would have been a “civil
                 action” under [28 U.S.C.] § 1441.
         Id. at 1137.
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         21-10587                Opinion of the Court                         19

         purpose of asserting fraudulent transfer claims against them. 29
         The motion also sought to join FLTCI as a defendant in the case.
         The state court granted the motion on May 18 and promptly issued
         an order requiring FLTCH and the Targets to show cause, thus
         placing the liability burden on the defendants. FLTCI did not ap-
         pear in response to the show cause order, so on September 13, 2011,
         the state court—treating FLTCI as an original defendant in the
         case—entered an amended judgment making FLTCI jointly and
         severally liable with THI and THMI for their respective $55 million
         judgments—$110 million total.
                The Targets named in Wilkes’s May 16 motion objected on
         several grounds, including that they were beyond the reach of the
         Florida long-arm statute and that the state court lacked personal
         jurisdiction over them. The state court overruled their objections
         and granted Wilkes’s motion. The Targets appealed the jurisdic-
         tional ruling to the Florida Second District Court of Appeal, and
         on November 28, 2012, that court aﬃrmed the trial court’s ruling
         and remanded the case for further proceedings. Fundamental Long

         29 In addition to FLTCH, Wilkes’s motion sought leave to proceed against
         Fundamental Administrative Services, LLC (“FAS”); THI-Baltimore, Inc.;
         GTCR GolderRauner LLC; GTCR Partners VI, L.P.; Troutman Sanders LLP;
         Murray Forman; Leonard Grunstein; Edgar Jannotta; and Concepcion, Sexton
         & Martinez, P.A. Concepcion, Sexton & Martin was a Florida law firm, and
         its presence eliminated the possibility of diversity jurisdiction.
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         20                        Opinion of the Court                    21-10587

         Term Care Holdings, LLC v. Estate of Jackson ex rel. Jackson-Platts, 110
         So. 3d 6, 11 (Fla. 2d Dist. Ct. App. 2012). 30
                On December 5, 2011, Wilkes looked to the Bankruptcy
         Court for the Middle District of Florida for assistance. Wilkes had
         the Jackson Estate ﬁle an involuntary petition for Chapter 7 relief
         against FLTCI, not THMI. 31 Wilkes attached the Jackson Estate’s
         $110 million judgment against FLTCI to the petition. As of the
         date of ﬁling, the Jackson Estate was the only estate with a ﬁnal
         state court judgment.
                               *              *               *
                                        Commentary
                The record does not reveal the reason Wilkes selected De-
         cember 5, 2011, as the date for ﬁling the Chapter 7 petition against
         FLTCI. It could have been that the one-year extension provided by
         Fla. Stat. § 726.110 for ﬁling a fraudulent transfer action against
         FLTCH and the Targets was about to expire. As previously dis-
         cussed, that one-year period began at some point prior to Decem-
         ber 10, 2010, when Wilkes, having learned about the transfer of
         THMI’s assets to FLTCH, moved the Jackson court for leave to

         30 The Trustee, and later Shumaker, were of course unaware of the Second
         District Court of Appeal’s decision until late 2012. From Shumaker and the
         Trustee’s point of view, a § 56.29 proceeding—like the one brought against
         Schron and GECC—would be useless as a means of collecting on the Jackson
         Estate’s judgment against THMI.
         31 Wilkes filed a formal appearance for the Jackson Estate the same day along
         with Stichter, Riedel, Blain & Prosser, P.A.
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         21-10587                  Opinion of the Court                               21

         implead Schron and GECC as fraudulent transferees pursuant to
         § 56.29. Wilkes may have thought that a potential trustee of
         FLTCI’s Chapter 7 estate, exercising a trustee’s strong-arm power
         as a hypothetical FLTCI judgment creditor, could pursue FLTCH
         and the Targets with an UFTA cause of action—the same cause of
         action the Jackson Estate could bring against the transferees in state
         court. 32 For that potential trustee to pursue the transferees as a
         hypothetical FLTCI creditor, the Bankruptcy Court would have to
         treat FLTCI and THMI as one entity. Treating them as one could
         not have been part of Wilkes’s litigation strategy at that time. Its
         steadfast position was that FLTCI and THMI were entirely separate
         entities. Wilkes had to assume that position to avoid violating the
         automatic stay that issues as a result of ﬁling a Chapter 7 petition
         pursuant to 11 U.S.C. § 362(a).
                So why did Wilkes put FLTCI into bankruptcy instead of
         THMI? The record yields several possibilities. One was that Wilkes
         wanted to continue prosecuting the Probate Estates’ wrongful
         death actions in state court where Wilkes could seek multimillion-
         dollar jury verdicts. If THMI were in bankruptcy, the automatic
         stay would bring an end to the state court litigation, and the pros-
         ecution of the Probate Estates’ wrongful death actions would have
         to move to the Bankruptcy Court in the form of wrongful death
         claims against THMI’s estate, the value of which would be decided

         32 Or a federal district court exercising diversity jurisdiction under 28 U.S.C.
         § 1332.
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         22                         Opinion of the Court                        21-10587

         by the Bankruptcy Court. See 11 U.S.C. § 502(a). 33 Doing so would
         diminish the value of the claims, and they would likely be worth
         signiﬁcantly less than they would be before a jury.
                A second possible reason for putting FLTCI, rather than
         THMI, into bankruptcy could have been the assistance the trustee
         of the bankruptcy estate could provide Wilkes in its prosecution of
         the Probate Estates’ actions in state court. The scope of the evi-
         dence the trustee would be able to discover in marshalling FLTCI’s
         assets would likely exceed what Wilkes could obtain under state
         discovery rules. Access to what the trustee uncovered would aid
         Wilkes in prosecuting the Probate Estates’ claims—and would be
         helpful to use later in post-judgment proceedings supplementary,
         such as impleading targets to collect judgments.
                In exchange for the freedom to have their wrongful death
         actions prosecuted to the hilt, the Probate Estates paid a price.
         They gave up their fraudulent transfer claims against FLTCH and
         the Targets under Florida’s UFTA since those claims became “ex-
         tinguished” on or before December 10, 2011. As things turned out,

         33 11 U.S.C. § 502(a) states in relevant part:
                 (a) A claim or interest, proof of which is ﬁled under section
                 501 of this title, is deemed allowed, unless a party in inter-
                 est . . . objects.
                 (b) . . . [I]f such objection to a claim is made, the court, after
                 notice and a hearing, shall determine the amount of such
                 claim in lawful currency of the United States as of the date of
                 the ﬁling of the petition, and shall allow such claim in such
                 amount.
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         21-10587                   Opinion of the Court                               23

         though, the Trustee and her special litigation counsel uncovered
         evidence suﬃcient to enable the FLTCI estate to make out causes
         of action against FLTCH and aligned Targets under theories of law
         other than those the UFTA codiﬁes.
                                *               *                *
                 The Jackson, Nunziata, and Webb Estates ﬁled claims
         against the Debtor’s—FLTCI’s—estate on February 22, 2012, in the
         sums of $110 million, $200 million, and $900 million respectively. 34
         The Jones, Townsend, and Sasser Estates ﬁled claims against the
         Debtor’s estate on March 27, 2012, in the sums of $200 million
         each. 35 With the exception of the Jackson Estate, none of the Pro-
         bate Estates had a claim against the Debtor. All of their claims were
         based on THMI’s (and THI’s) negligence. Nonetheless, Wilkes, as
         an oﬃcer of the court, in ﬁling claims against the Debtor’s estate
         that appeared to be against THMI rather than the Debtor, eﬀec-
         tively represented that the claims against the Debtor were derivative

         34 At the time the Chapter 7 petition was filed, only the Jackson Estate had a
         final state court judgment. As of March 6, 2013, however, these three claims
         were all based on state court judgments.
         35 On March 6, 2013, the cases of these three Probate Estates were pending in
         state court. In Townsend, THI’s counsel had been retained by the THI Re-
         ceiver after defense counsel (for THI and THMI) had withdrawn per instruc-
         tions in April 2010. On October 17, 2012, THI, having acquired new counsel,
         filed a “Motion to Disqualify” the trial judge on the ground of bias against THI.
         Defendant Trans Healthcare, Inc.’s Motion to Disqualify and Supporting
         Memorandum of Law, Estate of Arlene Townsend v. Briar Hill, Inc., No. 53-
         2009CA-001025, 2012 WL 8139948 (Fla. Cir. Ct. Oct. 17, 2012)
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         24                     Opinion of the Court                 21-10587

         of THMI’s liability. At least, according to the Bankruptcy Court,
         that is how the Trustee interpreted Wilkes’s representations. In re
         Fundamental Long Term Care, Inc., 500 B.R. 147, 149–50 (Bankr. M.D.
         Fla. 2013). If FLTCI’s liability was in fact derivative of THMI’s lia-
         bility, Wilkes’s continued litigation of the Probate Estates’ cases
         ﬁled in state court pre-petition would appear to violate the auto-
         matic stay because the litigation had the eﬀect of increasing the
         Debtor’s liability post-petition.
                 But Wilkes’s litigation strategy throughout had been, and
         continued to be, that the Debtor—FLTCI—and THMI were sepa-
         rate entities: a parent corporation and an independent subsidiary.
         Accordingly, the Probate Estates’ claims against the Debtor’s estate,
         if legitimate, must have been based on a theory other than THMI’s
         conduct, because if the claims were based on a theory that ren-
         dered the Debtor legally responsible for THMI’s conduct prior to
         December 5, 2011, Wilkes’s continued litigation of the Probate Es-
         tates’ wrongful death actions against THMI or its post-judgment
         proceedings supplementary as a creditor of THMI would be barred
         by the automatic stay in FLTCI’s bankruptcy.
                In sum, each Probate Estate had a legitimate claim against
         two entities. First, each Estate had a claim against the Debtor’s es-
         tate that existed pre-petition against FLTCI. If allowed, the Bank-
         ruptcy Court would “determine the amount” of such a claim. 11
         U.S.C. § 502(b). Each Estate also had a claim against THMI. The
         two claims could not both be based on the theory pursued in the
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         21-10587                Opinion of the Court                       25

         state court wrongful death actions without violating the automatic
         stay.
                             *             *             *
                                     Commentary
                As it turned out, the Bankruptcy Court eventually treated
         THMI as part of the Debtor’s estate and the Probate Estates as hav-
         ing ﬁled claims against THMI’s (nonexistent) estate. The Bank-
         ruptcy Court also impliedly aﬀorded the Probate Estates standing,
         as THMI creditors, to join the Trustee (now in eﬀect acting as trus-
         tee of two bankruptcy estates—FLTCI’s and THMI’s) in prosecut-
         ing the surviving claims of the Second Amended Complaint in the
         adversary proceeding initiated by Wilkes on October 1, 2013. See
         infra part III. The claims were in two groups. One group consisted
         of the Trustee’s strong-arm claims against FLTCH and several Tar-
         gets as fraudulent transferees of THMI’s assets under the Florida
         UFTA. The other group consisted of the Trustee’s claims against
         the same defendants as the perpetrators of a variety of torts and
         breaches of duty committed against THMI and as the successors in
         interest of THMI.
                             *             *             *
                On April 2, 2012, after the Probate Estates’ claims against the
         Debtor’s estate had been ﬁled, Berger Singerman LLP (“Singer-
         man”) appeared in the case as the Debtor’s counsel and moved the
         Bankruptcy Court to convert the Debtor’s Chapter 7 case to a case
         under Chapter 11 of the Bankruptcy Code. The motion, which
         stated that FLTCI and THMI had ceased operations six years ago,
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         26                        Opinion of the Court                      21-10587

         represented—among other things—that the $110 million judgment
         the Jackson Estate obtained against FLTCI in Jackson was invalid
         because FLTCI never appeared in the case and thus was not within
         the state trial court’s jurisdiction. Consequently, the Jackson Estate
         was not a valid judgment creditor of FLTCI, and its ﬁling of the
         Chapter 7 petition was eﬀectively a nullity. Assuming the petition’s
         validity, the motion stated that the “Trustee’s strategy and actions
         [we]re being orchestrated by Wilkes, for the sole beneﬁt of its cli-
         ents and the ﬁrm itself through the ultimate recovery of astronom-
         ical contingency fees” and that Wilkes was “using the Bankruptcy
         Case and . . . the powers of the Chapter 7 Trustee to deny THMI
         representation” in the cases Wilkes had brought against it. 36
                On April 3 and 4, after receiving Singerman’s motion to con-
         vert, the Trustee, armed to a great extent with the information
         Wilkes provided her, ﬁled motions for leave to conduct Rule 2004
         examinations of some of the individuals Wilkes had impleaded in
         Jackson pursuant to Fla. Stat. § 56.29—including attorneys at Trout-
         man Sanders, LLP (“Troutman”), the law ﬁrm that created the legal

         36 If the Bankruptcy Court granted Singerman’s motion, FLTCI would func-
         tion as a debtor-in-possession with the rights and powers of a Chapter 11 trus-
         tee. In that capacity, FLTCI itself would be required to perform all except the
         investigative functions and duties of a bankruptcy trustee. See 11 U.S.C.
         § 1107. These duties would include accounting for property, examining and
         objecting to claims, and filing informational reports as required by the court.
         Id. § 704. In that capacity, FLTCI would play a large part in determining who
         would be examined under Rule 2004—and to what extent.
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         21-10587                     Opinion of the Court                               27

         structure for the bust-out scheme, and other individuals presuma-
         bly having knowledge of the disposition of THMI’s assets. 37
                Singerman immediately objected to the Trustee’s motions.
         Picking up where it left oﬀ in its motion to convert, Singerman had
         this to say about Wilkes’s involvement in the Trustee’s decision-
         making:
                 14. Based on the nature and scope of the 2004 Mo-
                 tions, it is abundantly clear that the Trustee continues
                 to advance a litigation strategy hoisted on her by
                 [Wilkes] on behalf of the Petitioning Creditor and
                 Claimants in this case to deprive the Debtor [FLTCI] and
                 [THMI] of legal representation and available defenses. At
                 the same time, the Trustee is improperly using . . . the

         37 Rule 2004 states in subsection (b) in relevant part:
                 The examination of an entity under this rule or of the debtor
                 under § 343 of the [Bankruptcy] Code may relate only to the
                 acts, conduct, or property or to the liabilities and financial con-
                 dition of the debtor, or to any matter which may affect the ad-
                 ministration of the debtor's estate, or to the debtor’s right to a
                 discharge.’
         Fed. R. Bankr. P. 2004(b). In subsection (c), Rule 2004 states in relevant part:
                 The attendance of an entity for examination and for the pro-
                 duction of documents or electronically stored information,
                 whether the examination is to be conducted within or without
                 the district in which the case is pending, may be compelled as
                 provided in Rule 9016 for the attendance of a witness at a hear-
                 ing or trial.
         Fed. R. Bankr. P. 2004(c).
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         28                    Opinion of the Court                21-10587

               2004 Motions to engage in broad, “ﬁshing expedition”
               discovery that the Wilkes plaintiﬀs have been unable
               to obtain in any other forum.
               15. Tellingly, the 2004 Motions each request that the
               [Bankruptcy] Court order that “interested creditors”
               be permitted to attend the examinations and “make
               inquiry.” There is no doubt that the intent of that re-
               quest is to give Wilkes a broad discovery platform to
               pursue non-debtor targets in non-bankruptcy forums.
               The request certainly has nothing to do with the prep-
               aration of the Debtor’s Schedules or Statements of
               Financial Aﬀairs.
               ...
               18. Based on the foregoing, the Debtor respectfully
               submits that the [Bankruptcy] Court should deny the
               2004 Motions, without prejudice, or, alternatively, not
               adjudicate the 2004 Motions pending a ruling on the
               Motion to Convert.
         Debtor’s Objections to Motions of Chapter 7 Trustee for Rule 2004
         Examinations at 4–5, In re Fundamental Long Term Care, Inc., No.
         8:11-bk-22258 (Bankr. M.D. Fla. Apr. 5, 2012) (emphasis added)
         (footnote omitted).
                The Bankruptcy Court heard the Trustee’s Rule 2004 mo-
         tions on April 12, granted the motions with respect to the produc-
         tion of certain documents, and stated that it would consider the
         Debtor’s objections to the motions on June 6. On April 24, the
         Bankruptcy Court denied the Debtor’s motion to convert the case
         to a Chapter 11 proceeding.
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         21-10587               Opinion of the Court                      29

                            *             *             *
                                    Commentary
                 In sum, the Trustee, soon after her appointment, knew that
         Wilkes: (1) was unable to execute the Jackson judgment against the
         defendants in state trial court; (2) realized that THMI’s assets had
         been fraudulently transferred to FLTCH and the Targets; and (3)
         should have been aware of Florida’s UFTA and its four-year pre-
         scriptive period. That period began to run at the time of the bust-
         out scheme in March 2006. It therefore ran out by the time the
         Jackson Estate received a state court judgment on July 22,
         2012. But under the Florida UFTA discovery extension, Fla. Stat. §
         726.110, the Jackson Estate had one year from Wilkes’s discovery
         of the fraud, which occurred on or before December 10, 2012, to
         bring a fraudulent transfer action under Florida’s UFTA.
                 Still attempting to collect on the Jackson judgment, Wilkes
         tried to come to a solution. It ﬁrst tried to bring a Florida UFTA
         action via a § 56.29 motion to implead but was unable to obtain
         relief. Wilkes then tried a second option: petitioning for Chapter 7
         relief against FLTCI. Wilkes waited to ﬁle for this relief until De-
         cember 5, 2011—ﬁve days before the absolute latest the § 726.110
         discovery extension would have run for the Probate Estates’ UFTA
         claims against FLTCH and the Targets. But Wilkes did not place
         THMI in Chapter 7 bankruptcy—it petitioned the Bankruptcy
         Court to put FLTCI into Chapter 7 bankruptcy. Wilkes therefore
         allowed the one-year discovery extension to expire, thus extinguish-
         ing the Probate Estates’ claims for fraudulent transfer against
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         30                     Opinion of the Court                 21-10587

         THMI. As it turned out, the Trustee later discovered evidence that
         enabled the Probate Estates to sue FLTCH and the Targets as suc-
         cessors to THMI, holding them responsible for THMI’s debts, in-
         cluding the Probate Estates’ judgments.
                 Beyond the statute of repose issue, there was a further issue
         with Wilkes’s plan. FLTCI had no assets except THMI shares.
         FLTCI’s Trustee therefore could not pursue FLTCH and the Trus-
         tees under the UFTA because FLTCI was not itself guilty as a fraud-
         ulent transferor. So Wilkes’s strategy was two-fold: (1) have the
         Chapter 7 Trustee in possession of the THMI shares seek evidence
         of THMI causes of action against FLTCH and the Targets even
         though such causes of action are not actually property of the es-
         tate, thus using the Trustee as a discovery platform; and (2) allow
         the Trustee to obtain evidence Wilkes could use in § 56.29 proceed-
         ings to implead the Targets and other potential fraudulent transfer-
         ees in state court.
                                          II.
                                          A.
               On June 1, 2012, the Trustee moved the Bankruptcy Court
         to approve the employment of Steven M. Berman, a partner at Shu-
         maker, as special litigation counsel. The Bankruptcy Court granted
         the motion on June 5. The same day, Singerman (the Debtor’s
         counsel) moved the Bankruptcy Court to dismiss the Chapter 7
         case on several grounds, including that Wilkes was abusing the
         Chapter 7 process in seeking relief against a debtor it knew “ha[d]
         no business activity, no going concern value, and no employees.”
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         21-10587               Opinion of the Court                         31

         According to Singerman, Wilkes ﬁled the petition “to further its
         ﬁnancial interests in maximizing claims, and facilitating execution
         of default judgments, against the Debtor, THMI and other third
         parties regardless of the resulting prejudice to the estate.”
                Along with the motion to dismiss, Singerman ﬁled two
         other pleadings that complained that the Trustee, in assisting
         Wilkes’s prosecution of claims against THMI, was breaching her
         duty to maximize the Debtor’s estate by enhancing the value of
         THMI’s shares—which were assets of the Debtor’s estate. The ﬁrst
         pleading supplemented the Debtor’s objections to the Trustee’s
         motions for Rule 2004 examinations discussed above. The second
         pleading responded to the Trustee’s motion for a protective order
         regarding the notice of deposition the Debtor served on the Trus-
         tee on May 23.
                 The gist of the two ﬁlings was essentially two-fold. First, the
         $110 million judgment the Jackson court entered against FLTCI in
         the proceeding supplementary was invalid because that court
         lacked personal jurisdiction over FLTCI; therefore, the Jackson Es-
         tate lacked a valid judgment on which to base its Chapter 7 petition
         against FLTCI. Second, and as argued in Singerman’s motion to
         dismiss, the Trustee was breaching her duty to the Debtor’s estate
         in “acquiesce[ing] to Wilkes in connection with its unrelenting ef-
         forts to (mis)use this Chapter 7 case to further its ﬁnancial interests
         in maximizing claims, and facilitating execution of default judg-
         ments, against the Debtor, THMI and other third parties regardless
         of the resulting prejudice to the estate.”
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         32                        Opinion of the Court                     21-10587

                               *               *              *
                                         Commentary
                Singerman’s argument proceeds from two points. The ﬁrst
         is that THMI was part of the Debtor’s estate because THMI’s
         shares were FLTCI’s sole asset. The Trustee was attempting to
         maximize the value of THMI’s shares, and thus the value of the
         Debtor’s estate, so that the Jackson Estate’s claim (based on its $110
         million judgment against FLTCI) could be paid. The second point
         is contradictory. Instead of maximizing the value of THMI’s shares
         to the Debtor’s estate, the Trustee, in acquiescing to Wilkes’s pur-
         suit of judgments against THMI, was minimizing the value of the
         shares to the Debtor’s estate. 38
                               *               *              *
               Berman, on behalf of the Trustee, opposed the motion to
         dismiss in a response ﬁled on June 18. 39 The Trustee lamented that
         in her investigation into the assets of the Debtor’s estate, “the
         Debtor and related parties have uniformly and deﬁantly refused to
         produce [requested] documentation without broad conﬁdentiality

         38 The automatic stay issued in the FLTCI bankruptcy barred Wilkes from
         prosecuting any pre-petition claims against FLTCI in state court, or from oth-
         erwise increasing the liability of its bankruptcy estate. At the same time,
         Wilkes was not barred from prosecuting claims against THMI, which, if they
         resulted in judgments against THMI, would minimize the value of its shares
         as assets of the Debtor’s estate.
         39 Unless otherwise indicated, all of the Trustee’s pleadings were filed Shu-
         maker.
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         21-10587                  Opinion of the Court                              33

         agreements, all in derogation of th[e] [Bankruptcy] Court’s direc-
         tives and unquestionably clear statutory law.” Further, the Trustee
         noted that she “received no substantive responses to her infor-
         mation requests”—nothing but “rigorous opposition to avoid any
         ﬂow of even the most basic information” required.
                 In addition to the Trustee, the Probate Estates also opposed
         the Debtor’s motion to dismiss on several grounds. Among the
         reasons was that the Debtor had no standing to ﬁle the motion,
         “particularly over the opposition of the Creditors” 40—namely, the
         Probate Estates. Wilkes stated that “[t]wo of the Creditors, the Es-
         tate of Elvira Nunziata and the Estate of Joseph Webb, have un-
         stayed judgments against THMI. The remaining creditors, with
         the exception of the Estate of Jones,[] have default judgments as to
         liability against THMI.” 41
               Responding to the Probate Estates’ opposition to dismissal,
         the Debtor stated:
                [T]his case gives [the Probate Estates] no substantive
                right they do not already have. Their only aim in ﬁl-
                ing this case was to shop for a better forum for
                broader discovery that they cannot get in their chosen

         40 Wilkes appended this footnote to that statement: “[T]he Order for Relief is
         conclusive as to the Debtor that the claim of the Petitioning Creditor, the Es-
         tate of Juanita Jackson, is an undisputed, non-contingent claim that is owed by
         the Debtor.”
         41 The unstayed judgments that the Nunziata and Webb Estates obtained
         were the result of empty-chair trials in state court.
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         34                     Opinion of the Court                21-10587

               non-bankruptcy courts, which courts will, in any
               event, be the ultimate arbiters of the parties’ rights
               and defenses. This Court and its jurisdiction are being
               used as a pawn to gain information and for other stra-
               tegic litigation purposes, not for any legitimate bank-
               ruptcy purpose.
         Debtor’s Omnibus Reply to State Court Litigants’ and Trustee’s
         Oppositions to Debtor’s Motion to Dismiss Chapter 7 Case at 9–10,
         In re Fundamental Long Term Care, Inc., No. 8:11-bk-22258 (Bankr.
         M.D. Fla. June 21, 2012) (emphasis in original). Following an evi-
         dentiary hearing, the Bankruptcy Court denied the motion with-
         out prejudice on July 6, 2012.
                 At a hearing on June 29, 2012, the Bankruptcy Court in-
         structed Berman to confer with interested counsel and prepare a
         draft of an omnibus order establishing discovery procedures and
         protocol for the production of documents and the examination of
         witnesses. The Bankruptcy Court considered Berman’s draft, and
         on July 12, 2012, it incorporated parts of Berman’s draft into the
         Omnibus Order it entered. The Omnibus Order established the
         scope of the Trustee’s Rule 2004 examinations and stated that the
         Trustee should coordinate the date, time, and location of the ex-
         aminations to allow them to be completed by September 14, 2012.
         It provided that the examinations and consequent discovery could
         potentially include other business entities or assets in the Debtor’s
         estate.
               On July 19, 2012, the Trustee ﬁled a multi-count complaint
         for damages in the Circuit Court of Polk County, Florida—where
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         21-10587                  Opinion of the Court                               35

         the lawsuits brought by the Jackson, Sasser, and Townsend Estates
         had been ﬁled. 42 The complaint charged the defendants with: (1)
         legal malpractice in abandoning the defense of THI and THMI in
         Jackson; (2) legal malpractice in failing to respond on behalf of
         FLTCI to the Jackson court’s May 23, 2011, order to show cause,
         which allowed the state trial court to enter a $110 million default
         judgment against FLTCI; and (3) breach of ﬁduciary duties owed
         to THMI and FLTCI. 43 On July 20, 2012, the Trustee ﬁled another
         complaint in the Circuit Court of Polk County, charging the de-
         fendants with unauthorized practice of law in unlawfully control-
         ling or directing THMI’s defense in Jackson and in representing
         themselves as counsel for FLTCI. 44 The defendants in both cases
         timely removed the cases to the United States District Court for the
         Middle District of Florida. 45

         42 The complaint was filed against: FAS; Kristi Anderson (FAS in-house coun-
         sel); Alan Grochal, the THI Receiver; two law firms, Tydings & Rosenberg
         LLP and Quintairos, Prieto, Wood & Boyer, P.A.; and six lawyers of the re-
         spective firms.
         43 The filing of this lawsuit was no doubt prompted by the statements Singer-
         man made in the Debtor’s April 2 motion to convert the case to a Chapter 11
         proceeding and in the filings made on June 5, both referring to the entry of the
         $110 million default judgment against FLTCI.
         44 The defendants in this complaint were FAS, Anderson, and Christine Zack
         (FAS’s in-house counsel).
         45 The cases were removed to the District Court under 28 U.S.C. § 1441 based
         on diversity of citizenship.
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         36                           Opinion of the Court                         21-10587

                Three weeks later, on August 10, 2012, the Debtor—
         FLTCI—moved the Bankruptcy Court for leave to challenge the
         Jackson court’s $110 million judgment against it pursuant to Florida
         Rule of Civil Procedure 1.540(b)(4). 46 The Bankruptcy Court heard
         the motion on September 7 and denied it without prejudice in a
         September 25 order. 47 The Debtor renewed the motion on March
         6, 2013.

         46 Rule 1.540 states in pertinent part:
                 (b) Mistakes; Inadvertence; Excusable Neglect; Newly Dis-
                 covered Evidence; Fraud; etc. On motion and upon such
                 terms as are just, the court may relieve a party or a party’s legal
                 representative from a ﬁnal judgment, decree, order, or pro-
                 ceeding for the following reasons:
                 ...
                 (4) that the judgment, decree or order is void.
         Fla. R. Civ. P. 1.540.
         47 The dispositive portion of the order reads:
                 The Debtor’s Motion is DENIED without prejudice condi-
                 tioned on the Trustee (i) following through on obtaining an
                 extension of the deadline for filing a motion under Florida Rule
                 of Civil Procedure 1.540 in the action pending in Polk County
                 Circuit Court, styled Estate of Juanita Amelia Jackson v. Briar Hill,
                 Inc., et al., Case No. 2004-CA-3229; and (ii) meeting and con-
                 ferring in person with the [THI] Receiver, Alan Grochal.
         Order Denying Debtor’s Motion for Leave to Challenge Judgments
         and Claims at 1, In re Fundamental Long Term Care, Inc., No. 8:11-BK-
         22258 (Bankr. M.D. Fla. Sept. 7, 2012).
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         21-10587                 Opinion of the Court                          37

                 The Omnibus Order temporarily resolved the disputes re-
         sulting from the Trustee’s eﬀorts to conduct Rule 2004 examina-
         tions of several Targets. The Omnibus Order gave the Trustee the
         right to conduct discovery regarding: (i) the Debtor’s assets and li-
         abilities; (ii) control of the Debtor’s assets and operations; (iii) po-
         tential avoidance actions; and (iv) the possibility of including other
         business entities or assets in the Debtor’s bankruptcy estate. The
         Trustee’s mission, as she saw it, was to identify, secure, and recover
         hundreds of millions of dollars (if not more than one billion dol-
         lars) as the owner of THMI assets in the form of tort claims—in-
         cluding claims for legal malpractice, 48 breach of ﬁduciary duties,
         and fraud. According to the Bankruptcy Court, the Trustee’s mis-
         sion was “really no secret to anyone involved in this case. . . . [T]he
         Trustee . . . openly stated what her goal [wa]s.” In re Fundamental
         Long Term Care, Inc., 500 B.R. 147, 151 (Bankr. M.D. Fla. 2013).
                              *              *              *
                                       Commentary
                 The property of the Debtor’s bankruptcy estate included
         “all legal or equitable interests of the debtor in property,” 11 U.S.C.
         § 541(a)(1), such as causes of action belonging to the debtor. 5 Col-
         lier on Bankruptcy ¶ 541.07 (16th ed. 2022). The Debtor’s estate
         did not extend, however, to THMI’s assets, including THMI’s
         causes of action. See Kreisler v Goldberg, 478 F.3d 209, 214 (4th Cir.

         48 The multi-count lawsuits the Trustee filed in the Circuit Court of Polk
         County in July 2012 were part of the Trustee’s mission.
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         38                       Opinion of the Court                    21-10587

         2007) (“The fact that a parent corporation has an ownership inter-
         est in a subsidiary, however, does not give the parent any direct in-
         terest in the assets of the subsidiary.”) (emphasis in original); In re
         Com. Mortg. & Fin. Co., 414 B.R. 389, 395 (Bankr. N.D. Ill. 2009) (“As
         a general rule, property of the estate includes the debtor’s stock in
         a subsidiary, but not the assets of the subsidiary.”). As the owner
         of 100% of THMI’s stock, though, the Trustee had full control of
         THMI. In seizing THMI’s tort claims, which were the only assets
         THMI possessed, the Trustee treated THMI as if it were dissolved
         and its tort claims had become part of the Debtor’s estate. After
         the Bankruptcy Court consolidated FLTCI and THMI at the trial
         of the principal adversary proceeding in this case, THMI’s assets
         were part of the bankruptcy estate.
                                             B.
                The Rule 2004 examinations, coupled with information pro-
         vided by Wilkes and what Berman learned about the bust-out
         scheme, led the Trustee to ﬁle claims she believed aided her mis-
         sion. Before turning to the claims themselves, we explain the bust-
         out scheme. 49
                                             1.
              THI was incorporated under Delaware law in 1998.
         Through subsidiaries, it operated nursing homes, assisted living

         49 The description of the bust-out scheme draws on Chief Judge Williamson’s
         summary from the Bankruptcy Court’s opinion in In re Fundamental Long Term
         Care, Inc., 507 B.R. 359, 365–71 (Bankr. M.D. Fla. 2014).
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         21-10587               Opinion of the Court                       39

         facilities, and long-term acute care hospitals across the United
         States. THMI provided a wide variety of administrative services to
         THI’s operating subsidiaries.
                 A private equity group referred to as the “GTCR Group”
         provided THI’s initial funding. 50 Between 1998 and 2005, the
         GTCR Group invested $37 million of its own capital in THI. Ven-
         tas, Inc. (“Ventas”) loaned THI $55 million followed by another $22
         million, with the stock of THI and THMI serving as collateral.
         GECC eventually assumed the $55 million loan. The GTCR Group
         controlled THI’s Board of Directors and was instrumental in the
         company’s day-to-day management and administration.
                Early in 2003, the GTCR Group decided to increase THI’s
         nursing home operations. Integrated Health Services (“Inte-
         grated”), one of the nation’s largest nursing home operators, was
         in bankruptcy in Delaware, and the GTCR Group planned on ac-
         quiring its assets out of bankruptcy. To do that, the GTCR Group
         restructured THI. First, it created THI Holdings, LLC (“THI Hold-
         ings”), exchanging the GTCR Group’s 83% stock interest in THI
         for an equal percentage of THI Holdings’s shares. Second, THI
         Holdings created two new subsidiaries: THI of Baltimore, Inc.
         (“THI-Baltimore”) and THI of Baltimore Management, LLC
         (“THMI-Baltimore”). With the restructuring in place: (1) THI
         Holdings became the parent of two wholly owned subsidiaries,

         50 The GTCR Group consisted of GTCR VI Executive Fund; GTCR Fund VI,
         LP; GTCR Associates VI; GTCR Partners VI, LP; and GTCR Golder Rauner,
         LLC.
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         40                       Opinion of the Court                    21-10587

         THI and THI-Baltimore; (2) THI became the parent of the wholly
         owned subsidiary THMI; and (3) THI-Baltimore became the parent
         of the wholly owned subsidiary THMI-Baltimore.
                With this restructuring, the GTCR Group intended to repli-
         cate the old THI structure for holding the Integrated assets it
         planned on acquiring. THI-Baltimore, operating as THI had,
         would operate the acquired nursing homes, and THMI-Baltimore,
         functioning as THMI had, would provide the management services
         for the homes.
                But the GTCR Group failed to acquire the Integrated nurs-
         ing homes. It was outbid by ABE Briarwood (“Briarwood”). THI-
         Baltimore was not out of the picture for long, however. It was soon
         able to strike a deal with Briarwood because Briarwood was not a
         licensed nursing home operator. Briarwood leased or subleased
         the former Integrated homes to THI-Baltimore to operate. THI-
         Baltimore then contracted with THMI-Baltimore to provide the
         management services for the homes. THI-Baltimore would be
         proﬁtable, the GTCR Group thought, because the income gener-
         ated by its nursing home operations would more than oﬀset the
         rent it paid Briarwood and the management fees paid to THMI-
         Baltimore. 51

         51 THMI-Baltimore lacked a staﬀ, so it used THMI’s employees and equip-
         ment (and other assets) to provide management services to the newly acquired
         Integrated nursing homes. THMI therefore shared in the revenue THMI-Bal-
         timore received from THI-Baltimore for providing the services.
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         21-10587                Opinion of the Court                         41

                The arrangement with Briarwood coupled with THI’s oper-
         ations seemed successful. By mid-2003, THI was reporting gross
         annual revenues of $1 billion and a net annual income of $6 mil-
         lion. In reality, however, THI had sustained a $29 million loss and
         was on the verge of defaulting on the Ventas and GECC loans.
         GECC and Ventas therefore took steps to protect their positions.
                First, GECC and Ventas forced THI to enter into a series of
         forbearance agreements at a substantial cost in fees to THI. Sec-
         ond, GECC took control of THI’s bank accounts. Pursuant to the
         terms of the loan agreement between GECC and THI, THI’s cash
         ﬂowed through a series of lockboxes and sweep accounts. After
         GECC learned of misrepresentations in THI’s ﬁnancial reporting,
         GECC began “trapping cash” in the sweep accounts. It instructed
         the Bank of New York, which kept THI’s deposits, to capture all of
         the money held in THI’s accounts. THI gave GECC control of a
         large portion of its assets. At the same time, it deprived itself of
         the ability to pay its bills and jeopardized patient care in its nursing
         homes. A lawsuit brought against the GTCR Group, Edgar Jan-
         notta (associated with the GTCR Group), and THI alleged that
         they were conspiring to divert money loaned to certain nursing
         home facilities to pay the obligations of other facilities.
                By early 2006, THI and THMI were defendants in over 150
         lawsuits—among them, the wrongful death actions Wilkes had
         brought on behalf of the Jackson Estate in 2004 and the Nunziata
         Estate in 2005.
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         42                      Opinion of the Court                   21-10587

                As the Jackson litigation was progressing and other cases like
         it were about to be ﬁled, THI and THMI’s boards of directors con-
         sidered whether seeking protection in bankruptcy would be in the
         best interests of the companies, their employees, and their credi-
         tors. In January 2005, they authorized the companies to ﬁle for
         bankruptcy. The GTCR Group overruled their decision. After con-
         sulting counsel at Troutman, 52 the GTCR Group decided to take a
         diﬀerent approach and execute a bust-out scheme to preserve the
         THI conglomerate and keep its assets intact.
                                            2.
                 The bust-out scheme was carried out in three phases. The
         initial phase involved closing two transactions simultaneously in
         March 2006. In the ﬁrst transaction, THI Holdings sold THMI’s
         assets, as well as its shares of THI-Baltimore, to FLTCH for $9.9
         million—far less than their fair market value. As of January 2006,
         those assets had been valued at more than $183 million.
                In the second transaction, THI sold its shares of the now-
         assetless THMI 53 to FLTCI for $100,000. FLTCI therefore acquired
         all of THMI’s liabilities but none of its assets. Troutman—where
         Leonard Grunstein, who held an interest in FLTCH, 54 was a part-
         ner—had incorporated FLTCI just months before. FLTCI’s sole

         52 On July 1, 2020, Troutman Sanders merged with Pepper Hamilton to be-
         come Troutman Pepper Hamilton Sanders LLP.
         53 THI owned 100% of THMI’s issued and outstanding shares of stock.
         54 Murray Forman, an investment banker, also held an interest in FLTCH.
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         21-10587              Opinion of the Court                       43

         shareholder was Barry Saacks, an elderly graphic artist who was
         not aware that he owned FLTCI or that it acquired stock in THMI.
                After acquiring the THMI assets, FLTCH rebranded them
         and continued generating millions in proﬁts without the burden of
         THMI’s liabilities. Within six months, THMI-Baltimore changed
         its name to Fundamental Clinical Consulting, LLC (“FCC”) and
         took over the operations of the former Integrated nursing homes,
         and Fundamental Administrative Services, LLC (“FAS”) 55 was cre-
         ated to take over the administrative services under the manage-
         ment contracts previously held by THMI-Baltimore. All of THMI’s
         employees became employees of either FCC or FAS, depending on
         whether the employee provided operational aid, clinical support,
         or administrative services.
                THMI and FLTCI became defunct following the March 2006
         closings, but THI remained an active corporation until the GTCR
         Group launched the second phase of the bust-out scheme, winding
         down THI.
               The GTCR Group launched the second phase in November
         2007 when it sold a THI entity for $4.7 million. Three months later,
         the GTCR Group sold the remaining THI properties (except for
         one facility in Maryland) to Omega Healthcare Investors, Inc. and
         CommuniCare Health Services. As part of the latter transaction,
         CommuniCare acquired THI’s right to operate those properties.

         55 FLTCH was FAS’s sole member.
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         44                        Opinion of the Court                      21-10587

         The GTCR Group received nearly $48 million from the sale. The
         proceeds of the sales were used to pay oﬀ THI’s creditors.
                In January 2009, the GTCR Group had THI petition a Mar-
         yland state court on behalf of itself and 143 subsidiaries—but not
         THMI—for appointment of a receiver. The Maryland court
         granted THI’s petition and the same day appointed a receiver, who
         was subsequently replaced by Alan Grochal, an attorney in the law
         ﬁrm that ﬁled the petition. The purpose of the receivership was to
         obtain a stay in the litigation of Wilkes’s cases while the receiver-
         ship was ongoing.
                With the receivership underway, the GTCR Group executed
         the third—and ﬁnal—phase of the bust-out scheme: concealing the
         March 2006 transactions. The transactions had to be concealed
         long enough for the statute of limitations to run on a fraudulent
         transfer suit against FLTCH. 56 The prescriptive period for an action
         to void a fraudulent transfer was four years in Florida and Delaware
         and six years in New York. Prior to the trial of the adversary pro-
         ceeding in this case in October 2014, the parties—with the

         56 The lawyers counseling the GTCR Group apparently assumed that Wilkes
         would not pursue FLTCH until Wilkes had obtained a judgment in the earliest
         of the Probate Estate cases it had brought, Jackson, and that with the judgment
         in hand, Wilkes would file an UFTA action against FLTCH and any of the
         recipients of THMI’s assets. As it turned out, those lawyers were correct—
         Wilkes did not pursue FLTCH with an UFTA claim until after it filed an ad-
         versary complaint against FLTCH and others in the FLTCI bankruptcy case
         on October 1, 2013.
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         21-10587                Opinion of the Court                         45

         Bankruptcy Court’s consent—agreed to apply the Florida UFTA,
         Fla. Stat. § 726.101 et seq.
                 In an eﬀort to ensure that the prescriptive period would run
         before Wilkes established that its clients’ negligence claims were
         meritorious and thus could support a free standing UFTA cause of
         action, the GTCR Group had to take control of THI and THMI’s
         defense in those cases in order to delay their completion. The re-
         ceivership order had given the receiver the right to defend THMI
         in Wilkes’s cases even though THMI was not one of the THI sub-
         sidiaries included in the THI receivership. In June 2009, as a delay
         tactic, Grochal (the THI Receiver) ﬁled an action, Trans Health Care,
         Inc. v. Creekmore, in the Circuit Court of Miami-Dade County for
         the domestication of the receivership in Florida. 57 No. 2009CA-
         11513, 2013 WL 11015914 (Fla. Cir. Ct. June 19, 2013). Grochal im-
         mediately sought a stay of the actions Wilkes was prosecuting
         against THI and THMI. The circuit court granted the domestica-
         tion of the receivership but denied Grochal’s application for a stay,
         leaving the decision whether to grant a stay to the state courts in
         which Wilkes’s cases were pending.
                To reiterate, the four-year prescriptive period for ﬁling an ac-
         tion to void the March 2006 sale of THMI’s assets to FLTCH and
         any other recipients of the assets would expire in March 2010. Gro-
         chal, aware of that fact and the status of Wilkes’s cases, directed

         57 Creekmore was a Wilkes client. None of Wilkes’s cases were pending in
         Miami-Dade County.
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         46                      Opinion of the Court                21-10587

         the lawyers that the receivership had retained to defend THI and
         THMI in Wilkes’s cases to withdraw their representation in April
         2010—just over four years after the March 2006 transactions had
         closed and 16 months after the receivership’s creation.
                The lawyers defending THI and THMI in Jackson withdrew
         their representation of the defendants with leave of court on May
         18, 2010. The case went to trial before a jury on July 22, 2010, with-
         out the lawyers’ presence. It was thus an empty-chair trial and re-
         sulted in verdicts of $55 million each against THI and THMI. Judg-
         ments were entered accordingly.
                             *             *             *
                                     Commentary
                In a nutshell, the bust-out scheme involved THMI’s assets
         and liabilities being split into two separate entities. FLTCH got the
         assets. FLTCI got the liabilities. If they could get away with it,
         THI’s owners could enjoy THMI’s money without being subject to
         THMI’s legal liabilities. It goes without saying that this is wrong.
         That is why fraudulent transfer statutes exist. The bust-out scheme
         continued by attempting to avoid liability under those statutes.
         Namely, the powers that be in the THI corporate family orches-
         trated a defense strategy that allowed the UFTA prescriptive period
         to run without alerting potential creditors like Wilkes’s clients that
         something untoward was going on behind the scenes.
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         21-10587               Opinion of the Court                       47

                                          3.
                In a way, the bust-out scheme continued through the bank-
         ruptcy proceedings in the Trustee’s conﬂict with the Debtor—
         FLTCI—FLTCH, and the Targets over the representation of THI
         and THMI in Wilkes’s state court proceedings. After Wilkes put
         FLTCI into bankruptcy in December 2011, the Targets realized that
         the withdrawal of defense counsel in Wilkes’s wrongful death ac-
         tions was unwise. Although they appeared to have solid time bar
         defenses to Wilkes’s fraudulent transfer actions in the form of post-
         judgment motions under Fla. Stat. § 56.29, Wilkes’s litigation strat-
         egy was of considerable concern. After obtaining multimillion-
         dollar verdicts in empty-chair jury trials, Wilkes would use the evi-
         dence the bankruptcy trustee uncovered to reinforce its § 56.29 mo-
         tions or support an adversary proceeding in the FLTCI bankruptcy.
         To bring the empty-chair trials to an end and reduce their § 56.29
         exposure, the Targets concluded that they had to provide defense
         counsel for THI and THMI in Wilkes’s cases. In a memorandum
         opinion issued on March 20, 2015, the Bankruptcy Court recalled
         the steps they took:
               [T]he targets decided to provide a defense for THI
               and THMI as an outer ﬁrewall to any liability to the
               Probate Estates. In an eﬀort to ensure the remaining
               cases did not go undefended, the targets entered into
               a settlement agreement with the THI Receiver [Gro-
               chal] on January 5, 2012.
               Under the January 2012 agreement, FAS—one of the
               targets—agreed to defend THI, the THI Receiver, and
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         48                    Opinion of the Court                21-10587

               the THI receivership estate from any claims arising
               out of the negligence or wrongful death cases ﬁled by
               the Probate Estates. FAS agreed to deposit $800,000
               in escrow to fund the costs of that defense. GECC—
               one of THI’s lenders who was also a target—likewise
               agreed to contribute up to $200,000 toward the de-
               fense costs. FAS fairly immediately delegated the
               duty to defend THI back to the THI Receiver, and the
               THI Receiver immediately set out to retain counsel
               for THI and THMI.
         In re Fundamental Long Term Care, Inc., 527 B.R. 497, 504 (Bankr.
         M.D. Fla. 2015).
                As the Bankruptcy Court pointed out, however, the Receiver
         didn’t act soon enough:
               Newly retained counsel for THMI attempted to ap-
               pear on the company’s behalf on the morning of trial
               in the case ﬁled by the Nunziata Estate. But the court
               in that case would not let counsel appear. Likewise,
               the court in the case ﬁled by the Webb Estate would
               not let newly retained counsel appear for either THI
               or THMI. Because the state courts would not let
               newly retained counsel appear on behalf of THI and
               THMI, both of those cases proceeded to empty-chair
               trials, and the juries ultimately returned more than $1
               billion in verdicts combined.
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         21-10587                  Opinion of the Court                              49

         Id. (footnote omitted). 58 By the time Berman and Shumaker joined
         the Trustee’s team, lawyers retained by the THI Receiver—Gro-
         chal—were actively representing THI and THMI in Wilkes’s
         wrongful death cases. At the same time, the Trustee was seeking
         access to their litigation ﬁles. The THI Receiver objected, so Ber-
         man moved the Bankruptcy Court for an order requiring the Re-
         ceiver to show cause why the ﬁles should not be produced. The

         58 The verdict against THMI in Nunziata, which was tried on January 9, 2012,
         was $60 million in compensatory damages and $140 million in punitive dam-
         ages. Almost immediately after the entry of judgment, Wilkes moved the
         court ex parte for an injunction against FLTCH, FAS, Forman, Grunstein (all
         Targets), the THI Receiver, and his attorney—none being parties in the case—
         that “purport[ed] to prohibit the [THI] Receiver and his ‘agents and assignees’
         from challenging in any court anywhere in the country any aspect of the
         [Nunziata] Estate’s entitlement to collect on its judgment.” Trans Health
         Mgmt., Inc. v. Nunziata, 159 So. 3d 850, 856–57 (Fla. 2d Dist. Ct. App. 2014).
         The state court granted the injunction. THMI, represented by Shumaker, ap-
         pealed the judgment, and the enjoined parties appealed the injunction. The
         Second District Court of Appeal dismissed THMI’s appeal under Fla. Stat.
         § 607.1622(8) because THMI had been dissolved for failure to file an annual
         report. Id. at 855. The Second District Court of Appeal also vacated the in-
         junction because it “was issued without notice to any of the nonparties, with-
         out the issuance of process on any of them, and without the presentation of
         admissible evidence.” Id. at 858. In a consolidated appeal, FAS challenged a
         pretrial discovery order finding that it “had committed a fraud on the court.”
         Id. at 854. The Second District Court of Appeal quashed the order because it
         “was not based on evidence admitted at a properly noticed evidentiary hear-
         ing.” Id. at 859–60.
                 The judgment in Webb was reversed and the case was remanded for
         further proceedings. Trans Health Mgmt., Inc. v. Webb ex rel. Webb, 132 So. 3d
         1152 (Fla. 1st Dist. Ct. App. 2013) (per curiam).
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         50                     Opinion of the Court                  21-10587

         Receiver did not dispute that the Trustee should generally have ac-
         cess to THMI’s books and records, but he claimed that the lawyers’
         litigation ﬁles were privileged. In re Fundamental Long Term Care,
         Inc., No. 8:11-bk-22258, 2012 WL 4815321, at *2 (Bankr. M.D. Fla.
         Oct. 9, 2012) (internal quotation marks omitted). He also took the
         position that he had the exclusive right to control the defense of
         any claims against THMI. Id. This was so, he said, because he had
         assumed the obligation of defending THMI “to ensure that no
         THMI obligation might by default exhaust the limited assets of the
         THI estate to the detriment of THI’s other creditors.” Id. (internal
         quotation marks omitted).
                The Bankruptcy Court held a hearing on the Receiver’s ob-
         jection on September 27, 2012, and on October 9, 2012, the Bank-
         ruptcy Court issued an order stating that
                the Trustee—as the sole shareholder of the Debtor’s
                wholly owned subsidiary—should have (i) access to
                the books and records relating to the Debtor and its
                subsidiary (including any litigation ﬁles); and (ii) the
                right to control THMI activities (including the right
                to assert any attorney-client privilege, to the extent it
                exists, on THMI’s behalf ).
         Id. at *11.
                On October 29, 2012, the THI Receiver appealed that order
         and promptly moved the Bankruptcy Court to stay its order pend-
         ing the appeal. Wilkes opposed the motion, alleging that FLTCI
         was merely “a shell and its purchase of THMI was a sham transac-
         tion designed to beneﬁt a few wrongdoers by transferring the
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         21-10587              Opinion of the Court                         51

         valuable assets of THMI, lodging the liabilities in a shell company,
         and concealing the whole scheme from the creditors.” Wilkes
         went on to allege that the Receiver was an integral part of the
         scheme:
               In January 2012, sixteen parties including General
               Electric Capital Corporation, Inc., GTCR, Ventas, Ru-
               bin Schron, Leonard Grunstein, Murray Forman, and
               the state court receiver for THI, entered into a speciﬁc
               agreement, memorializing an extant conspiracy, to
               fund a massive eﬀort to conceal discovery of the facts
               related to their fraud. The signatories attempted to
               gain legitimacy for these eﬀorts by using the color of
               the state law receivership of THI.
         Creditors’ Opposition to Motion of Alan M. Grochal for Stay Pend-
         ing Appeal at 3–4, In re Fundamental Long Term Care, Inc., No. 8:11-
         bk-22258 (Bankr. M.D. Fla. Nov. 5, 2012). Wilkes concluded by say-
         ing that “the Debtor and the other ‘interested parties’ have no
         standing in this case.”
                 The Bankruptcy Court heard the motion on November 16,
         2012, and took it under advisement. The day before, unbeknownst
         to the Trustee and the Bankruptcy Court, FLTCH and FAS sued
         THMI in the Southern District of New York for a declaration that
         the fraudulent transfer claims Wilkes was attempting to prosecute
         via its § 56.29 post-judgment motions in Nunziata and Webb—which
         had resulted in jury verdicts and judgments of $200 million and
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         52                       Opinion of the Court                      21-10587

         $900 million, respectively—were time-barred. 59 Fundamental Long
         Term Care Holdings, LLC. v. Trans Health Mgmt., Inc., No. 1:12-cv-
         8339 (S.D.N.Y. ﬁled Nov. 15, 2012). Six days later, the lawyer who
         brought that action also ﬁled a complaint for Christine Zack (a FAS
         in-house counsel) against Shumaker in the Southern District of
         Ohio, seeking unrelated relief. Zack v. Shumaker, Loop & Kendrick,
         LLP, No. 2:12-cv-1075 (S.D. Ohio ﬁled Nov. 21, 2012).
                Before the defendants were served with process in those
         cases, the Trustee decided to take over THMI’s defenses in the
         Wilkes cases. On December 10 and 21, 2012, Shumaker moved the
         appellate courts in Webb and Nunziata, where THMI’s appeals were
         pending, to appear as appellants’ counsel in place of the lawyers the
         THI Receiver had retained. Then, on December 27, 2012, the Trus-
         tee, having notice of the federal district court cases in New York
         and Ohio, sought to enjoin their prosecution by commencing an
         adversary proceeding against FLTCH, FAS, and Zack with a two-
         count complaint. 60

         59 The complaint alleged that the post-judgment motions were time-barred
         under the laws of Delaware, Florida, Maryland, New York, and Pennsylvania.
         60Count I was lodged against Zack and Count II was against FLTCH and FAS.
         The complaint alleged that following the entry of the Omnibus Order on July
         12, the Respondents
                in concert with the Debtor and other interested parties, ha[d]
                undertaken a concerted eﬀort to undermine the Trustee’s ad-
                ministration of this case with the sole purpose of reducing the
                potential exposure of third parties, including FLTCH and FAS,
                who were clearly involved in the fraudulent eﬀorts to place the
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         21-10587                   Opinion of the Court                                53

                On January 4, 2013, the Bankruptcy Court entered an order
         denying the THI Receiver’s motion to stay the Bankruptcy Court’s
         October 9, 2012, ruling pending the THI Receiver’s appeal to the
         District Court for the Middle District of Florida. 61 Although it de-
         nied the motion, the Bankruptcy Court ordered counsel for the
         Trustee, the Receiver’s counsel, and counsel hired by the Receiver

                 Debtor and THMI’s [assets], exceeding more than $700 Million
                 in value, beyond the reach of creditors.
         Complaint for Temporary and Permanent Injunctive Relief at ¶ 24, Scharrer v.
         Zack, No. 8:12-ap-1198 (Bankr. M.D. Fla. Filed Dec. 27, 2012). The complaint
         also alleged that “according to an FAS representative’s recent 2004 Examina-
         tion testimony, FAS is paying various sets of lawyers more than $500,000 per
         month just in connection with the instant bankruptcy case, related litigation,
         oppositions, and discovery.” Id. at ¶ 19. The complaint further alleged that in
         ﬁling suit against THMI in the Southern District of New York, FLTCH and
         FAS sought to “avoid consideration and resolution by this Court of the very
         issues the Trustee is statutorily obligated to investigate [as] authorized by this
         Court.” Id. at ¶ 31.
                  According to the Trustee, Zack’s suit against Shumaker alleged that
         Shumaker’s representation of the Trustee “constituted an abuse of process.”
         Id. at ¶ 34. The Trustee contended that Zack ﬁled the suit “shortly after th[e
         Bankruptcy] Court cautioned Zack’s counsel against pursuing various re-
         quests for sanctions against lawyers and other parties,” id. at ¶ 33, at a hearing
         in which the Bankruptcy Court “denied Zack’s Motion for Sanctions and sug-
         gested that all parties would be well served focusing on the merits of the bank-
         ruptcy case and avoiding. . . personal attacks and reﬂexive assertions of rights
         to sanctions.” Id. at ¶ 35.
         61 On December 21, 2012, the Trustee moved the District Court to dismiss
         the appeal. On September 12, 2013, the District Court entered an order stay-
         ing the appeal “pending a resolution by the Bankruptcy Court of the interrela-
         tionship between THMI and FLTCI.”
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         54                     Opinion of the Court                21-10587

         to represent THMI in the Wilkes cases to confer so the Trustee
         could “evaluate the positions she will take on behalf of THMI in
         the Wilkes Litigation.” Regarding the current representation of
         THMI, the Bankruptcy Court provided that:
               The law ﬁrms who have made appearances on behalf
               of THMI are authorized to continue to defend the
               Wilkes Litigation to prevent prejudice to THMI’s
               rights and to ensure that defaults are not entered or
               permitted to remain in place uncontested (including
               prosecuting appeals with respect to previously en-
               tered judgments) against THMI until the Trustee ei-
               ther (i) authorizes existing THMI counsel to continue
               to represent THMI; or (ii) obtains substitute counsel
               (who enters his or her appearance in each Wilkes Lit-
               igation matter) and releases existing THMI counsel
               from any further obligations.
               ...
               In any event, the Trustee shall take any and all actions
               necessary to ensure that disputed claims are de-
               fended, including prosecuting appeals with respect to
               previously entered judgments.
         Order Denying Motion for Stay Pending Appeal at 2, In re Funda-
         mental Long Term Care, Inc., No. 8:11-bk-22258 (Bankr. M.D. Fla. Jan.
         4, 2013). The Bankruptcy Court also stated that “[a]ny substantive
         information regarding the personal injury claims and defenses
         shared with the Trustee during the . . . conferences will not be
         shared with the Petitioning Creditors or their counsel absent fur-
         ther order of this Court.” Id. at 3.
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         21-10587                  Opinion of the Court                             55

               The same day this order was entered, FLTCH and FAS
         moved the Bankruptcy Court to enter an order disqualifying Shu-
         maker as Trustee’s counsel on the ground that Shumaker had a
         conﬂict of interest in favor of Wilkes. 62 The motion alleged that
         Wilkes had brought the Chapter 7 case for two reasons:
                The ﬁrst reason was to remove THMI’s defense
                against the plaintiﬀs’ outrageous claims from compe-
                tent counsel that serves only THMI’s interest, and
                place it under the control of counsel with loyalties to
                the plaintiﬀs and their counsel. The second reason
                was to obtain a trustee, with the mantle of independ-
                ence and court appointment, to assist in collecting
                THMI’s bogus liabilities from unrelated third par-
                ties. . . . This case and this Court are being used to
                perpetrate a gross violation of fundamental due pro-
                cess, and [Shumaker’s] representation of THMI is
                critical to pulling it oﬀ.
         Joint Motion of Fundamental Administrative Services, LLC and
         Fundamental Long Term Care Holdings, LLC for an Order (A) Dis-
         qualifying Shumaker, Loop & Kendrick LLP as Counsel to Trans
         Health Management, Inc. Due to Conﬂict of Interest, and (B)
         Granting Related Relief at 3, In re Fundamental Long Term Care, Inc.,
         No. 8:11-bk-22258 (Bankr. M.D. Fla. Jan. 4, 2011).

         62 Contrast this motion with the motion for disqualification and disgorgement
         Wilkes will later bring, which argues that Shumaker had a conflict of interest
         against Wilkes. See infra part IV.
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         56                       Opinion of the Court                    21-10587

                 On January 30, 2013, the Bankruptcy Court, “having heard
         argument of counsel for the Trustee, FAS, and FLTCH,” entered
         an order denying FLTCH and FAS’s motion to disqualify Shu-
         maker. The order stated that the Bankruptcy Court would conduct
         a status conference on February 4, 2013, “at which time the Trustee
         shall report to the Court the status of pending state court litigation
         and appeals involving the Debtor or THMI,” and the “current rep-
         resentation of the Debtor and THMI in such cases.” The Bank-
         ruptcy Court required that prior to the status conference, the Trus-
         tee and the THI Receiver confer about “the prior and future repre-
         sentation of THMI.” On February 5, 2013, FLTCH and FAS ap-
         pealed that order to the District Court.
                Meanwhile, on January 23, 2013, the Bankruptcy Court
         granted the Trustee’s motion for a preliminary injunction barring
         FLTCH and FAS from prosecuting their declaratory judgment ac-
         tion in the Southern District of New York and barring Zack from
         proceeding with her case in the Southern District of Ohio.
                On March 7, 2013, the Debtor—FLTCI—renewed the mo-
         tion it had ﬁled on August 10, 2012, pursuant to Florida Rule of
         Civil Procedure 1.540(b)(4), challenging the $110 million judgment
         entered against it as void. 63 One day earlier, on March 6, the

         63 The same day, the Debtor objected to the Jackson Estate’s $110 million
         claim on the ground that the judgment had been obtained via extrinsic fraud.
         The Bankruptcy Court overruled the objection on June 21, 2013, following an
         evidentiary hearing. In re Fundamental Long Term Care, Inc., 500 B.R. 140
         (Bankr. M.D. Fla. 2013).
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         21-10587                  Opinion of the Court                             57

         Trustee moved the Bankruptcy Court to authorize and direct me-
         diation of all claims. On March 19, 2013, FLTCH and FAS jointly
         responded to the Trustee’s motion. They repeated their concern
         from the hearing on their motion seeking Shumaker’s disqualiﬁca-
         tion. Their concern was that Shumaker would enter into “collusive
         settlements of the six [wrongful death] actions with [Wilkes] ‘to set
         THMI’s liabilities at amounts that . . . are going to be astronomical
         windfalls to the plaintiﬀs . . . set in stone behind closed doors.’” “In
         the mediation envisioned by the Trustee, there will be no party ar-
         guing to the mediator that THMI or the Debtor has zero liability
         to these plaintiﬀs.” The Bankruptcy Court heard the motion on
         March 26 and granted it over the objections of the Debtor, FLTCH,
         and FAS, appointing a retired bankruptcy judge as mediator. 64
                On June 6, 2013, following ﬁve days of mediation, the Trus-
         tee ﬁled an expedited motion to compromise the claims that the
         Sasser, Jones, and Townsend Estates had brought against THMI in
         state court and ﬁled as claims against the Debtor’s estate in the
         bankruptcy proceeding. 65 In Sasser and Jones, THMI and the

         64 As a result of the Bankruptcy Court’s September 12, 2013, decision, the me-
         diation ended.
         65 Also on June 6, 2013, the Trustee and Kristi Anderson jointly moved to com-
         promise the claims brought in the lawsuits ﬁled against FAS and Anderson
         (and others) on July 19 and 20, 2012. FLTCH and FAS objected to the com-
         promise. In a memorandum opinion issued on June 21, 2013, the Bankruptcy
         Court overruled the objection and approved the compromise. FLTCH and
         FAS appealed the ruling on June 27, 2013. FAS voluntarily dismissed the appeal
         on March 11, 2014.
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         58                     Opinion of the Court                21-10587

         Debtor stipulated to a claim for compensatory damages of $5 mil-
         lion and punitive damages of $5 million—a total of $20 million be-
         tween the two cases. In Townsend, THMI and the Debtor stipulated
         to a claim for compensatory damages of $10 million and punitive
         damages of $10 million. The Trustee ﬁled an amendment to her
         expedited motion to compromise on July 10.
                The Trustee’s motion was met with vehement opposition by
         FLTCH, FAS, FCC, THI Holdings, the THI Receiver, GECC, and
         the Debtor on a variety of substantive and procedural grounds.
         The objections led to reciprocal exchange of documentary evi-
         dence. The Trustee produced documents on which she and Shu-
         maker relied in determining that the settlement proposed was in
         the best interests of the bankruptcy estate. The objectors produced
         documents supporting their objections.
                 The Bankruptcy Court heard the Trustee’s motion on July
         10–12, 2013, and on July 12 the Bankruptcy Court entered an order
         approving the compromise. The order was perfunctory. The trial
         date in Townsend was looming and the Bankruptcy Court wanted
         its ruling to serve as notice well in advance of the trial. The Bank-
         ruptcy Court anticipated that the parties would agree on a super-
         seding replacement order. As a precaution, the Debtor, joined by
         the Receiver, appealed that July 12 order to the District Court, as
         did FAS and FCC. On December 18, 2013, the District Court re-
         versed the July 12 order and remanded the matter to the Bank-
         ruptcy Court with the instruction that it reconsider the settlements
         after it concluded the adversary proceeding and resolved the issue
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         21-10587                Opinion of the Court                           59

         of the identity of interest between FLTCI and THMI, if any. The
         District Court observed that many of the issues plaguing the Bank-
         ruptcy Court were “created because the creditors placed [FLTCI]
         into bankruptcy as the debtor, rather than its subsidiary THMI
         against which the [Probate Estates] have causes of action.” As in-
         dicated infra part III, the Bankruptcy Court resolved this issue by
         treating THMI and FLTCI as one entity for Chapter 7 purposes.
                On July 30, 2013, FLTCH and FAS moved the Bankruptcy
         Court for authority either to transfer their New York declaratory
         action to the Middle District of Florida with referral to the Bank-
         ruptcy Court or, in the alternative, to dismiss the New York action
         without prejudice and reﬁle it in the Bankruptcy Court. On August
         2, FLTCH and FAS supplemented their motion to include a request
         for injunctive relief “based on the ﬂagrant misconduct of the
         [Townsend] Estate and its counsel, Wilkes,” that took place follow-
         ing the jury trial in Townsend and entry of judgment for the Town-
         send Estate on July 29, 2013.
                 What Wilkes had done in Townsend after the entry of judg-
         ment was described by the Florida District Court of Appeal in Gen-
         eral Electric Capital Corp. v. Shattuck, 132 So. 3d 908 (Fla. 2d Dist. Ct.
         App. 2014). On July 29, 2013—after the state court had entered a
         default against THI and a jury returned a verdict against THI of
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         60                        Opinion of the Court                      21-10587

         $1.1 billion ($1 billion of which was for punitive damages)—the
         trial court entered judgment against THI. 66
                Two days later, the [Townsend E]state ﬁled a “motion
                to alter and amend the judgment to conform with ev-
                idence at trial.” The motion asked the court to add
                the sixteen Appellants to the ﬁnal judgment pursuant
                to Florida Rule of Civil Procedure 1.530(g). The mo-
                tion was served only on the attorney for the THI
                [R]eceiver, not on any of the sixteen Appellants. Later
                that same day the trial court, without soliciting re-
                sponses or holding a hearing, granted the motion and
                entered the amended ﬁnal judgment at issue in these
                proceedings. The amended judgment added the six-
                teen Appellants as judgment debtors, jointly and sev-
                erally liable for the damages award “based on the evi-
                dence adduced at trial” demonstrating that they were
                “the real parties in interest.”
         Id. at 910–11. 67

         66 The Townsend case was tried after the trial judge denied THI’s motion to
         recuse on the ground of bias. FLTCH and FAS’s August 2 supplement to their
         July 30 motion stated that the “heavily one-sided damages trial was riddled
         with procedural and substantive errors, and the verdict will be appealed and is
         very unlikely to withstand appellate review.”
         67 The 16 appellants included: FLTCH; FAS; THI-Holdings; THI-Baltimore;
         GECC; GTCR Golder Rauner, LLC; GTCR Fund VI, L.P.; GTCR Partners VI,
         L.P.; GTCR VI Executive Fund, L.P.; GTCR Associates VI; Edgar D. Jannotta,
         Jr.; Murray Forman; Leonard Grunstein; Ventas; Ventas Realty, L.P.; and Rubin
         Schron. The Second District Court of Appeal reversed the judgment and re-
         manded the case for further proceedings. Shattuck, 132 So. 3d at 914.
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         21-10587               Opinion of the Court                        61

                The Bankruptcy Court heard the motion to transfer on Au-
         gust 20, 2013, and took it under advisement. As it turned out, a
         ruling was unnecessary since the purpose of the motion was ac-
         complished when the Bankruptcy Court entertained FLTCH and
         FAS’s statute of limitations defense at the trial of the principal ad-
         versary proceeding (initiated by the Probate Estates) in September
         and October 2014 as aﬃrmative defenses to the Probate Estates’
         claims. See In re Fundamental Long Term Care, Inc., 507 B.R. 359, 384
         (“Denial of the motions to dismiss [as time-barred] is without prej-
         udice. The Defendants are free to raise the statute of limitations
         as an aﬃrmative defense.”).
                On September 3, 2013, the District Court decided FLTCH
         and FAS’s appeal of the Bankruptcy Court’s January 30, 2013, order
         denying their motion to disqualify Shumaker. The District Court
         did so with these observations:
               Appellants contend the [T]rustee has a direct conﬂict
               with making decisions for [THMI] even though the
               debtor [FLTCI] owns 100% of the stock in THMI. Be-
               cause of this asserted conﬂict, Appellants contend
               [T]rustee’s counsel, [Shumaker], also has a conﬂict.
               ...
               This asserted conﬂict is occasioned because of the un-
               usual posture of this case. This is an involuntary
               bankruptcy brought by a creditor of THMI’s parent
               corporation. By putting THMI’s parent corporation
               [FLTCI,] in bankruptcy rather than THMI, the
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         62                      Opinion of the Court                  21-10587

               creditors are allowed to continue to pursue litigation
               against THMI.
               Since THMI is not the debtor, it does not receive any
               of the beneﬁts of bankruptcy, such as an automatic
               stay of civil litigation against it. Therefore, civil liti-
               gation has been proceeding against THMI outside the
               control of the Bankruptcy Court. The [T]rustee has
               been making decisions (such as allowing “claims”) for
               THMI as if THMI were in bankruptcy.
               It is apparent that a decision needs to be made
               whether in fact THMI and the Debtor should be
               treated as the same entity under theories of alter ego,
               substantive consolidation, or other legal or equitable
               theory. If so, THMI should be brought into the bank-
               ruptcy as a debtor which would aﬀord it the beneﬁts
               of bankruptcy as well as the burdens. If THMI is not
               to be treated as the same entity as the debtor, then the
               litigation against THMI may be moot in this bank-
               ruptcy estate and the issues involved in this appeal
               may become moot.
         Order of Remand at 1–2, In re Fundamental Long Term Care, Inc., No.
         8:11-bk-22258 (Bankr. M.D. Fla. Sept. 5, 2013). The District Court
         therefore remanded the case with the instruction that the Bank-
         ruptcy Court determine at the earliest practical time whether
         “THMI should be brought into the bankruptcy case as a debtor.”
                             *             *              *
                                     Commentary
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         21-10587               Opinion of the Court                        63

                The District Court observed the obvious. Other than the
         Jackson Estate, none of the Probate Estates had a claim against the
         Debtor. Their claims were against THMI, an entirely separate en-
         tity. And they could not be allowed in the Debtor’s estate. That is
         why it was necessary that the Bankruptcy Court consider THMI,
         qua separate entity, as a bankrupt entity together with FLTCI.
                            *             *             *
                The Bankruptcy Court followed the District Court’s lead on
         September 12, 2013. In a Memorandum Opinion, the Bankruptcy
         Court held that the Bankruptcy Court was the proper forum for
         Wilkes’s fraudulent transfer claims. In re Fundamental Long Term
         Care, Inc., 500 B.R. 147 (Bankr. M.D. Fla. 2013). In doing so, the
         Bankruptcy Court addressed Wilkes’s argument that the Probate
         Estates should be allowed to continue their state court litigation:
               In asking the Court not to enjoin their eﬀorts in state
               court, the creditors argue the Court should be guided
               by the Trustee’s judgment as to what is in the best in-
               terests of the estate. That is not quite right. The
               Court is ﬁrst and foremost guided by the Bankruptcy
               Code. And the Bankruptcy Code grants this Court
               exclusive jurisdiction over property of the estate.
               There is no question in the Court’s mind that contin-
               uation of the proceedings supplementary—given the
               Estate of Nunziata’s acknowledgement that the assets
               that were allegedly transferred to the “targets” belong
               to THMI—is an attempt (even if unintentional) to ob-
               tain or take control of property of the estate, and that
               alone warrants requiring the creditors [the Probate
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         64                       Opinion of the Court                 21-10587

                Estates] to pursue any fraudulent transfer or alter ego
                claims in this Court.
         Id. at 160. The Bankruptcy Court then set a hearing to set “the
         parameters of a single proceeding—involving the Trustee, the
         creditors, and the ‘targets’—for resolving any fraudulent transfer
         and alter ego claims.” Id. The Trustee, as a hypothetical creditor
         of THMI, could not mount fraudulent transfer causes of action
         against FLTCH and the Targets unless THMI was in bankruptcy.
                              *             *              *
                                      Commentary
               As evidenced by the various disputes over control of THMI’s
         defense strategy, the Chapter 7 proceeding pitted Wilkes, the Pro-
         bate Estates, the Trustee, and Shumaker against FLTCI, FLTCH,
         and the Targets.
                                           III.
                                           A.
                On October 1, 2013, the Probate Estates initiated an adver-
         sary proceeding in the Bankruptcy Court against 16 entities and in-
         dividuals with a two-count complaint for declaratory relief. 68
         Count I alleged that six of the defendant parties assumed the debts

         68 The defendant parties were: GECC; FAS; THI-Baltimore; GTCR Golder
         Rauner, LLC; FLTCH; Murray Forman; Leonard Grunstein; Rubin Schron;
         Ventas, Inc; Ventas Realty, LP; GTCR Fund VI, LP; GTCR Partners VI, LP;
         GTCR VI Executive Fund, L.P.; GTCR Associates VI; Edgar D. Jannotta, Jr;
         and THI-Holdings. Each count rested on 502 paragraphs of allegations.
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         21-10587                  Opinion of the Court                             65

         and liabilities of THI, THMI, and FLTCI as successors to those en-
         tities. Count II alleged that eleven of the defendant parties were
         the alter egos of THI, THMI, and FLTCI and therefore assumed
         their debts and liabilities.
                On October 24, 2013, the Trustee moved the Bankruptcy
         Court pursuant to Federal Rule of Bankruptcy Procedure 7024 69
         for leave to intervene as a party plaintiﬀ to bring additional claims
         that constitute the property of the Debtor’s estate. 70 The Bank-
         ruptcy Court granted the motion on October 31 and, on November
         18, the Trustee ﬁled a Complaint in Intervention which added a
         Count III to the Probate Estates’ complaint “to substantively con-
         solidate THMI into the Debtor’s bankruptcy estate.” Count III al-
         leged that “[t]there is such a unity of interest and ownership be-
         tween FLTCI and THMI that the independence of each corpora-
         tion had, in eﬀect, never begun, and therefore adherence to the ﬁc-
         tion of separate identities serves only to defeat justice.”
              The next day, in a Memorandum Opinion on Motions for
         Temporary Injunction and Motion to Approve Compromise, the

         69 The Trustee stated in her motion that Rule 9024incorporates Federal. Rule
         Civil Procedure 24. But actually, Rule 7024 incorporates that rule, which al-
         lows intervention by a party that “has a claim or defense that shares with the
         main action a common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B).
         70 On November 13, 2013, in a Memorandum Opinion on the Trustee’s Mo-
         tion to Enlarge Time Period to Bring Avoidance and Other Actions, the Bank-
         ruptcy Court extended the two-year limitations periods in sections 108 and
         546 of the Bankruptcy Code to April 13, 2014.
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         66                    Opinion of the Court                 21-10587

         Bankruptcy Court concluded that “THMI’s fraudulent transfer and
         alter ego claims (if any) potentially belong to the estate” and en-
         joined the Probate Estates “from pursuing any proceedings supple-
         mentary or other collection eﬀorts that could conceivably aﬀect
         property of the estate.” In re Fundamental Long Term Care, Inc., 501
         B.R. 770, 774, 784 (Bankr. M.D. Fla. 2013). The Bankruptcy Court
         also denied a motion to compromise made by the Trustee (involv-
         ing the claims of the Sasser, Jones, and Townsend Probate Estates)
         because one of its provisions would allow the Probate Estates to
         maintain their lawsuits against THMI, suggesting that the Bank-
         ruptcy Court viewed lawsuits against THMI as aﬀecting property
         of FLTCI. Id. at 784.
                The Probate Estates amended their adversary complaint on
         December 19, 2013. This pleading consisted of 228 pages with 1201
         paragraphs and 22 counts. It was a typical shotgun complaint in
         that each count incorporated all preceding paragraphs of the com-
         plaint such that Count XXII was an amalgamation of all counts.
                On March 14, 2014, the Bankruptcy Court, in a Memoran-
         dum Opinion on Motions to Dismiss, identiﬁed the counts and the
         claims they asserted. According to the Bankruptcy Court:
               The twenty-two counts in the complaint can be bro-
               ken down into eight claims for relief: one count for
               substantive consolidation by the Trustee (Count I),
               two counts for breach of ﬁduciary duty (Counts II &
               III), four counts for aiding and abetting a breach of
               ﬁduciary duty (Counts IV–VII), one count for succes-
               sor liability (Count VIII), two counts for piercing the
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         21-10587               Opinion of the Court                        67

               corporate veil (Counts IX & X), three counts for alter-
               ego liability (Counts XI–XIII), eight counts for (actual
               or constructive) fraudulent transfer (Counts XIV–
               XXI), and one count for conspiracy to commit a
               fraudulent transfer (Count XXII).
         In re Fundamental Long Term Care, Inc., 507 B.R. 359, 372 (Bankr.
         M.D. Fla. 2014).
                            *             *             *
                                    Commentary
                Before passing on the suﬃciency of any of the counts,
         though, the Bankruptcy Court shared the frustration Judge Mer-
         ryday expressed on November 8, 2013, in reviewing a complaint
         Wilkes ﬁled in the Middle District of Florida on behalf of the Jack-
         son Estate against McGraw-Hill Companies, Inc.; Standard &
         Poor’s Financial Services, LLC; Credit Suisse Securities (USA), LLC;
         and Credit Suisse First Boston Mortgage Securities Corporation.
         See Jackson-Platts v. McGraw-Hill Cos., No. 8:13-cv-850-T-23MAP,
         2013 WL 6440203, at *1 (M.D. Fla. Nov. 8, 2013). This complaint
         alleged that “the [Jackson] Estate holds a $110 million judgment
         against [THI], and [THMI] . . . which is uncollected.” Id. The com-
         plaint and charged the defendants with
               an expansive and enduring conspiracy among an ar-
               ray of conspirators, including S & P and Credit Suisse,
               who together allegedly undertook “a shell game” ef-
               fected by a scheme the complaint denominates a
               “Propco–Opco–Oldco” (P–O–O) business structure,
               designed to “loot the assets” of the THI entities,
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         68                         Opinion of the Court                        21-10587

                 among many other targets, and—as part of an “un-
                 lawful and improper professional liability and general
                 liability claim reduction strategy”—designed to ren-
                 der the THI entities unable to satisfy the [Jackson] Es-
                 tate’s judgment. The conspiracy allegedly sought to
                 further the malevolent purpose of capturing enor-
                 mous proﬁt for the conspirators at the expense of
                 nursing home occupants.
         Id. Judge Merryday described the complaint as “a confusing, am-
         biguous, generalized, conclusory, and uninformative (and intermit-
         tently melodramatic) paper” and dismissed it. 71 Id. at *4, *6.

         71 The judge said a bit more:
                 The complaint requires considerable energy to read with pa-
                 tience and to attempt to understand with conﬁdence. Alt-
                 hough alleging an encompassing, malevolent, and predatory
                 scheme, the complaint provides to the disinterested reader lit-
                 tle or nothing on which to conclude that the allegations arise
                 from a sound factual basis or, more to the point, that the
                 pleader has even the least notion that the allegations arise from
                 a sound factual basis. The constant attribution of acts to “the
                 Defendants” and “the Co–Conspirators” disguises much infor-
                 mation necessary to glean the meaning, if any, of the allega-
                 tions. The almost entire absence of allegations of time, place,
                 and manner and the pertinent absence of the identity of the
                 particular actors is wholly disabling to the disinterested reader.
                 These omissions are so impairing and so obvious that the dis-
                 interested reader tends to doubt their inadvertence.
         Jackson-Platts v. McGraw-Hill Cos. , 2013 WL 6440203, at *4.
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         21-10587                   Opinion of the Court                        69

         On December 6, 2013, Wilkes voluntarily dismissed the case. 72
                                *              *               *
                Nevertheless, despite the deﬁciencies in this amended com-
         plaint, the Bankruptcy Court, “(particularly given the two years it
         ha[d] spent dealing with all of these parties in the main bankruptcy
         case) [wa]s able to glean the meaning of the critical allegations—
         albeit not without considerable energy.” In re Fundamental Long
         Term Care, Inc., 507 B.R. at 386.
               In ruling on the motions, the Bankruptcy Court indicated
         how it viewed the case. To the Bankruptcy Court, it was obvious
         that
                the main thrust of this case is the Plaintiﬀs’ claims for
                fraudulent transfer. In all, the Plaintiﬀs allege a total
                of eight counts for fraudulent transfer against the De-
                fendants (Counts XIV–XXI).
                ...
                The complaint unquestionably states claims for
                fraudulent transfer against THI–Baltimore and
                FLTCH.
                ...
                [T]he facts of the complaint plausibly allege that the
                transfer of THMI’s assets to FLTCH was for the ben-
                eﬁt of Forman and Grunstein since they owned
                FLTCH—a closely held company.

         72 Wilkes dismissed the case pursuant to Fed. R. Civ. P. 41(a)(1).
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         70                     Opinion of the Court                21-10587

         Id. at 380–81. In essence, the Bankruptcy Court viewed the Probate
         Estates’ sprawling and tangled amended complaint as simply a
         fraudulent transfer action. That said, it was clear to the Bank-
         ruptcy Court that the plaintiﬀs “fail[ed] to state a claim for relief
         under any alter-ego or veil-piercing theories.” Id. at 386. Plaintiﬀs
         did, however, state claims for breach of ﬁduciary duty, aiding and
         abetting breach of ﬁduciary duty, fraudulent transfer, conspiracy
         to commit fraudulent transfer, and successor liability against a va-
         riety of defendants. Id.
                The Bankruptcy Court dismissed the remaining claims with-
         out prejudice and with leave to amend. Id. It granted leave with
         the expectation that the amendment would cure the many defects
         of the amended complaint. Id. In passing on the suﬃciency of the
         claims asserted in the amended complaint, the Bankruptcy Court
         did not consider the defendants’ argument that the claims were
         time-barred. It stated that the defendants’ statute of limitations
         grounds for dismissing the adversary proceeding would be treated
         as aﬃrmative defenses and addressed later See id. at 384.
               On April 4, 2014, the Probate Estates ﬁled a second amended
         complaint with 32 claims—more claims than were contained in the
         ﬁrst amended complaint. Instead of rehabilitating the dismissed
         claims and curing the previous complaint’s defects, the second
         amended complaint: (1) incorporated several hundred paragraphs
         of the ﬁrst amended complaint by reference; (2) repleaded ﬁve
         claims the Bankruptcy Court had dismissed in their entirety; (3)
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         21-10587                  Opinion of the Court                             71

         oﬀered a new, but largely repetitive, restatement of several claims;
         and (4) added four new claims against several defendants.
                The defendants responded to the second amended com-
         plaint by ﬁling motions to dismiss. 73 On June 26, 2014, the Bank-
         ruptcy Court dismissed the following claims: “alter ego liability
         (Count 23), aiding and abetting against Schron (Count 26), abuse
         of process (Count 27), conspiracy to commit abuse of process
         (Count 28), negligence (Count 29), fraudulent transfer against
         Schron (Count 30), civil conspiracy against GECC (Count 31), and
         avoidance of a post-petition transfer (Count 32).” The Bankruptcy
         Court then gave the plaintiﬀs seven days to ﬁle another amended
         complaint restating the claims that had not been dismissed.
                In the end, the claims that survived were: (1) a claim for sub-
         stantive consolidation of THMI and FLTCI; (2) two claims of
         breach of ﬁduciary duty; (3) six claims of aiding and abetting
         breach of ﬁduciary duty; (4) a request for declaratory relief against
         FLTCH, FAS, and THI-Baltimore on a successor liability theory; (5)

         73 While the motions were pending, on June 2, 2014, the Trustee commenced
         an adversary proceeding against Troutman in the Bankruptcy Court. The
         complaint alleged the following: Count I, a claim for negligence in abandoning
         FLTCI in Jackson resulting in a $110 million judgment; Count II, negligence in
         failing to inform FLTCI and its sole shareholder of their right to independent
         counsel in connection with the March 2006 transaction—the bust-out
         scheme—in which FLTCI acquired THMI; Count III, fraudulent concealment
         of the harm the March 2006 transaction could cause FLTCI; Count IV, fraud—
         participating in a scheme that defrauded FLTCI, THMI, and their creditors;
         and Count V, negligent supervision of a Troutman employee.
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         72                     Opinion of the Court                  21-10587

         one claim each of actual and constructive fraudulent transfer; and
         (6) one claim of civil conspiracy to commit fraudulent transfer.
         The Bankruptcy Court concluded that “any further attempts by the
         Plaintiﬀs to amend their complaint would be futile or unfairly prej-
         udicial to the Defendants.” In re Fundamental Long Term Care, Inc.,
         512 B.R. 690, 707 (Bankr. M.D. Fla. 2014).
                 On August 26, 2014, as the Bankruptcy Court and the parties
         were preparing for a trial on the remaining claims of the second
         amended complaint, the Bankruptcy Court denied the defendants’
         motions for summary judgment without a hearing in a two-page
         order. 74
                The trial of the case began on September 22, 2014. It ended
         ﬁfteen days later, on October 7. On December 16, the Bankruptcy
         Court tentatively announced the following ﬁndings of fact and con-
         clusions of law:
                (1) FLTCI and THMI are consolidated and ought to be
                    treated as if they are one.
                (2) The claims for breach of ﬁduciary duty and aiding and
                    abetting breach of ﬁduciary duty fail for lack of proof.
                    Indeed, “the evidentiary record shows that the chal-
                    lenge[d] transactions were entirely fair.”

         74 There was one exception. On September 15, 2014, the Bankruptcy Court
         granted Ventas and Ventas Realty, LP summary judgment on one count of
         aiding and abetting breach of fiduciary duty.
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         21-10587                Opinion of the Court                          73

                (3) The claims of constructive fraud and actual fraud fail for
                    lack of proof that THMI’s assets were sold to defraud
                    THI or THMI’s creditors. The transferor of THMI was
                    THI. THI sold 100% of THMI’s shares to FLTCI, but
                    THI did not do so to defraud its creditors or THMI’s
                    creditors.
                (4) The claim of successor liability is established. “FAS and
                    possibly [THI-Baltimore] and FLTCH [we]re the mere
                    continuation of THMI and . . . the 2006 transaction [the
                    bust-out scheme] was a fraudulent eﬀort to avoid the li-
                    ability of a predecessor corporation.” “The parties ap-
                    pear to agree that the Delaware law governs” whether
                    the successor liability claim is time-barred. The statute
                    of limitations’ three-year prescriptive period began to
                    run when the March 2006 transaction closed, and the
                    plaintiﬀs didn’t ﬁle their successor liability claim until Oc-
                    tober 1, 2013. The Bankruptcy Court tolled this time pe-
                    riod because the injury sustained was “inherently un-
                    knowable,” and the plaintiﬀs’ claims were “concealed” by
                    the defendants.
                 Following the conclusion of the adversary proceeding, on
         January 9, 2015, Wilkes, for the Townsend Estate, moved the Bank-
         ruptcy Court “for Relief to Comply with the Mandate of the Flor-
         ida Second District Court of Appeal” in General Electric Capital Corp.
         v. Shattuck, 132 So. 3d 908 (Fla. 2d Dist. Ct. App. 2014). Wilkes asked
         that the Townsend Estate be allowed to “proceed with its motion
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         74                       Opinion of the Court                 21-10587

         to alter or amend the judgment” it procured in the state court
         wrongful death action to include the 16 parties it wished to be
         bound by the Townsend Estate’s $1.1 billion judgment in that ac-
         tion. Following a hearing on May 27, 2015, the Bankruptcy Court
         denied that motion without prejudice.
                 Meanwhile, on February 2, 2015, the Bankruptcy Court is-
         sued an order requiring the Trustee, the “Fundamental Defend-
         ants,” 75 the Probate Estates, and other interested parties to submit
         to mediation on February 3–4, 2015. The parties attended media-
         tion on February 3, 4, 5, 9, and 10. Also on February 10, the Bank-
         ruptcy Court granted the Trustee’s motion to “consolidate” the
         bankruptcy to include THMI, pursuant to the Bankruptcy Court’s
         ﬁnding that FLTCI and THMI could be treated as one.
               On February 23, 2015, the Trustee moved the Bankruptcy
         Court to compromise two controversies involving the Trustee, the
         Probate Estates, and the Fundamental Defendants.
              The Trustee presented two compromises. In one, the Fun-
         damental Defendants would pay the Trustee $18.5 million 76 and
         would receive the Trustee’s and Probate Estates’ general releases

         75 The “Fundamental Defendants” included FLTCH, FAS, FCC, THI-Balti-
         more, Murray Forman, and Leonard Grunstein.
         76 $4 million of that amount would be paid over time.
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         21-10587                     Opinion of the Court                                  75

         and a bar order in exchange. 77 In re Fundamental Long Term Care,
         Inc., 527 B.R. 497, 507–08 (Bankr. M.D. Fla. 2015). The second com-
         promise was with the Quintairos law ﬁrm. It would pay the Trus-
         tee $1.25 million and receive general releases like the ones the Fun-
         damental Defendants would receive, as well as the same bar order.
         Id. at 508.
                 In addressing the motions in its March 20 Memorandum
         Opinion on Motion to Compromise and Motions for Permanent
         Injunctive Relief, the Bankruptcy Court described what the Chap-
         ter 7 case had become: “at least 27 lawsuits and 15 appeals before
         13 diﬀerent courts and 17 judges in 5 states” involving 16 defend-
         ants. 78 Id. at 501. The Bankruptcy Court listed the defendants and
         their tentative dispositions. Id. at 501 n.6. In short, only ﬁve of the
         defendants were potentially liable on a successor liability theory.
               The Bankruptcy Court then assessed the compromises un-
         der the Justice Oaks factors 79 and found that they met the factors.

         77 Third parties, such as the non-settling defendants that prevailed, would be
         barred from asserting claims against the Fundamental Defendants arising out
         of or relating to the claims the Fundamental Defendants were released from.
         78 The Bankruptcy Court provided the citations for the 18 reported decisions
         the litigation had spawned. In re Fundamental Long Term Care, Inc., 527 B.R. at
         501 n.5.
         79 Those factors are: (i) the probability of success in the litigation between the
         settling parties; (ii) the difficulties, if any, to be encountered in collection; (iii)
         the complexity of the litigation involved and the expense, inconvenience, and
         delay necessarily attending it; and (iv) the paramount interests of the creditors
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         76                        Opinion of the Court                       21-10587

         Id. at 509. But it stated it would only approve “the proposed com-
         promises and bar orders conditioned on the entry of a ﬁnal, non-
         appealable order enjoining the Probate Estates from pursuing any
         claims arising out of the nucleus of facts set forth in the adversary
         complaint in this proceeding.” Id. at 517. The Probate Estates were
         free to appeal any of the Bankruptcy Court’s orders, as well as liti-
         gate their negligence claims against the THI Receiver and in Jones,
         Sasser, and Webb. Id.
                But they [we]re enjoined from (i) pursuing any pend-
                ing proceedings supplementary; (ii) litigating their
                civil rights claim against the GTCR Group, GECC,
                and Ventas; and (iii) pursuing any claims against the
                GTCR Group, GECC, Ventas, and Schron as “real
                parties in interest” in the Townsend, Jones, or Sasser
                cases. 80 In short, there will be no sequel.

         and a proper deference to their reasonable views. Wallis v. Justice Oaks II,
         Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990).
         80 The Bankruptcy Court added this footnote:
                In Townsend, the Townsend Estate obtained a $1.1 billion ver-
                dict against THI. After the trial, the Townsend Estate at-
                tempted to add the non-settling Defendants to the judgment
                as the “real parties in interest.” The Sasser and Jones Estates
                similarly attempted to add the non-settling Defendants as de-
                fendants in those state court actions—albeit before judg-
                ment—based on the same “real party in interest” theory. All
                three of those cases have been removed to this Court. In the
                Court’s view, the “real party in interest” theory, which is based
                on the January 5 settlement agreement [between the THI Re-
                ceiver and Targets], is completely without merit. In any case,
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         21-10587                   Opinion of the Court                               77

         Id.
                On March 23, the Bankruptcy Court entered an order ap-
         proving the Trustee’s proposed compromises; the approval was
         conditioned on the entry of an injunction permanently enjoining
         the Probate Estates from pursuing claims against any of the non-
         settling defendants—in other words, the non-Fundamental De-
         fendants. In addition to enjoining them in the manner it described
         on March 20, the Bankruptcy Court also enjoined the Probate Es-
         tates from “pursuing any claims against the non-settling Defend-
         ants arising out of the nucleus of facts set forth in the adversary
         complaint in this proceeding.” The Bankruptcy Court added this
         proviso: “In the event any part of this Order is reversed on appeal,
         the Motion to Compromise shall not be approved, and none of the
         terms of the parties’ compromise shall become eﬀective.”
               On March 27, 2015, the THI Receiver appealed the Bank-
         ruptcy Court’s decisions from March 20 and 23. On April 3, the
         Probate Estates appealed the Bankruptcy Court’s March 20 Mem-
         orandum Opinion and the ﬁnal judgment it entered on March 27.

                                *               *                *

                 it is essentially the same as several of the claims asserted here
                 just recast under a different name, and even if it is somehow
                 distinct, that claim could have been litigated here.
         In re Fundamental Long Term Care, Inc., 527 B.R. at 517 n.113.
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         78                     Opinion of the Court                  21-10587

                                      Commentary
                As the Bankruptcy Court recognized, “the main thrust of
         this case is the Plaintiﬀs’ claims for fraudulent transfer.” Wilkes let
         the Probate Estates’ fraudulent transfer claims extinguish to pre-
         serve its ability to seek multimillion-dollar jury verdicts in state
         court, then ﬁled a baseless Chapter 7 petition against an inoperative
         shell corporation with no assets—not even potential causes of ac-
         tion against FLTCH and the Targets. This, Wilkes thought, would
         essentially set the Trustee to work for Wilkes. In the bankruptcy
         proceeding, the Trustee could discover evidence that Wilkes could
         not discover in various state court wrongful death cases. Wilkes
         could use this evidence to potentially bring unrelated claims against
         the defendant entities.
                                           B.
                  On September 9, 2015, the Trustee moved the Bankruptcy
         Court: (i) to approve another compromise, this time between the
         Trustee and the bankruptcy estate’s professionals; (ii) to reconsider
         and vacate in part the March 20 Memorandum Opinion and the
         March 23 Order approving the two compromises described above;
         (iii) to enter a separate opinion or order unconditionally approving
         the $18.5 million settlement; and, if appropriate, (iv) to enter a sep-
         arate opinion or order addressing the Targets’ requests for perma-
         nent injunction, independent of the compromises discussed
         herein, subject to the ongoing rights of all parties. The Settlement
         Term Sheet attached to this motion provided that the proceeds of
         any claims against Troutman would be placed in a Litigation Trust
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         21-10587               Opinion of the Court                       79

         for the beneﬁt of deferred litigation expenses and the Probate Es-
         tates, that the Trustee (of the instant bankruptcy estate) would
         serve as trustee of the Litigation Trust, and that she would take
         “direction from a steering committee made up exclusively by the
         Probate Estates and their representative(s).”
                Following a hearing on October 5, the Bankruptcy Court
         granted the compromise in an order entered on October 23, 2015.
         The order adhered to the Bankruptcy Court’s position in its March
         20 Memorandum Opinion that the $18.5 million settlement satis-
         ﬁed the Justice Oaks factors, but the order declined to condition ap-
         proval of the settlement on a permanent non-appealable injunc-
         tion. The Bankruptcy Court concluded that the compromise was
         “fair and equitable in light of the permanent injunction the [Bank-
         ruptcy] Court will enter enjoining the Probate Estates from pursu-
         ing any claims against the non-settling Defendants arising out of
         the same nucleus of facts” alleged in the complaint the Probate Es-
         tates ﬁled in initiating the adversary proceeding back on October 1,
         2013.
                On October 28, 2015, the Bankruptcy Court entered an or-
         der granting the Trustee’s amended motion for approval of the
         third compromise—the compromise between the Trustee, the
         bankruptcy estate professionals, and the Probate Estates—which
         included a payment to Shumaker: $5 million as an attorney’s fee
         and costs of $620,148.48, for a total payment of $5,620,148.48. In
         addition, the order approved the continuing work of the Trustee
         found in the Settlement Term Sheet, providing that the proceeds
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         80                     Opinion of the Court                  21-10587

         of “[a]ny bankruptcy estate claims against [Troutman] and related
         parties [were to] be put into a Litigation Trust” administered pur-
         suant to the Settlement Term Sheet and that the Trustee would
         serve as the trustee of the Litigation Trust after concluding her du-
         ties as Trustee of the bankruptcy estate. The Bankruptcy Court
         also approved the payment of certain administrative expenses and
         the distribution of the balance:
                [The] Initial Settlement Proceeds [go] to the trust ac-
                count of Wilkes & McHugh, P.A. . . . for distribution
                to the Probate Estates in accordance with the existing
                fee agreements between them and their professionals,
                as well as applicable Florida and Pennsylvania law re-
                garding settlements of personal injury and wrongful
                death claims, trust accounts, and contingency fee
                agreements.
                Finally, the Court granted four motions to compromise: one
         with the Quintairos ﬁrm for $1.25 million; a second with GTCR-
         related parties for $1.5 million; a third with Ventas and GECC for
         $250,000 and $1.5 million, respectively; and a fourth with the THI
         Receiver for $700,000—for a total of $5.2 million. Added to the
         $18.5 million the Trustee received from the Fundamental Defend-
         ants, the Trustee received settlements totaling $23.7 million. Of
         the $23.7 million, the Probate Estates received about $16.2 million.
         But as provided in settlement agreements between the Estates and
         their attorneys, each estate received $1 million, less a $50,000 future
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         21-10587                 Opinion of the Court                            81

         cost reserve. The attorneys received the remainder as fees and
         costs. 81
                On December 22, 2015, the Bankruptcy Court entered an
         order granting Berman and Shumaker’s motion to withdraw as
         special litigation counsel. The order provided that Shumaker
         would “continue to assist with preparation of the Litigation Trust
         Agreement” referred to in the October 28 order “at no additional
         cost to the Trustee.”
                                             C.
                 While the adversary proceeding Wilkes initiated on October
         1, 2013, was coming to a close, the adversary proceeding the Trus-
         tee initiated against Troutman on June 2, 2014, 82 was still pending
         on a motion to dismiss the complaint for failure to state a claim for
         relief. Because the Troutman adversary proceeding aﬀected the on-
         going work of the Trustee, Berman, and Shumaker through the
         Litigation Trust as described above, the opinion now turns to that
         litigation.
                On December 8, 2015, the Bankruptcy Court granted Trout-
         man’s motion, dismissing Count I with prejudice and Counts II–V
         with leave to amend. On May 6, 2016, the Trustee ﬁled an amended
         complaint against Troutman alleging four counts: conspiring with
         FLTCH and others to defraud, and actually defrauding, THI’s

         81 The law ﬁrms receiving these fees were: Wilkes; Howell & Thornhill, P.A.;
         Stichter, Riedel, Blain & Postler, P.A.; and Kynes, Markman & Feldman, P.A.
         82 See supra note 73.
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         82                   Opinion of the Court               21-10587

         creditors; aiding and abetting the fraud; aiding and abetting
         FLTCH’s conversion of THMI’s assets; and aiding and abetting
         THI’s oﬃcers’ breach of their ﬁduciary duties to THMI.
                Troutman answered the amended complaint, denying the al-
         legations of wrongdoing and asserting 29 aﬃrmative defenses. The
         Trustee and Troutman thereafter entered into a settlement agree-
         ment which required Troutman to pay FLTCI’s bankruptcy estate
         the sum of $6.5 million—placed in the Litigation Trust—in ex-
         change for a bar against future claims. On December 16, 2016, the
         Trustee moved the Bankruptcy Court to approve that settlement
         agreement. Wilkes objected to the Trustee’s motion on January
         27, 2017. After a hearing, on May 17, 2017, the Bankruptcy Court
         granted the Trustee’s motion. The Bankruptcy Court ruled with-
         out considering Wilkes’s objection to the compromise because the
         Probate Estates “lack[ed] a pecuniary interest” in the matter. On
         May 31, Wilkes appealed the Bankruptcy Court’s decision to the
         District Court.
                On February 2, 2018, the Trustee moved to dismiss the ap-
         peal on the ground that the Probate Estates did not have standing
         to challenge her settlement with Troutman because the Probate
         Estates were not “persons aggrieved.” The Probate Estates had
         been “cashed-out” of the bankruptcy case, meaning that they
         would receive nothing from the $6.5 million Troutman settlement.
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         21-10587                Opinion of the Court                           83

         Rather, the entire sum would go to Wilkes (in the form of attor-
         ney’s fees and costs). 83
                On May 30, 2019, in the midst of Wilkes’s attempts to dis-
         qualify Shumaker and the bankruptcy judge, explained infra part
         IV, the District Court issued an order holding that the Probate Es-
         tates had standing to challenge the Troutman compromise agree-
         ment, vacating the Bankruptcy Court’s order approving the settle-
         ment, and remanding the matter so that the Bankruptcy Court
         could determine in the ﬁrst instance whether the Trustee had vio-
         lated the provisions of the Settlement Term Sheet—which was part
         of the compromise—by settling with Troutman without the Pro-
         bate Estates’ approval.
               On August 2, 2019, the Bankruptcy Court, on remand,
         granted the Trustee’s motion to approve the Troutman compro-
         mise. The Bankruptcy Court explained that because the Trustee
         had not been discharged from her duties as Trustee of the bank-
         ruptcy estate and the Bankruptcy Court had not approved the Liti-
         gation Trust, the Trustee had the authority to enter into the settle-
         ment with Troutman in her capacity as Chapter 7 Trustee.
                Wilkes appealed the Bankruptcy Court’s decision on August
         16, 2019, and on September 30, 2020, the District Court aﬃrmed.
         The District Court ﬁrst held that the Bankruptcy Court did not

         83 We assume in this opinion that Wilkes would share the proceeds of the
         Troutman settlement with the other lawyers who represented the Probate Es-
         tates.
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         84                     Opinion of the Court                 21-10587

         abuse its discretion in concluding that the Trustee had the authority
         to enter into a settlement with Troutman because, according to the
         plain language of the Settlement Term Sheet, the Probate Estates
         could not gain control over any potential settlements until the
         bankruptcy closed and the Trustee transitioned from Chapter 7
         trustee to the trustee of the Litigation Trust. The District Court
         also held that the Bankruptcy Court did not commit plain error by
         ﬁnding the Troutman settlement fair because the Bankruptcy
         Court’s determination had “substantial evidentiary support.”
               Wilkes ﬁled a motion for reconsideration on October 28,
         2020. The District Court denied the motion on December 18, 2020.
         The settlement with Troutman became ﬁnal on January 20, 2021,
         and on February 19, 2021, Troutman paid the Bankruptcy Estate
         $6.53 million.
                                          IV.
                                          A.
                While the dispute over the Troutman compromise was play-
         ing out, several other disputes arose. These disputes stemmed
         from a potential conﬂict of interest on Shumaker’s part. In short,
         Wilkes believed Shumaker to have a conﬂict of interest and moved
         to disqualify the ﬁrm from participating in the bankruptcy pro-
         ceedings and disgorge the attorney’s fees it had received. But
         Wilkes also believed that Chief Bankruptcy Judge Williamson had
         a conﬂict of interest and moved to have him recused so that an-
         other judge could decide the motion to disqualify Shumaker.
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         21-10587               Opinion of the Court                         85

                According to Berman, some time after the Bankruptcy
         Court approved the Trustee’s compromise with Troutman, Wilkes
         approached the Trustee, her general counsel—Watkins—and the
         Oﬃce of the United States Trustee, and alleged that Shumaker had
         an undisclosed conﬂict of interest while representing the Trustee
         such that Shumaker could not be considered “disinterested” under
         11 U.S.C. § 327(a). The alleged conﬂict was based on Shumaker’s
         long-standing legal representation of Healthcare REIT, Inc.
         (“HCN”). Berman and Shumaker considered the allegation to be
         meritless, so on May 4, 2018, under the penalty of perjury, Berman
         ﬁled a “Supplemental Disclosure” with the Bankruptcy Court,
         which focused on Shumaker’s relationship with HCN.
                 The Supplemental Disclosure revealed the following: Shu-
         maker had represented HCN, “a publicly traded real estate invest-
         ment trust based in Toledo, Ohio,” for thirty years as outside coun-
         sel “in corporate, real estate, and other transactional matters.”
         HCN’s only connection with any of the Probate Estates was its
         ownership of real estate leased to Lyric Health Care Holdings III,
         Inc., the owner and operator of the Auburndale Oaks nursing
         home in which Townsend and Jackson once resided. Under the
         lease, HCN surrendered possession and control of the premises to
         its lessee and therefore had no liability for injuries to anyone on the
         premises. In the complaint it ﬁled in Townsend (in state court) in
         January 2009, Wilkes named HCN as a defendant. But once it ap-
         peared that HCN had no involvement in the operation of the nurs-
         ing home, Wilkes dismissed HCN from the case.
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         86                      Opinion of the Court                   21-10587

                On June 4, 2018—while the Trustee’s motion to dismiss the
         Probate Estates’ appeal of the Bankruptcy Court’s May 17, 2017,
         order approving the Troutman compromise was pending in the
         District Court—Wilkes moved the Bankruptcy Court to disqualify
         Berman and Shumaker as the Trustee’s special litigation counsel
         nunc pro tunc and require them to disgorge the $5,620,148.48 they
         received as costs and an attorney’s fee. 84 The motion asserted that
         the Bankruptcy Court should declare Berman and Shumaker dis-
         qualiﬁed from the moment the Trustee sought its approval of their
         employment as special litigation counsel because they were not dis-
         interested as required by § 327(a). Moreover, the motion alleged
         Berman and Shumaker failed to timely disclose their “connections
         with the debtor, creditors, [or] any other party in interest”—con-
         nections that revealed their disinterestedness—pursuant to Rule
         2014. While the Supplemental Disclosure revealed Shumaker’s
         connections to HCN, as well as its relationship with the Auburn-
         dale Oaks property and the nursing home tenant, that disclosure
         was untimely, according to Wilkes.
                Wilkes accompanied that motion with a second motion—
         this one seeking to “withdraw the reference” of the motion for dis-
         qualiﬁcation and disgorgement. If granted, the motion to with-
         draw the reference would place the motion for disqualiﬁcation and
         disgorgement before the District Court, rather than the

         84 We assume that the motion requesting disgorgement included the fee and
         costs because it refers to “all past and future compensation.”
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         21-10587              Opinion of the Court                       87

         Bankruptcy Court. For that reason, the motion to withdraw the
         reference was placed on the District Court’s docket on July 3.
                 The motion to withdraw the reference reiterated the reasons
         Shumaker should be disqualiﬁed: because HCN, which Shumaker
         had been representing for thirty years, “was the owner of the nurs-
         ing homes where four of the six [Probate] Estates resided [and] was
         also a previous state court litigation adversary of the Townsend Es-
         tate [in Townsend].” The motion to withdraw the reference then
         leveled another allegedly disqualifying accusation, this one aimed
         at the bankruptcy judge presiding over the case—Chief Judge Wil-
         liamson.
                According to that motion, Chief Judge Williamson should
         not hear the motion to disqualify Shumaker because his law clerk,
         Edward J. Comey, had been an associate at Shumaker and had
         worked on bankruptcy cases with Berman. Had Shumaker dis-
         closed that information in the Supplemental Disclosure before its
         appointment as special litigation counsel, Chief Judge Williamson
         could have considered whether to recuse himself—especially if
         Comey’s history had come to light.
                The District Court issued an order denying Wilkes’s motion
         to withdraw the reference on November 1, 2018. In doing so, it
         dealt straightforwardly with the points Wilkes made in the motion
         to withdraw the reference:
               The [Probate E]states contend in the motion that Shu-
               maker’s representation of HCN, an owner of nursing fa-
               cilities, creates a disqualifying conﬂict of interest.
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         88                      Opinion of the Court                   21-10587

                Also, the estates contend that Shumaker failed to dis-
                close that a law clerk for the bankruptcy judge is a former
                Shumaker associate and is married to a Shumaker partner.
                Armed with these conﬂict theories, the [Probate
                E]states demand that Shumaker disgorge all fees
                earned in representing the trustee. . . .
                The bankruptcy judge’s determination of the disqual-
                iﬁcation motion promotes the eﬃcient use of judicial
                resources and advances uniformity in bankruptcy
                procedure. The bankruptcy judge enjoys the ad-
                vantage of presiding for six years over litigation in-
                volving the estates, the trustee, and their counsel.
                The bankruptcy judge “bring[s] a unique expertise to
                the question of when simultaneous representa-
                tion . . . is a conﬂict that works to the detriment of
                the estate in bankruptcy [or] its creditors.” And the
                bankruptcy judge “is on the front line, in the best po-
                sition to gauge the ongoing interplay of factors and
                to make delicate judgment calls” about the retention
                and disqualiﬁcation of counsel.
                The resolution of a motion to disqualify counsel in
                this circumstance is a core proceeding and the perti-
                nent considerations decisively favor denying with-
                drawal.
         Order Denying Motion to Withdraw the Reference at 1–3, Estate of
         Juanita Jackson v. Scharrer, No. 8:18-cv-01602 (M.D. Fla. Nov. 1, 2018)
         (third and fourth alterations in original) (emphasis added) (citations
         omitted).
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         21-10587                    Opinion of the Court                                 89

                 After failing in the District Court, on January 17, 2019,
         Wilkes moved both Chief Judge Williamson and his law clerk to
         recuse pursuant to 28 U.S.C. § 455 and Federal Rule of Bankruptcy
         5004. 85 The motion for recusal essentially tracked the points the
         District Court elaborated on in its November 1 order: Shumaker’s
         longstanding client, HCN, owned nursing facilities involved in the
         bankruptcy case; Chief Judge Williamson’s law clerk was a former
         Shumaker associate and is married to a Shumaker partner; and all
         of this created an unacceptable conﬂict.
               On June 7, 2019, Chief Judge Williamson decided Wilkes’s
         recusal motion. He observed that § 455(b) “provides for the recusal

         85 28 U.S.C. § 455 provides in relevant part:
                 (a) Any . . . judge . . . of the United States shall disqualify him-
                 self in any proceeding in which his impartiality might reason-
                 ably be questioned.
                 (b) He shall also disqualify himself in the following circum-
                 stances:
                 1. Where he has a personal bias or prejudice concerning a
                 party, or personal knowledge of disputed evidentiary facts con-
                 cerning the proceeding;
                 2. Where in private practice he served as a lawyer in the matter
                 in controversy, or a lawyer with whom he previously practiced
                 law served during such association as a lawyer concerning the
                 matter.
         Rule 5004 provides: “[a] bankruptcy judge shall be governed by 28 U.S.C. §
         455, and disqualified from presiding over the proceeding or contested matter
         in which the disqualifying circumstances arise[] or, if appropriate, shall be dis-
         qualified from presiding over the case.” Fed. R. Bankr. P. 5004(a).
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         90                      Opinion of the Court                    21-10587

         of a judge if the judge’s spouse has an interest that could be aﬀected
         by the outcome of the case, or if the judge has a personal bias or
         personal knowledge of disputed facts in the case.” Chief Judge Wil-
         liamson read Wilkes’s motion as centering on these points: (1) “that
         Comey was previously associated with Shumaker”; (2) that Comey
         “may have personal knowledge of the relationship” between HCN
         and Shumaker; (3) that “Comey’s spouse has a ﬁnancial interest in
         Shumaker”; and (4) that “Comey’s conﬂict should be imputed to
         the Court,” thereby necessitating the Bankruptcy Court’s recusal.
                In responding to these points, Chief Judge Williamson stated
         that he screened Comey from the case following the ﬁling of the
         motion to disqualify Shumaker and would not impute Comey’s
         prior association with Shumaker or Comey’s wife’s status with the
         law ﬁrm to himself. The judge acknowledged that
               in evaluating a request for recusal of a judge, Courts
               should consider whether there is an actual and rea-
               sonable doubt concerning the judge’s impartiality.
               Congress has required that a judge’s impartiality must
               reasonably be questioned before the judge recuses
               himself, “because there is a need to prevent parties
               from manipulating the system for strategic reasons,
               perhaps to obtain a judge more to their liking.”
               In this case, the timing and circumstances of the Recusal
               Motion suest that the request may stem from a search for
               a diﬀerent judge to consider the Disqualiﬁcation Motion
               and related issues, rather than a concern for the Court’s im-
               partiality.
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         21-10587                Opinion of the Court                            91

               The Probate Estates ﬁled the Disqualiﬁcation Motion
               and the Recusal Motion, but will retain no money
               from any settlements reached by the bankruptcy es-
               tate. Wilkes, as attorney for the Probate Estates, has
               admitted that the Probate Estates “[a]re not going to
               get any cash” from future settlements generated by
               the Trustee. Instead, the Probate Estates have con-
               tractually agreed to convey any distributions from the
               bankruptcy estate to their attorneys as payment of
               the attorneys’ deferred fees and costs totaling more
               than $7 million.
               In the Disqualiﬁcation Motion, the Probate Estates
               seek the disgorgement from Shumaker of “any and
               all past and future compensation approved by this
               Court.” It appears, therefore, that the Probate Estates may
               seek to collect any funds that Shumaker is required to dis-
               gorge, solely in an eﬀort to recoup their attorneys’ deferred
               fees and costs. To the extent that the disgorged funds
               are property of the bankruptcy estate, the Court pos-
               sesses jurisdiction over the ultimate award of the dis-
               gorged funds.
               The Probate Estates initially moved to withdraw the
               reference of the Disqualiﬁcation Motion in order to
               have it decided by a District Court judge. The Recusal
               Motion was ﬁled only after the District Court denied
               the Motion to Withdraw the Reference, in part be-
               cause the bankruptcy judge “enjoys the advantage of
               presiding for six years over litigation involving the es-
               tates, the trustee, and their counsel.”
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         92                        Opinion of the Court                      21-10587

                Under these circumstances, the Court has considered
                whether the Recusal Motion was ﬁled because of rea-
                sonable doubts about its impartiality, or whether the
                Recusal Motion was ﬁled for the strategic purpose of
                obtaining a diﬀerent judge, and ﬁnds that recusal is
                not warranted.
         Order and Memorandum Opinion on Probate Estates’ Motion for
         Recusal at 17–19, In re Fundamental Long Term Health Care, Inc., No.
         8:11-bk-22258 (Bankr. M.D. Fla. June 7, 2019) (alteration in original)
         (emphasis added) (citations and footnotes omitted).
                On June 21, 2019, Wilkes moved the District Court for leave
         to appeal the interlocutory order denying its motion to recuse. The
         heart of Wilkes’s argument, in the District Court’s view, was that
         the “late screening of Comey was insuﬃcient to cure the alleged
         bias” of Chief Judge Williamson.
                On July 30, 2019, the District Court denied Wilkes leave to
         appeal because it established none of the three elements required
         under 28 U.S.C. § 1292(b) for an interlocutory appeal: (1) the appeal
         did not present a controlling question of law; (2) the appeal failed
         to present a substantial ground for diﬀerence of opinion; and (3)
         resolution of the appeal would not advance the ultimate determi-
         nation of litigation. 86

         86 The District Court noted that Wilkes had petitioned the District Court for
         a writ of mandamus requiring Chief Judge Williamson “to recuse himself from
         the entire Chapter 7 proceeding.” That petition was pending before another
         district judge at the time the District Court denied Wilkes’s motion for leave.
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         21-10587                 Opinion of the Court                               93

                                              B.
                On August 21, 2019, while Wilkes’s appeal of the Bank-
         ruptcy Court’s approval of the Troutman settlement was pending,
         the Bankruptcy Court decided the Probate Estates’ motion to dis-
         qualify Berman and Shumaker and for disgorgement of their pay-
         ment in a Memorandum Opinion. In re Fundamental Long Term
         Care, Inc., 605 B.R. 249 (Bankr. M.D. Fla. 2019). The Bankruptcy
         Court began by noting why Wilkes ﬁled the motion two and a half
         years after Shumaker’s withdrawal from the case as the Trustee’s
         special litigation counsel: “The attorneys were dissatisﬁed with the
         Trustee’s settlement of the proceeding against Troutman . . . be-
         cause the projected $2.8 million distribution to the Probate Estates
         from the settlement was insuﬃcient to pay their deferred attor-
         ney’s fees in the amount of $7,352,104.38.” 87 Id. at 256.

         87 As the Bankruptcy Court noted:
                The [motion for disqualification and disgorgement] was also
                filed after the Probate Estates unsuccessfully objected to the
                Trustee’s compromise of the proceeding against Troutman
                Sanders LLP. In the Objection, the Probate Estates com-
                plained that the Trustee’s compromise improperly barred
                them from pursuing their own claims against Troutman, and
                that the compromise did not fairly disclose the amount of any
                distribution that the Probate Estates would receive from the
                settlement funds.
                The Probate Estates ha[d] already received approximately
                $16.2 million out of $23.7 million in settlements generated by
                the Trustee during the course of the bankruptcy case. Of the
                $16.2 million paid to the Probate Estates in the aggregate . . .
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         94                        Opinion of the Court                      21-10587

               The Bankruptcy Court then turned to the argument Wilkes
         advanced in support of the Probate Estates’ motion:
                In their Summary of Argument . . . the Probate Es-
                tates assert that they have uncovered connections be-
                tween Shumaker and at least four entities that af-
                fected Shumaker’s disinterestedness: (1) Healthcare
                REIT [HCN], which they assert is “an actual or poten-
                tial adversary” of the Probate Estates and the bank-
                ruptcy estate; (2) two entities known as Lyric Health
                Care, LLC and Lyric Health Care Holdings III, Inc.
                (together, Lyric), which they assert are adversaries of
                the Probate Estates and THMI, the Debtor’s subsidi-
                ary; and (3) Home Quality Management, Inc. (HQM),
                which they assert is an adversary of two of the Pro-
                bate Estates.
         Id. at 256.
              As the Bankruptcy Court saw it, Wilkes was contending that
         Shumaker’s connections to HCN, Lyric, and HQM rendered Ber-
         man and Shumaker “unable to fulﬁll [their] ﬁduciary duties to the

                each individual probate estate actually received $1 million less
                a $50,000.00 “future cost reserve.” The balance of the distri-
                bution paid to the Probate Estates from the bankruptcy estate
                was disbursed to their attorneys for their fees and other
                charges. Consequently, the six Probate Estates received less
                than $6 million from their total distribution of $16.2 million,
                and the remaining $10 million was used to pay the Probate Es-
                tates’ attorney’s fees and costs.
         In re Fundamental Long Term Care, Inc., 605 B.R. at 255–56 (footnote omitted).
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         21-10587                 Opinion of the Court                             95

         only creditors in the bankruptcy case,” the Probate Estates, and
         therefore incapable of being disinterested as required by 11 U.S.C.
         § 327(a). Id. at 256–57. In addressing this disinterestedness point,
         the Bankruptcy Court ﬁrst recalled the service § 327(a) and Rule
         2014 perform in the administration of a bankruptcy estate.
                Section 327(a) authorizes a trustee, with the court’s ap-
         proval, to employ one or more attorneys or other professional per-
         sons “that do not hold or represent an interest adverse to the estate,
         and that are disinterested persons, to represent or assist the trustee
         in carrying out the trustee’s duties.” Id. at 254 (quoting 11 U.S.C.
         § 327(a)). A “disinterested person” is a person who “does not have
         an interest materially adverse to the interest of the estate or of any
         class of creditors or equity security holders, by reason of any direct
         or indirect relationship to, connection with, or interest in, the
         debtor, or for any other reason.” Id. (emphasis added) (quoting 11
         U.S.C. § 101(14)(C)). The Bankruptcy Code does not deﬁne the
         phrase “interest materially adverse to the estate.” This Court has,
         however, and we deﬁne a “materially adverse interest” as
                an “economic interest that would tend to lessen the
                value of the bankruptcy estate or that would create
                either an actual or potential dispute in which the es-
                tate is a rival claimant . . . or . . . a predisposition under
                the circumstances that render such a bias against the
                estate.”
         Electro-Wire Prods., Inc. v. Sirte & Permutt, P.C., 40 F.3d 356, 361 (11th
         Cir. 1994) (alteration in original) (quoting Roger J. Au & Son, Inc. v.
         Aetna Ins. Co., 64 B.R. 600, 604 (N.D. Ohio 1986)).
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         96                     Opinion of the Court                 21-10587

                Federal Rule of Bankruptcy Procedure 2014 implements the
         disinterestedness provision of § 327(a) by requiring professional
         persons to make certain disclosures at the time they seek approval
         of their employment. Speciﬁcally, a professional must set forth any
         “connections with the debtor, creditors, or any other party in inter-
         est, their respective attorneys and accountants, the United States
         trustee, or any person employed in the oﬃce of the United States
         trustee.” Fed. R. Bankr. P. 2014(a). Under the rule, a professional
         must disclose all “connections” to parties in interest “that are not
         so remote as to be de minimis.” In re Fullenkamp, 477 B.R. 826, 834
         (Bankr. M.D. Fla. 2011) (quoting In re Leslie Fay Cos., Inc., 175 B.R.
         525, 536 (Bankr. S.D.N.Y. 1994)) (internal quotations omitted).
               As the Bankruptcy Court observed:
               A professional who violates § 327(a) and Rule 2014
               may be disqualiﬁed and may be required to disgorge
               any fees that they have received for the representa-
               tion. Section 328(c) of the Bankruptcy Code, for ex-
               ample, provides that the Court may deny compensa-
               tion to a professional person employed under § 327 if,
               at any time during the professional person’s employ-
               ment, he “is not a disinterested person, or represents
               or holds an interest adverse to the interest of the es-
               tate with respect to the matter on which such profes-
               sional person is employed.” Similarly, a failure to dis-
               close the connections required by Rule 2014 “can war-
               rant disqualiﬁcation, denial of compensation, and dis-
               gorgement of any compensation already received.”
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         21-10587              Opinion of the Court                       97

         In re Fundamental Long Term Care, Inc., 605 B.R. at 255 (footnotes
         omitted).
                With these principles in hand, the Bankruptcy Court consid-
         ered the arguments Wilkes advanced in support of the Probate Es-
         tates’ motion. Wilkes’s primary contention, as characterized by the
         Bankruptcy Court, was that “Shumaker also represent[ed] [HCN],
         which leased the underlying real property to certain of the nursing
         homes involved in the wrongful death actions.” Id. at 252. Conse-
         quently, HCN’s interest was “adverse to” the Probate Estates and
         to the bankruptcy estate, and Shumaker’s representation of HCN
         was not timely disclosed to creditors or the Bankruptcy Court. Id.
                Characterizing HCN as the owner of the real property
         leased to the nursing homes was only half true. HCN, according
         to Wilkes, was “the owner of the nursing homes where the major-
         ity of the [Probate Estates’ decedents] resided.” Id. at 257. And
         Lyric and HQM were adversaries of the Probate Estates and THMI.
                The Bankruptcy Court meticulously examined the way in
         which HCN, Lyric, and HQM may have aﬀected Shumaker’s disin-
         terestedness under § 327(a). Here is what the Bankruptcy Court
         found, starting with HCN.
                                        HCN
                 It was undisputed that Shumaker represented HCN, a real
         estate investment trust, and had done so for several years. The only
         tangible connection between HCN and any of the Probate Estates
         occurred in June 2005, when HCN purchased the real property on
         which the Auburndale Oaks nursing home was located and in
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         98                     Opinion of the Court               21-10587

         which Townsend and Jackson resided. Contrary to Wilkes’s repre-
         sentation, however, HCN did not own or operate the facility. HCN
         merely leased the property to a tenant—one of the Lyric entities—
         and that entity operated the home. As the Bankruptcy Court noted:
               Despite scores of hours of deposition testimony and
               thousands of exhibits developed through a joint dis-
               covery eﬀort, [Wilkes] and the Trustee never consid-
               ered [HCN] as potentially liable to the bankruptcy es-
               tate because of any prepetition transactions. In fact,
               [Wilkes] acknowledge[s] that [HCN]’s existence and
               contact with THI appeared in deposition exhibits,
               Bates-stamped documents, and other discovery mate-
               rials in the case. But [HCN] never emerged from the
               materials as a potential target for recovery. The
               March 2006 transaction [the bust-out scheme], for ex-
               ample, was “front and center” of the [Adversary] Pro-
               ceeding, but the joint investigation by the Trustee and
               [Wilkes] never revealed any potential claim against
               [HCN] arising out of a connection with THI.
         Id. at 260 (footnote omitted).
                The Bankruptcy Court cited a letter that Watkins, the Trus-
         tee’s general counsel, wrote to Wilkes on January 18, 2018—four
         and a half months before Wilkes ﬁled the motion to disqualify Shu-
         maker as the Trustee’s litigation counsel. The letter was in re-
         sponse to Wilkes’s letter to Watkins of December 29, 2017, in
         which Wilkes attached 18 items purportedly showing that Shu-
         maker’s relationship to HCN disqualiﬁed Shumaker from serving
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         21-10587              Opinion of the Court                         99

         as the Trustee’s counsel. The Bankruptcy Court quoted the follow-
         ing from Watkins’s letter to Wilkes:
               The Involuntary [Chapter 7] petition was ﬁled on De-
               cember 5, 2011. Despite your knowledge that [HCN]
               was a party to the Briar Hill suit for a short period of
               time, I have no records or recollection of [HCN] be-
               ing a topic of discussion (as a potential target or oth-
               erwise) in the bankruptcy case. [HCN] was also not
               a creditor in the bankruptcy case, and did not appear
               to have any ongoing business or contact with the
               Debtor, [FLTCI]. In fact, the ﬁrst time [HCN] was
               brought to our attention is when you raised Shu-
               maker’s alleged conﬂict of interest in or about Sep-
               tember 2017, nearly 6 years after the involuntary pe-
               tition had been ﬁled.
         Id.
                The Bankruptcy Court then stated that “[b]ased on [its] re-
         view of the documents sent by [Wilkes], the Trustee’s general
         counsel did not see how [HCN] had any relationship to the
         Debtor[] and did not ﬁnd a conﬂict created by Shumaker’s repre-
         sentation of [HCN].” Id. (internal quotation marks omitted). The
         Bankruptcy Court ended its analysis of the HCN issue by conclud-
         ing that Shumaker’s relationship with HCN was not disqualifying
         under § 327:
               In summary, [Wilkes] allege[s] that [HCN] had prepe-
               tition connections to THI that were not investigated
               in the bankruptcy case because of [HCN]’s attorney-
               client relationship with Shumaker.         But the
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         100                     Opinion of the Court                  21-10587

                prepetition transactions were the subject of exhaus-
                tive joint discovery and litigation in multiple proceed-
                ings, and neither [Wilkes] nor the Trustee ever con-
                sidered [HCN] as potentially liable to the bankruptcy
                estate. For these reasons, Shumaker’s representation
                of [HCN] did not lessen the value of the bankruptcy
                estate, create a potential dispute between the bank-
                ruptcy estate and [HCN], or create a circumstance
                that would generate a bias against the bankruptcy es-
                tate.
         Id. at 260–61.
                                          Lyric
              The Bankruptcy Court provided a brief explanation of Shu-
         maker’s relationship with Lyric:
                [HCN] leased the property underlying the Auburn-
                dale Oaks nursing facility to Lyric . . . after [HCN] pur-
                chased the property in 2005, and Lyric thereafter op-
                erated the nursing home facility. [HCN] sold the
                property in December 2012. Shumaker acknowl-
                edges that Lyric may have made payments to Shu-
                maker in relatively small amounts during Lyric’s lease
                of the property[,] . . . such payments represent[ing]
                compensation for work performed by Shumaker
                for . . . [HCN]. Shumaker’s services were not pro-
                vided to Lyric, and Lyric made the payments only
                pursuant to its obligations under the lease.
         Id. at 261.
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         21-10587               Opinion of the Court                        101

               Summarizing, the Bankruptcy Court found that “Shumaker
         did not serve as Lyric’s attorney, and [] its representation of Lyric’s
         landlord did not create a disqualifying conﬂict of interest in the
         bankruptcy case.” Id.
                                         HQM
               HQM operated nursing homes in Florida under leases with
         HCN; HCN served as landlord and owned the real estate on which
         the homes were situated. Shumaker never served as HQM’s attor-
         ney—but, as with Lyric, Shumaker may have received payments
         from HQM pursuant to its contract with HCN. The payments
         would be for work Shumaker performed for HCN. Id. at 262.
               The Probate Estates sued HQM in Nunziata and Webb, but
         HQM was dismissed from the lawsuits in 2009, two years prior to
         the Chapter 7 bankruptcy case here. Neither Wilkes nor the Trus-
         tee considered HQM a Target—that is, a transferee of THMI’s as-
         sets—so HQM was not mentioned in the complaint Wilkes ﬁled in
         the bankruptcy case to initiate the adversary proceeding. In sum,
         the Bankruptcy Court found that Shumaker’s representation of
         HQM’s landlord, HCN, did not create a conﬂict of interest in the
         bankruptcy case. Id.
                Having concluded that Shumaker’s legal representation of
         HCN and Shumaker’s interactions with Lyric and HQM were, in
         eﬀect, immaterial to its § 327(a) analysis, the Bankruptcy Court re-
         turned to Wilkes’s contention that Shumaker failed to comply with
         Rule 2014 by omitting its representation of HCN from its initial
         disclosures. The Bankruptcy Court found no violation because
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         102                       Opinion of the Court                     21-10587

                Shumaker’s representation of [HCN] was not adverse
                to the Probate Estates or to the bankruptcy estate
                [and] there [was] no evidence that Shumaker was
                aware of any alleged connection between [HCN] and
                the Probate Estates, or [HCN] and the bankruptcy es-
                tate, before [Wilkes] raised the issue in 2017. In other
                words, this [was] not a situation in which Shumaker
                knew of the alleged connections and deliberately
                chose not to disclose them, or in which Shumaker’s
                conﬂict check system was wholly inadequate.
         Id. at 263.
               Based on the foregoing analysis, the Bankruptcy Court, on
         August 21, 2019, entered an order denying the motion for disquali-
         ﬁcation and disgorgement.
                                              C.
                The Probate Estates appealed that order to the District
         Court. The District Court found no error in the Bankruptcy
         Court’s conclusion that Shumaker’s pre-petition connections with
         HCN, Lyric, and HQM did not create a disqualifying conﬂict of in-
         terest in the bankruptcy case under § 327(a). 88 In re Fundamental
         Long Term Care, Inc., No. 8:19-cv-2176-T-33, 2020 WL 954982, at *8–
         9 (M.D. Fla. Feb. 27, 2020). The District Court did ﬁnd error,

         88 Whether Shumaker’s connections with HCN, Lyric, and HQM created a
         disqualifying conflict of interest under 11 U.S.C. § 327(a) presented a mixed
         question of fact and law. The District Court found no clear error in the Bank-
         ruptcy Court’s fact findings regarding Shumaker’s involvement with HCN,
         Lyric, and HQM and the entities’ relationship to the bankruptcy estate.
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         21-10587              Opinion of the Court                      103

         however, in the Bankruptcy Court’s analysis of the issues presented
         by the Probate Estates’ argument that Shumaker violated Rule
         2014.
                The District Court began its discussion of the Bankruptcy
         Court’s order denying Wilkes’s motion for disqualiﬁcation and dis-
         gorgement by noting that the Bankruptcy Court found that Shu-
         maker did not violate Rule 2014 by omitting its representation of
         HCN in its initial disclosures. Id. at *11. The Bankruptcy Court
         reached this conclusion based on its ﬁnding that there was no evi-
         dence that Shumaker was aware of any alleged connection be-
         tween HCN and the Probate Estates or between HCN and the
         bankruptcy estate. Id. This, the Bankruptcy Court added, was not
         a situation in which Shumaker knew of the alleged connections and
         deliberately chose not to disclose them, or one in which the opera-
         tion of the conﬂict system in the Shumaker law oﬃce was wholly
         inadequate and thus could not be relied on. Id. In short, there was
         “no knowing violation of Rule 2014 by Shumaker.” Id.
                 Although the District Court saw no error in the Bankruptcy
         Court’s ﬁnding that Shumaker did not knowingly violate Rule
         2014, it was concerned about what the order did not say. It was
         “unclear . . . whether the Bankruptcy Court considered a negligent
         or inadvertent nondisclosure after the initial disclosure was made.”
         Id. at *12. As the District Court explained, the order was
               ambiguous . . . [and] otherwise silent as to whether
               the Bankruptcy Court analyzed—under a negligence
               lens—Shumaker’s failure to identify and disclose po-
               tential connections between its 30-year, long term
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         104                      Opinion of the Court                  21-10587

                  client and the bankruptcy estate, its creditors, and
                  other parties of interest after the initial disclosures
                  were made. Additionally, the [order was] silent as to
                  the nondisclosures of connections to Lyric and HQM.
         Id. 89
                The District Court therefore vacated the Bankruptcy
         Court’s Rule 2014 ruling and remanded the matter to the Bank-
         ruptcy Court so it could consider the record through the negli-
         gence lens and determine, in the ﬁrst instance: (1) whether there
         was “an unintentional, negligent and/or inadvertent nondisclo-
         sure” of Shumaker’s connections to HCN, Lyric, and HQM; (2)
         whether a Rule 2014 violation occurred; (3) if so, whether sanctions
         were warranted; and (4) if sanctions were warranted, what type of
         sanctions would be warranted. Id. In all other respects, the District
         Court aﬃrmed the order denying the motion for disqualiﬁcation
         and disgorgement. Id. at *13.
                                             D.
                On remand, the Bankruptcy Court complied with the Dis-
         trict Court’s mandate, answering the questions the District Court
         put to it:
                  Th[is] Court has considered the record on remand
                  and ﬁnds that Shumaker inadvertently and non-negli-
                  gently failed to disclose all of its connections with the
                  Debtor, creditors, or other interested parties in this

         89 The District Court appears to have overlooked the payments Lyric and
         HQM made to Shumaker pursuant to the lease agreements with HCN.
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         21-10587               Opinion of the Court                      105

               case. The Court further ﬁnds that no sanctions are
               warranted because the connections did not create a
               disqualifying conﬂict of interest, the nondisclosures
               were inadvertent, the connections were not material,
               Shumaker corrected the inadvertent nondisclosures,
               and Shumaker’s representation of the Trustee greatly
               beneﬁted the bankruptcy estate.
         In re Fundamental Long Term Care, Inc., 614 B.R. 753, 756 (Bankr.
         M.D. Fla. 2020).
               After making these ﬁndings, the Bankruptcy Court ex-
         plained how it reached them. It did so after citing the disclosures
         Wilkes says Shumaker should have made. Wilkes again alleged that
         Shumaker failed to disclose its connections with HCN, Lyric, and
         HQM pre-petition. See id. at 757.
                 According to Wilkes, Shumaker’s connections with these en-
         tities should have been revealed on June 1, 2012, in Shumaker’s dec-
         laration of disinterestedness ﬁled with the Trustee’s application for
         approval of Shumaker’s employment. If not then, Wilkes argued,
         the disclosures should have been made at any of the following
         times: on March 22, 2013, in a supplemental disclosure in support
         of the application; on February 6, 2014, in an amended declaration
         of disinterestedness to accompany the Trustee’s motion to modify
         the terms of Shumaker’s retention as special counsel; or on July 27,
         2016, in a notice related to continued disinterestedness.
               Neither the ﬁrst declaration nor any of the supplements
         Wilkes mentioned disclosed any connection between Shumaker
         and HCN, Lyric, or HQM. The Bankruptcy Court found that “the
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         106                    Opinion of the Court                 21-10587

         omission was inadvertent and not the result of negligence.” Id. at
         760–61. The case law did not explain what constitutes negligent
         nondisclosure under Rule 2014, so the Bankruptcy Court drew on
         Florida law in concluding that the omissions were not caused by
         negligence:
               Generally, . . . a misrepresentation is negligent under
               Florida law if the representor “should have known the
               representation was false.” To state a claim for negli-
               gent misrepresentation, for example, a plaintiﬀ must
               allege that the representation was made “without
               knowledge of its truth or falsity, or . . . under circum-
               stances in which he ought to have known of its fal-
               sity.”
         Id. at 761 (footnote omitted).
               In determining whether Shumaker was negligent, the Bank-
         ruptcy Court was mindful that:
               [U]nder Rule 2014, an attorney is not charged with
               the duty to disclose “every conceivable interpretation
               of its connections and possible consequence resulting
               from the connections; as well as a prediction of the
               outcome of any litigation that may result from, or be
               related to, the referenced connection.” When an at-
               torney seeks employment in a bankruptcy case, the
               disclosure required by Rule 2014 should not be “an
               impossible task subject to endless litigation over what
               would be enough.”
         Id. (footnotes omitted).
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         21-10587               Opinion of the Court                      107

                In the Bankruptcy Court’s view, the record “d[id] not show
         that Shumaker knowingly omitted its connections with HCN,
         Lyric, and HQM from its Declarations,” or that “Shumaker omit-
         ted the connections under circumstances in which it should have
         known of the requirement to disclose.” Id.
                 The Bankruptcy Court considered whether Shumaker’s sup-
         plemental disclosures—of May 4, 2018, after Wilkes raised the is-
         sue of Shumaker’s potential conﬂict of interest, and on July 3, 2018,
         in a memorandum Shumaker ﬁled in opposition to the motion for
         disqualiﬁcation and disgorgement—cast light on Shumaker’s dec-
         larations so that Shumaker should have known that it had been re-
         quired to disclose its connections with HCN, Lyric, and HQM from
         the outset. The Bankruptcy Court found that the May 4 and July 3
         supplemental disclosures contained nothing indicating that Shu-
         maker, from the start, omitted disclosing its connections with
         those entities under circumstances in which it should have known
         that it had to disclose them.
               Regarding HCN, the Bankruptcy Court reasoned:
               The [May 4] Supplemental Disclosure include[d] the
               following representations with respect to HCN: (1)
               Shumaker did not represent HCN in the action com-
               menced on behalf of the Townsend Estate, and there-
               fore did not ﬁnd any client representation adverse to
               the Debtor’s creditors when it ran its conﬂicts checks;
               (2) Shumaker was never litigation counsel for HCN as
               against any of the Probate Estates; (3) Shumaker took
               only limited action as outside counsel in the
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         108                    Opinion of the Court               21-10587

               Townsend litigation by signing interrogatory re-
               sponses, did not open a ﬁle for the Townsend litiga-
               tion, and did not ﬁnd any connection between the
               Townsend Estate and Shumaker in its conﬂicts
               checks; (4) none of the Probate Estates had any claim
               against HCN as of the date that the bankruptcy peti-
               tion was ﬁled; (5) neither Shumaker nor the Trustee
               knew of a connection between HCN and the Town-
               send Estate before the Probate Estates raised the issue
               in 2017; and (6) HCN was never a target of any poten-
               tial litigation by the Trustee, and was never discussed
               by the Trustee or the Probate Estates’ attorneys.
         Id. at 761–62 (footnotes omitted).
               Regarding Lyric, the May 4 disclosure revealed:
                (1) Lyric was never Shumaker’s client; (2) Shumaker’s
               conﬂict system reﬂects that Lyric was an adverse
               party to HCN in corporate or real estate transactions
               that Shumaker worked on for HCN; (3) any payments
               received by Shumaker from Lyric likely represented
               reimbursement to HCN for charges that HCN had in-
               curred; and (4) Lyric was never a target of any litiga-
               tion by the Trustee in the bankruptcy case.
         Id. at 762 (footnotes omitted).
                In the memorandum from July 3, 2018, Shumaker “ad-
         dressed the [Probate Estates’] allegations regarding HQM by stat-
         ing that HQM [was] not its client, that HQM had leased real prop-
         erty from HCN upon which it operated nursing homes in Florida,
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         21-10587              Opinion of the Court                       109

         and that HQM was never a target of any litigation in the bank-
         ruptcy case.” Id.
               Taking the supplemental disclosures of May 4 and July 3 into
         account, the Bankruptcy Court found:
               Shumaker did not omit its connections with HCN,
               Lyric, and HQM under circumstances in which it
               should have known of the requirement to disclose.
               Shumaker did not represent HCN in any pre-bank-
               ruptcy litigation involving the Probate Estates, and
               none of HCN’s pre-petition transactions ever sur-
               faced as targets in the bankruptcy case despite exhaus-
               tive discovery and litigation. Lyric and HQM were
               not Shumaker’s clients. Instead, they were adverse to
               Shumaker’s client because of their landlord-tenant re-
               lationships.
               Shumaker performed its customary conﬂicts checks,
               and no conﬂict appeared in its ﬁles. There is nothing
               in the record to show that Shumaker disregarded ﬂags
               that should have alerted it to the connections, that
               Shumaker’s conﬂict check system is inherently
               ﬂawed, or that Shumaker maintains the system in a
               manner that reﬂects poor intra-ﬁrm communication
               and data input.
         Id.
                After noting that circumstances involving a conﬂict check
         system may constitute grounds for ﬁnding an intentional violation
         of Rule 2014, the Bankruptcy Court then quoted In re Fullenkamp:
         “[G]iven the various relationships between the parties, the Court is
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         110                      Opinion of the Court                     21-10587

         comfortable that [the] failure to discover the relationship was not .
         . . the result of a woefully inadequate conﬂict check system.” Id.
         (quoting In re Fullenkamp, 477 B.R. 826, 834 (Bankr. M.D. Fla. 2011)
         (internal quotation marks omitted)).
                Next, the Bankruptcy Court noted that
                [i]n Fullenkamp, the Court concluded that the omis-
                sion was inadvertent and did not rise to the level of a
                sanctionable nondisclosure. In this case, as in Ful-
                lenkamp, the record does not show that Shumaker in-
                itially omitted its connections to HCN, Lyric, and
                HQM under circumstances in which it should have
                known of the requirement to disclose. The omission
                was not the result of negligence.
         Id. at 762–63 (footnote omitted).
                 Finally, the Bankruptcy Court addressed the question of
         sanctions. It concluded that “no sanctions [were] warranted for the
         omission because the connections did not create a disqualifying
         conﬂict, the omission was inadvertent, the connections were not
         material to the bankruptcy estate, Shumaker corrected the omis-
         sions, and Shumaker’s representation provided a substantial beneﬁt
         to the estate.” Id. at 765–66. 90

         90 Regarding sanctions—that is, the disgorgement the Probate Estates were
         seeking from Shumaker—the Bankruptcy Court noted that “any compensa-
         tion recovered from Shumaker would be used to pay the balance of the attor-
         ney’s fees or costs owed by the [Probate] Estates” to Wilkes and would not go
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         21-10587                  Opinion of the Court                           111

                                              E.
                The Probate Estates appealed the Bankruptcy Court’s reso-
         lution of the Rule 2014 liability issues to the District Court. Wilkes
         argued that the Bankruptcy Court: (1) abused its discretion in deny-
         ing the Probate Estates an opportunity to conduct discovery on
         whether Shumaker’s omission to disclose its pre-petition connec-
         tions with HCN, Lyric, and HQM was unintentional, negligent,
         and/or inadvertent; (2) abused its discretion in failing to hold a
         hearing on whether such omission was unintentional, negligent,
         and/or inadvertent; and (3) used an inapplicable standard in deter-
         mining whether such omission was unintentional, negligent,
         and/or inadvertent. See In re Fundamental Long Term Care, Inc., No.
         8:20-cv-956, 2021 WL 222779, at *3 (M.D. Fla. Jan. 22, 2021).
                 Addressing the ﬁrst argument, the District Court recalled
         that, in the prior appeal, it “held that the Bankruptcy Court had a
         suﬃcient record to conclude that there was no intentional violation
         of Rule 2014.” Id. (citing In re Fundamental Long Term Care, Inc.,
         2020 WL 954982, at *11). Wilkes contended that that record was
         insuﬃcient, though, to permit the Bankruptcy Court to determine
         that Shumaker’s nondisclosure of its connections with HCN, Lyric,
         and HQM was an unintentional, negligent, or inadvertent nondis-
         closure. Wilkes also contended that the Bankruptcy Court’s denial
         of its request to reopen discovery for the purpose of establishing a

         to the Probate Estates themselves. In re Fundamental Long Term Care, Inc., 614
         B.R. at 755.
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         112                        Opinion of the Court              21-10587

         record suﬃcient to resolve that issue constituted an abuse of its
         right to discovery.
                The District Court disagreed and held that the Bankruptcy
         Court did not err in limiting discovery on remand. Id. The District
         Court noted that the Bankruptcy Court was intimately familiar
         with the factual and procedural history of the case, which had
         spanned several years. “Discovery was voluminous, as evidenced
         by [Wilkes’s] thirty-seven-page Motion to Disqualify and thirty-
         four attached exhibits, consisting of hundreds of pages. Shu-
         maker’s response also exceeded thirty pages and contained nine-
         teen attached exhibits.” Id. Elaborating on the record before the
         Bankruptcy Court, the District Court said:
                A negligence inquiry may diﬀer from an intentional-
                ity inquiry, but these ﬁlings indicate the parties exten-
                sively briefed all facets of disqualiﬁcation. The record
                provided the Bankruptcy Court with a thorough his-
                tory of Shumaker’s relationship with HCN, including
                the nature of previous legal representations, the pre-
                cise legal tasks Shumaker performed for HCN, and
                how HCN aﬀected Shumaker’s conﬂict checks. The
                record likewise contained detailed information on
                Shumaker’s interactions with Lyric and HQM, and
                how those entities appeared in the conﬂict system.
                The Bankruptcy Court was well within its discretion
                to base its decision on this information and to limit
                discovery it deemed unnecessary.
         Id. (citations omitted).
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         21-10587               Opinion of the Court                      113

                Like its ﬁrst argument, Wilkes’s second argument asserted
         an abuse of discretion. Wilkes argued that the Bankruptcy Court
         should have held an evidentiary hearing because material issues of
         fact existed regarding Shumaker’s failure to disclose its connections
         with HCN, Lyric, and HQM. Again, the District Court disagreed,
         reasoning that the extensive ﬁlings presented to the Bankruptcy
         Court in support of and in opposition to the motion to disqualify
         provided the Bankruptcy Court with “ample evidence” from which
         to make the ﬁndings the District Court requested. Id. at *4. The
         District Court then explained that “a bankruptcy judge ‘does not
         abuse her discretion in reaching a decision without holding an evi-
         dentiary hearing where the record provided ample evidence on
         which the court could make such a decision.’” Id. (quoting In re
         Garcia, 532 B.R. 173, 182 (B.A.P. 1st Cir. 2015)). The District Court
         noted that this was not a case where the record was inadequate to
         allow the Bankruptcy Court to resolve disputed issues of material
         fact and it was “unnecessary to conduct an evidentiary hearing on
         a contested matter unless there are disputed issues of material fact
         that a Bankruptcy Court cannot decide based on the record.” Id.
         (internal quotation marks and citation omitted).
                Wilkes’s third argument was that the Bankruptcy Court
         abused its discretion in relying on the negligent misrepresentation
         standard of Florida law in determining whether Shumaker’s failure
         to disclose its pre-petition interactions with HCN, Lyric, and HQM
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         114                       Opinion of the Court                      21-10587

         in its Rule 2014 disclosure was negligent. 91 Because “Shumaker had
         an aﬃrmative duty to disclose any relevant connections,” Wilkes
         argued, “the correct analysis should have been one of reasonable-
         ness.” Id. “By erroneously appl[ying] the elements of the fraud-
         based tort of negligent misrepresentation, rather than conducting
         a reasonableness analysis, [Wilkes] claim[s] the Bankruptcy Court
         abused its discretion.” Id. (ﬁrst alteration in original) (internal quo-
         tation marks and citation omitted).
               The District Court disagreed with Wilkes’s characterization
         of the Bankruptcy Court’s opinion. According to the District
         Court:
                The Estates argue that the Bankruptcy Court focused
                “almost entirely on [Shumaker’s] asserted lack of
                knowledge,” but Shumaker’s “purported lack of its
                undisclosed connections is not determinative to a
                negligence analysis.” Therefore, according to the Es-
                tates, the Bankruptcy Court used an incorrect legal
                standard because it “never analyzed the reasonable-
                ness of [Shumaker’s] asserted lack of knowledge un-
                der the circumstances.”
                But the Bankruptcy Court speciﬁcally examined the
                circumstances under which Shumaker failed to dis-
                close its connections. In concluding that the omission
                was not the result of negligence, the Bankruptcy

         91 Whether a court has misapplied the substantive law controlling its decision
         presents a question of law, not of discretion. The District Court’s analysis of
         the third argument correctly treated the negligence issue as a question of law.
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         21-10587              Opinion of the Court                      115

               Court not only considered what Shumaker purport-
               edly knew through its conﬂict check system, but also
               noted that (1) Shumaker never represented HCN in
               any pre-bankruptcy litigation involving the Estates,
               (2) HCN never surfaced as a target in the bankruptcy
               action despite exhaustive discovery on potential tar-
               gets, and (3) Shumaker never represented Lyric or
               HQM, but only dealt with them in an adverse posture
               as counsel for their landlords.
               Based on Shumaker’s purported knowledge at the
               time of the omissions, and these surrounding circum-
               stances, the Bankruptcy Court held that the omis-
               sions were not made under circumstances in which
               Shumaker “should have known of the requirement to
               disclose.” Therefore, the Court disagrees with the Es-
               tates’ contention that the Bankruptcy Court entirely
               eschewed the issue of reasonableness. The Bank-
               ruptcy Court considered the circumstances in which
               the omission was made and concluded that under the
               circumstances, the omission was “not the result of
               negligence.”
               The Court disagrees that the use of a negligent mis-
               representation standard constituted an abuse of dis-
               cretion. As noted by the Bankruptcy Court, no case
               law explains what constitutes a negligent nondisclo-
               sure under Rule 2014. Even the Estates’ cited case law
               states that there is “no clear deﬁnition of [the term
               negligence] in the context of discovery misconduct.”
               Therefore, the Court cannot say that the Bankruptcy
               Court used a clearly incorrect legal standard in
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         116                    Opinion of the Court                 21-10587

                evaluating Shumaker’s omissions as negligent misrep-
                resentations.
         Id. at *5 (alterations and emphasis in original) (citations omitted).
                Based on what Shumaker knew at the time of the omissions
         and these surrounding circumstances, the Bankruptcy Court held
         that Shumaker’s omissions “were not made under circumstances in
         which Shumaker ‘should have known of the requirement to dis-
         close.’” Id. (quoting In re Fundamental Long Term Care, Inc., 614 B.R.
         at 763). The District Court therefore disagreed with Wilkes’s claim
         that the Bankruptcy Court “entirely eschewed the issue of reason-
         ableness.” Id. “The Bankruptcy Court considered the circum-
         stances in which the omission was made and concluded that under
         the circumstances, the omission was ‘not the result of negligence.’”
         Id. (quoting In re Fundamental Long Term Care, Inc., 614 B.R. at 763).
                The District Court noted that, contrary to Wilkes’s position,
         the Bankruptcy Court acted consistent with the instructions it was
         given on remand when it used a negligent misrepresentation stand-
         ard. The Bankruptcy Court was instructed “to examine whether
         there was an ‘unintentional, negligent and/or inadvertent nondis-
         closure by Shumaker.’” Id. (quoting In re Fundamental Long Term
         Care, Inc., 2020 WL 954982, at *13). “By deﬁnition, failing to dis-
         close all relevant connections would be a negligent misrepresenta-
         tion by omission.” Id. Therefore, the District Court found itself
         unable to say that the Bankruptcy Court erred in evaluating Shu-
         maker’s omission under a negligent misrepresentation standard.
         Id.
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         21-10587              Opinion of the Court                        117

               In addition, the District Court agreed with Shumaker that
               the use of the negligent misrepresentation legal
               standard [was] consistent with the purpose of Rule
               2014. The rule requires an applicant for appointment
               by the trustee to “state the speciﬁc facts showing . . .
               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.”
               . . . [T]his rule does not require attorneys to raise
               “every conceivable interpretation of its connections
               and possible consequence resulting from the connec-
               tions, as well as a prediction of the outcome of any
               litigation that may result from, or be related to, the
               referenced connection.”
         Id. (citations omitted). The District Court concluded its consider-
         ation of Wilkes’s third argument by holding: “Examining Shu-
         maker’s omission under a negligent misrepresentation standard
         (that is, whether Shumaker omitted the connections under circum-
         stances in which it ‘ought to have known of its falsity’) [was] con-
         sistent with this purpose” and was not an abuse of discretion. Id.
         at *6.
                Based on the ﬁlings the parties submitted regarding Shu-
         maker’s Rule 2014 disclosures, the Bankruptcy Court had found
         that “there was no evidence showing Shumaker disregarded any
         red ﬂags that should have alerted it to the connections or that the
         conﬂict system was inherently ﬂawed, or that Shumaker
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         118                       Opinion of the Court                  21-10587

         maintained the conﬂict system in a manner that reﬂects poor intra-
         ﬁrm communication and data input.” Id. The District Court found
         no error in the Bankruptcy Court’s conclusion that Shumaker’s fail-
         ure to disclose its connections with HCN, Lyric, and HQM was
         non-negligent and inadvertent. Id. The District Court therefore
         aﬃrmed the Bankruptcy Court’s denial of the motion for disquali-
         ﬁcation and disgorgement. Id. at *7.
                                               V.
                The Probate Estates now appeal the District Court’s deci-
         sion aﬃrming the Bankruptcy Court’s April 16, 2020, order deny-
         ing the motion for disqualiﬁcation and disgorgement. They pre-
         sent ﬁve issues for our review; Shumaker presents three. 92 They

         92 The issues that the Probate Estates present are:
                I. Whether the District Court erred in aﬃrming the Bank-
                ruptcy Court’s determination on remand when the District
                Court found that [Shumaker] did not dispute that it repre-
                sented [HCN], or that [HCN] was the landlord and owner of
                [Lyric] at one time.
                II. Whether the District Court erred in aﬃrming the Bank-
                ruptcy Court’s determination on remand that [Shumaker’s] vi-
                olations were nonnegligent.
                III. Whether the District Court erred in aﬃrming the Bank-
                ruptcy Court’s use of a negligent misrepresentation standard
                rather than conducting a reasonableness analysis of [Shu-
                maker’s] violations.
                IV. Whether the District Court erred in determining that the
                use of the negligent misrepresentation legal standard is
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         21-10587                    Opinion of the Court                           119

         are essentially the same set of issues: (1) whether the District Court
         erred in aﬃrming the Bankruptcy Court’s decision that Shumaker
         did not have a disqualifying interest under 11 U.S.C. § 327(a); (2)
         whether the District Court erred in aﬃrming the Bankruptcy
         Court’s decision that Shumaker’s omission in its Rule 2014 disclo-
         sures of its pre-petition connections with HCN, Lyric, and HQM
         was inadvertent and not negligent; and (3) whether the Bankruptcy
         Court abused its discretion in ﬁnding that sanctions were not war-
         ranted for the omission. 93

                 consistent with the purpose of Federal Rule of Bankruptcy
                 Procedure 2014.
                 V. Whether the District Court erred in aﬃrming the Bank-
                 ruptcy Court’s determination on remand that [Shumaker’s] vi-
                 olations were inadvertent.
         Appellants’ Br. at 1. Shumaker’s brief presents the issues this way:
                 (1) whether the Bankruptcy Court abused its discretion when
                 it found that Shumaker did not possess a disqualifying interest
                 under 11 U.S.C. § 327(a), which finding was affirmed by the
                 District Court; (2) whether the Bankruptcy Court abused its
                 discretion when it found that Shumaker’s omission of imma-
                 terial connections from its Rule 2014 disclosures was inadvert-
                 ent and not negligent; and (3) whether the Bankruptcy Court
                 abused its discretion when it found no sanctions were war-
                 ranted for Shumaker’s omissions.
         Appellees’ Br. at 2.
         93 Because we resolve the first two issues in Shumaker’s favor, we need not
         consider the third issue.
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         120                     Opinion of the Court                   21-10587

                 In entertaining these issues, we sit as a second court of re-
         view. We therefore examine independently the factual and legal
         determinations of the Bankruptcy Court and employ the same
         standards of review the District Court employed. In re Issac Leaseco,
         Inc., 389 F.3d 1205, 1209 (11th Cir. 2004). We review legal conclu-
         sions of the Bankruptcy Court or the District Court de novo, and
         we review the Bankruptcy Court’s ﬁndings of fact for clear error.
         In re Fin. Federated Title & Tr., Inc., 309 F.3d 1325, 1328–29 (11th Cir.
         2002).
                We review denials of motions for sanctions, disqualiﬁcation,
         and disgorgement for abuse of discretion. See In re Hood, 727 F.3d
         1360, 1363 (11th Cir. 2013) (sanctions); Giles v. Garwood, 853 F.2d
         876, 878 (11th Cir. 1988) (disqualiﬁcation); S.E.C. v. Levin, 849 F.3d
         995, 1001 (11th Cir. 2017) (disgorgement). “An abuse of discretion
         occurs if the judge fails to apply the proper legal standard or to fol-
         low proper procedures in making the determination or bases an
         award upon ﬁndings of fact that are clearly erroneous.” Electro-
         Wire Prods., Inc. v. Sirte & Permutt, P.C., 40 F.3d 356, 359 (11th Cir.
         1994) (internal quotation marks and citations omitted).
                                            A.
                Section 327(a) of the Bankruptcy Code provides that “the
         trustee, with the court’s approval, may employ one or more attor-
         neys, accountants, appraisers, auctioneers, or other professional
         persons, that do not hold or represent an interest adverse to the
         estate, and that are disinterested persons, to represent or assist the
         trustee in carrying out the trustee’s duties.” 11 U.S.C. § 327(a). The
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         21-10587                Opinion of the Court                         121

         concept of “adverse interests” appears twice in §327(a). First, coun-
         sel may “not hold or represent an interest adverse to the estate.”
         Second, counsel must be a “disinterested person,” which means
         that counsel may not, among other things, “have an interest mate-
         rially adverse to the interest of the estate or of any class of creditors
         or equity security holders.” Id. § 101(14)(C). The Bankruptcy Code
         does not deﬁne the phrase “hold or represent an interest materially
         adverse to the estate.” Hence, as the Second Circuit observed,
         “[w]hether an adverse interest exists is best determined on a case-
         by-case basis.” In re Arochem Corp., 176 F.3d 610, 623 (2d Cir. 1999).
                This appeal focuses on Shumaker’s representation of HCN
         as outside counsel and whether Shumaker was “disinterested”
         given its relationship with HCN. As the Second Circuit observed:
                [S]ection 327(a) is phrased in the present tense, per-
                mitting representation by professionals “that do not
                hold or represent an interest adverse to the estate,” and
                limiting the class of acceptable counsel to those “that
                are disinterested persons.” 11 U.S.C. § 327(a) (empha-
                sis added). . . . Thus, counsel will be disqualiﬁed under
                section 327(a) only if it presently “hold[s] or repre-
                sent[s] an interest adverse to the estate,” notwith-
                standing any interests it may have held or represented
                in the past. . . .
                This reasoning ﬁnds support in related portions of the
                Bankruptcy Code, which draw explicit distinctions
                between current and past relationships. For example,
                the Bankruptcy Code deﬁnes a “disinterested person”
                as a person that, among other things, “is not and was
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         122                     Opinion of the Court                      21-10587

               not an investment banker for any outstanding security
               of the debtor,” see 11 U.S.C. § 101(14)(B) (emphasis
               added); “has not been, within three years before the date
               of the ﬁling of the petition, an investment banker for a
               security of the debtor, or an attorney for such an in-
               vestment banker in connection with the oﬀer, sale, or
               issuance of a security of the debtor,” id. § 101(14)(C)
               (emphasis added); and “is not and was not, within two
               years before the date of the ﬁling of the petition, a director,
               oﬃcer, or employee of the debtor,” id.
               § 101(14)(D) (emphasis added). The Bankruptcy
               Code thus recognizes a distinction between past and
               present representation.
         Id. at 623–24 (alterations in original). We will assume for purposes
         of this appeal that § 327(a) applies to Shumaker’s pre-petition and
         post-petition representation of HCN.
               Wilkes begins the Probate Estates’ argument on the ﬁrst is-
         sue with this statement:
               The Bankruptcy Court and District Court erred when
               they concluded that [Shumaker] was disinterested
               and did not possess a disqualifying interest under
               § 327. In the underlying Disqualiﬁcation Order, the
               Bankruptcy Court found that although HCN owned
               the Auburndale Oaks nursing home where the loved-
               ones of three of the six decedents of the [Probate]
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         21-10587                  Opinion of the Court                              123

                Estates resided,[ 94] HCN was not adverse because
                HCN “had no involvement in the operation of the
                nursing home.” However, the record before the Dis-
                trict Court established that [Shumaker] “does not dis-
                pute that it represented HCN, or that HCN was the
                landlord and owner of Lyric [the operator of the nurs-
                ing homes] at one time.”
         Appellants’ Br. at 30 (ﬁfth alteration in original) (ﬁrst emphasis
         added) (citations omitted).
                How could the District Court have held that Shumaker was
         disinterested and did not possess a disqualifying interest under
         § 327 in the face of Shumaker’s admission that its client, HCN,
         owned the Lyric nursing home where six decedents resided? In
         Wilkes’s telling, HCN was not just the landlord—it was the owner
         of the Auburndale Oaks facility. As such, the District Court—and
         the Bankruptcy Court earlier—inexplicably overlooked that HCN
         actually owned the nursing home.

         94 The Probate Estates’ opening brief is apparently referring to the following
         statement in the Bankruptcy Court’s memorandum opinion denying their mo-
         tion to disqualify and require disgorgement:
                [HCN] owned the real property on which the Auburndale Oaks nurs-
                ing facility was located, but had no involvement in the operation
                of the nursing home. [HCN] was initially named as a defend-
                ant in a wrongful death action brought by one of the Probate
                Estates, but was dismissed from the action with prejudice be-
                fore the bankruptcy case was filed.
         In re Fundamental Long Term Care, Inc., 605 B.R. at 258 (emphasis added).
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         124                    Opinion of the Court                 21-10587

                Did Wilkes call this “oversight” to the District Court’s atten-
         tion and move it to reconsider its conclusion that Shumaker was
         disinterested? No. It made a strategic decision. Because Wilkes’s
         motion would have been rejected out of hand, Wilkes did not move
         the District Court to reconsider its aﬃrmance of the Bankruptcy
         Court’s ﬁnding that Shumaker’s representation of HCN did not
         disqualify Shumaker from serving as the Trustee’s counsel. The
         notion that HCN owned the Auburndale Oaks nursing home was
         squarely refuted by the evidentiary record in the Bankruptcy Court
         and the Bankruptcy Court’s ﬁndings of fact based on that record.
         Wilkes chose instead to forego moving the District Court for re-
         consideration and ask this Court, on appeal, to declare Shumaker
         bound by the “Shumaker does not dispute” statement under the
         doctrine of judicial estoppel.
                The District Court would have rejected any such motion for
         reconsideration brought by the Probate Estates for the same rea-
         sons the District Court gave in its order aﬃrming the Bankruptcy
         Court’s ﬁnding on the ownership of the Auburndale Oaks nursing
         home issue. See In re Fundamental Long Term Care, Inc., 2020 WL
         954982. The District Court recalled those reasons in the order we
         review today. In re Fundamental Long Term Care, Inc., 2021 WL
         222779.
                The District Court cited the Probate Estates’ motion for dis-
         qualiﬁcation and disgorgement, which was based on Shumaker’s
         representation of HCN and HCN’s connection to Lyric among oth-
         ers. “In the [motion], the [Probate] Estates argued that Shumaker
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         21-10587              Opinion of the Court                         125

         had a long-standing relationship with [HCN], a real estate invest-
         ment trust. At the time of the bankruptcy proceedings, Shumaker
         had acted as HCN’s general counsel for over thirty years.” Id. at *1
         (citations omitted). The District Court then recited what the evi-
         dentiary record in the Bankruptcy Court revealed and why in de-
         ciding the Probate Estates’ earlier appeal it agreed with the Bank-
         ruptcy Court that Shumaker, in representing HCN, had not pos-
         sessed a disqualifying interest under § 327(a):
               HCN owned and leased the real property to some of the
               nursing homes involved in the wrongful death ac-
               tions. Speciﬁcally, [HCN] had connections to THI,
               THMI, and the related company THI Holdings, all of
               which were litigation targets in the underlying bank-
               ruptcy proceedings. HCN also had connections with
               [Lyric] and [HQM], which operated the nursing homes
               where some of the deceased residents lived.
               The [Probate] Estates argued that (1) these connec-
               tions constituted representations of adverse interests,
               disqualifying Shumaker under Section 327(a), and (2)
               Shumaker violated Rule 2014 by failing to disclose
               these connections in its initial declaration of disinter-
               estedness.
               The Bankruptcy Court denied the Motion to Disqual-
               ify (Disqualiﬁcation Order) on August 21, 2019, ﬁnd-
               ing that Shumaker did not possess a disqualifying in-
               terest under Section 327(a) and that Shumaker’s omis-
               sions in the initial disclosures did not violate Rule
               2014. The [Probate] Estates appealed the decision.
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         126                    Opinion of the Court                  21-10587

                On appeal, this Court adopted and aﬃrmed the Dis-
                qualiﬁcation Order “in all respects except to the ex-
                tent the Bankruptcy Court found no violation of the
                disclosure requirements of Rule 2014.”
         Id. at *1–2 (emphasis added) (citations omitted).
                The District Court could have gone further in elaborating
         on Shumaker’s representation of HCN and HCN’s connections
         with Lyric and others involved in the nursing home industry by
         quoting from the Bankruptcy Court’s order denying the motion
         for disqualiﬁcation and disgorgement. See In re Fundamental Long
         Term Care, Inc., 605 B.R. 249 (Bankr. M.D. Fla. 2019). The order
         presented the Bankruptcy Court’s holding at the outset and then
         explained it.
                The holding:
                [HCN] owned the real property on which certain
                nursing homes were located, but had no involvement
                in the operation of the facilities. Additionally, despite
                exhaustive investigation, neither the Probate Estates
                nor the Chapter 7 Trustee ever considered [HCN] as
                potentially liable to the bankruptcy estate because of
                any prepetition transactions. Accordingly, Shu-
                maker’s representation of [HCN] was not adverse to
                the Probate Estates or the bankruptcy estate.
         Id. at 252.
                The explanation:
                [HCN] is a real estate investment trust with its princi-
                pal place of business in Toledo, Ohio. In the sworn
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         21-10587              Opinion of the Court                        127

               Supplemental Disclosure, Berman stated that the
               “only tangential connection between [HCN] and any
               of the Probate Estates, [is that] on or about June 30,
               2005, . . . [HCN] purchased the real property located
               at 919 Old Winter Haven Road, Auburndale, Flor-
               ida—the location of the Auburndale Oaks facility in
               which Ms. Townsend and Ms. Jackson resided for a
               period of time (the ‘Auburndale Oaks Property’).”
               But [HCN] did not operate the Auburndale Oaks nursing
               home. It leased the Auburndale Oaks Property to a tenant
               (one of the Lyric entities) that operated the nursing
               home. In an Aﬃdavit ﬁled in state court in 2010, a
               Vice President of [HCN] stated:
                     6. [HCN] leased the Real Property to
                     Lyric Health Care Holdings III, Inc.
                     (“Tenant”) on June 30, 2005.
                     7. [HCN] serves only as a Landlord to
                     its Tenant for the Real Property.
                     8. [HCN] does not control the services pro-
                     vided by its Tenants or its Tenant’s agents,
                     employees or representatives. It does not
                     operate, nor has it ever operated, Auburn-
                     dale Oaks Healthcare Center, nor does it
                     control, nor has it ever controlled, the
                     services provided by Auburndale Oaks
                     Healthcare Center, its agents, employ-
                     ees or representatives.
                      9. [HCN] has never had any control
                      over the hiring, supervision, or
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         128                   Opinion of the Court                 21-10587

                      management of employees at Auburn-
                      dale Oaks Healthcare Center and it does
                      not administer, direct, supervise, or pro-
                      vide health care or skilled nursing ser-
                      vices at any facility, including Auburn-
                      dale Oaks Healthcare Center.
               Even though [HCN] had no involvement in the operation
               of the nursing home, the Probate Estates contend that
               it was potentially liable to the residents of Auburn-
               dale Oaks because its lease required the tenant/oper-
               ator to provide [HCN] with certain ﬁnancial and li-
               censing documents. But the Probate Estates provide
               no authority for the proposition that a property
               owner is liable for a tenant nursing home’s negli-
               gence. Further, even if such potential liability did ex-
               ist, Ms. Townsend’s estate is the only party that as-
               serted a claim against [HCN], and that claim was dis-
               missed with prejudice.
               Speciﬁcally, [HCN] was named as a defendant in the
               wrongful death action ﬁled by the Townsend Estate
               in state court in 2009. In the sworn Supplemental Dis-
               closure, Berman states that Shumaker did not repre-
               sent [HCN] in the action by the Townsend Estate,
               took only limited action in the case consistent with its
               role as outside general counsel, did not take any ac-
               tion related to the substantive claims in the case, and
               did not open a ﬁle for the litigation.
               In January 2011, Townsend’s Estate ﬁled a Notice of
               Voluntary Dismissal of [HCN] from the action with-
               out prejudice. In August 2011, more than three
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         21-10587              Opinion of the Court                         129

               months before the bankruptcy case was ﬁled, the
               state court entered an order dismissing the action
               against [HCN] with prejudice.
               In summary, [HCN] owned the real property on which
               the Auburndale Oaks nursing facility was located, but had
               no involvement in the operation of the nursing home.
               [HCN] was initially named as a defendant in a wrong-
               ful death action brought by one of the Probate Es-
               tates, but was dismissed from the action with preju-
               dice before the bankruptcy case was ﬁled. For these
               reasons, [HCN] is not adverse to the Probate Estates,
               and Shumaker’s representation of [HCN] did not
               lessen the value of the bankruptcy estate, create a po-
               tential dispute between the bankruptcy estate and
               [HCN], or create a circumstance that would generate
               a bias against the bankruptcy estate.
         Id. at 257–58 (third alteration in original) (emphasis added) (foot-
         notes omitted).
                 The order denying Wilkes’s motion states that HCN “owned
         the real property on which the Auburndale Oaks nursing facility was
         located.” Id. at 258 (emphasis added). So what did Wilkes ﬁnd to
         support its statement that: “In the underlying [order,] the Bank-
         ruptcy Court found that . . . HCN owned the Auburndale Oaks
         nursing home”? Appellants’ Br. at 30. And its statement that:
         “[Shumaker] does not dispute that it represented HCN, or that
         HCN was the landlord and owner of Lyric [the operator of the
         nursing homes] at one time”? Id. (emphasis in original).
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         130                       Opinion of the Court                      21-10587

                The ﬁrst statement is squarely contradicted in both the
         Bankruptcy Court’s order and the District Court’s order aﬃrming
         it. The Bankruptcy Court’s order is replete with unassailable state-
         ments that HCN owned the real estate on which nursing homes, in-
         cluding the Auburndale Oaks nursing home, were located—not the
         nursing homes themselves. 95 The order also notes that the homes
         were operated by lessees like Lyric, not HCN, their landlord. The
         statement that HCN owned the Auburndale Oaks facility was not
         made by the Bankruptcy Court or the District Court in the decision
         on review here.
                 The second statement was in the record before the District
         Court, as the Probate Estates’ brief represents, but the words,
         “[Shumaker] does not dispute that it represented HCN, or that
         HCN was the landlord and owner of Lyric [the operator of the
         nursing homes] at one time,” id., do not appear in the underlying
         order denying Wilkes’s motion or the District Court order aﬃrm-
         ing it (as to the § 372(a) issues) or the District Court’s order here on
         appeal. Rather, the second statement appears in an order the Dis-
         trict Court entered on September 25, 2020, while the Probate Es-
         tates’ appeal of the Bankruptcy Court’s order was pending. See Es-
         tate of Arlene Townsend v. Shumaker, No. 8:20-cv-956-T-33, 2020 WL
         10318565, at *1 (M.D. Fla. Sept. 25, 2020).

         95 The statements are unassailable because the District Court, in affirming the
         Bankruptcy Court’s disposition of the §327(a) disqualification issue, found the
         statements supported by the evidence and thus not clearly erroneous. See gen-
         erally In re Fundamental Long Term Care, Inc., 2020 WL 954982.
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         21-10587                  Opinion of the Court                             131

                The September 25 order denied Wilkes’s motion to supple-
         ment the Bankruptcy Court’s record with a “Closing Checklist”
         that, according to Wilkes, would show “Shumaker’s relationship
         with [HCN], the landlord and owner of two nursing homes in-
         volved in this action.” Id. at *1. The September 25 order contained
         this statement: “Shumaker does not dispute that it represented
         HCN, or that HCN was the landlord and owner of Lyric at one
         time.” 96 Id. at *2.
                 As indicated supra, Wilkes did not move the District Court
         to reconsider its aﬃrmance of the Bankruptcy Court’s ﬁnding that
         HCN neither owned Lyric nor operated the Auburndale Oaks fa-
         cility. A ﬁnding that HCN did own and operate the facility was crit-
         ical to the Probate Estates’ position. It went to the heart of their
         motion for disqualiﬁcation and disgorgement and is the sine qua non
         of their disqualiﬁcation argument here. If the Probate Estates had

         96 The District Court entered its order deciding the Probate Estates’ appeal of
         the Bankruptcy Court’s April 16, 2020, order on January 22, 2021. In re Funda-
         mental Long Term Care, Inc., 2021 WL 222779. After making the statement
         quoted above, the order went on to state:
                The only issues before the Court on appeal are whether the
                Bankruptcy Court abused its discretion in determining that the
                failure to mention this connection was inadvertent and non-
                negligent, and that the omission did not warrant sanctions.
                The Closing Checklist does nothing to further this inquiry, as
                it merely conﬁrms the relationship all parties agree existed. In
                short, the Court “is not convinced that supplementing the rec-
                ord will assist it in deciding this appeal.”
         Estate of Townsend v. Shumaker, 2020 WL 10318565, at *2 (citation omitted).]
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         132                     Opinion of the Court                    21-10587

         moved the District Court to reconsider, we have no doubt the Dis-
         trict Court would have gotten to the bottom of the apparent incon-
         sistency—created by the “Shumaker does not dispute” statement
         and the Bankruptcy Court’s contrary statements in In re Fundamen-
         tal Long Term Care, Inc., 605 B.R. 249—and held an evidentiary hear-
         ing. 97 Shumaker contends that the statement from the September
         25 order was a pure scrivener’s error that the District Court simply
         didn’t catch. Appellees’ Br. at 21. Shumaker could have brought
         the error to the District Court’s attention but neglected to do so.
                So we are faced with an argument Wilkes chose not to pre-
         sent to the District Court on behalf of the Probate Estates and Shu-
         maker’s neglect in failing to point the District Court to what it be-
         lieved was a scrivener’s error. Because Shumaker “never objected
         to or denied this statement by the District Court,” Wilkes contends
         that Shumaker is judicially estopped from contending here that
         HCN did not own and operate the Auburndale Oaks nursing
         home. Appellants’ Br. at 30. It matters not to Wilkes whether the
         “Shumaker does not dispute” statement was a scrivener’s error.
         “The equitable doctrine of judicial estoppel is intended to protect
         courts against parties who seek to manipulate the judicial process
         by changing their legal positions to suit the exigencies of the mo-
         ment.” Slater v. United States Steel Corp., 871 F.3d 1174, 1176 (11th

         97 We assume that at such a hearing, Shumaker would introduce the docu-
         ments establishing HCN’s ownership of the real estate, and its leases with
         those owning and operating the nursing homes, into evidence.
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         21-10587                  Opinion of the Court                           133

         Cir. 2017) (en banc). According to Wilkes, that is what Shumaker
         is doing here—manipulating the judicial process.
                In considering whether the judicial estoppel doctrine should
         be invoked, Wilkes would have us start with Shumaker’s “does not
         dispute” position, as reﬂected in the District Court’s September 25
         order: HCN owned and operated the Auburndale Oaks nursing
         home. 98 Wilkes says that the manipulation of the judicial process
         occurred when Shumaker took the position he advances here, on
         appeal: HCN did not own and operate the Auburndale Oaks facil-
         ity. According to Wilkes, Shumaker changed its position as indi-
         cated in the September 25 order “to suit the exigencies of the mo-
         ment.”
                What Wilkes ignores is that the position Shumaker took—
         as reported in the September 25 order—was directly contrary to
         the position Shumaker had taken successfully at the hearing on the
         motion for disqualiﬁcation and disgorgement in the Bankruptcy
         Court and in the District Court on appeal. If the doctrine of judi-
         cial estoppel was in eﬀect on September 25, 2020, Shumaker’s

         98 The doctrine of judicial estoppel would not work for the Probate Estates if
         we started with the position Shumaker took throughout the litigation over the
         motion for disqualification and disgorgement: HCN owned the real estate on
         which the nursing home was located, while Lyric leased the land, created the
         nursing home, and thereafter operated it.
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         134                       Opinion of the Court                       21-10587

         position as announced that day abused the judicial process 99 and
         should be disregarded as manipulative of that process.
                We are unaware of a situation like the one here, and Wilkes
         has not cited one. Wilkes describes the instant scenario as follows.
         A party’s lawyer fails to call to a court’s attention a statement in the
         court’s order that, in the party’s view, misstates the party’s legal
         position and under the circumstances had to be a scrivener’s error.
         Despite the misstatement, the party prevails. On appeal, when the
         party’s adversary relies on the statement as written in the order, the
         party objects, explains why it believes the statement is a scrivener’s
         error, and takes the legal position it had been taking prior to the
         entry of the order. The adversary responds. Judicial estoppel bars
         the party from changing the legal position attributed to it in the
         order.
                Judicial estoppel is an equitable doctrine. It applies when a
         party advances a legal or factual position in one court, and the
         court relies on the position in deciding an issue. At the same time
         or later in another court, the party advances an entirely new legal
         or factual position—one that is contrary to the position advanced
         in the ﬁrst court. That is not the case here. We would be hard
         pressed to say that equity requires that we accept Wilkes’s argu-
         ment.

         99 If the statement that Wilkes points to was not a scrivener’s error, Shumaker
         abused the judicial process because its statement was flatly contrary to the po-
         sition it previously took in the Bankruptcy Court and in the District Court on
         appeal.
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         21-10587              Opinion of the Court                      135

                 We therefore hold that Shumaker was not disqualiﬁed from
         representing the Trustee of the Debtor’s (FLTCI’s) estate by virtue
         of its pre-petition representation of HCN or HCN’s connections
         with Lyric, HQM, or any of the other entities Wilkes has identiﬁed
         as rendering Shumaker disqualiﬁed. And we ﬁnd nothing relating
         to Shumaker’s post-petition representation of HCN that disquali-
         ﬁed Shumaker from representing the Trustee. Shumaker’s repre-
         sentation of HCN did not lessen the value of the bankruptcy es-
         tate, create a dispute between the bankruptcy estate and HCN, or
         create a circumstance that could be considered a bias against the
         bankruptcy estate. We therefore aﬃrm the District Court’s order
         as it relates to Shumaker’s alleged disqualiﬁcation under § 327(a).
                                          B.
                We turn now to the second issue this appeal presents:
         whether the District Court erred in aﬃrming the Bankruptcy
         Court’s decision that Shumaker’s omission in its Rule 2014 disclo-
         sures of its pre-petition connections with HCN, Lyric, and HQM
         was inadvertent and not negligent.
                The District Court remanded the disqualiﬁcation issue to
         the Bankruptcy Court with this instruction: “to determine, in the
         ﬁrst instance, if there was an unintentional, negligent and/or inad-
         vertent nondisclosure by Shumaker.” In re Fundamental Long Term
         Care, Inc., 2020 WL 954982, at *13. Whether the nondisclosure was
         negligent called for the determination of a mixed question of fact
         and law. Thus, an error would occur if the Bankruptcy Court
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         136                   Opinion of the Court                 21-10587

         applied the wrong legal standard for negligence or committed clear
         error in making its factual ﬁndings.
                Wilkes argues that the Bankruptcy Court made an error of
         law. The Bankruptcy Court, according to Wilkes, “erroneously ap-
         plied a negligent misrepresentation standard under Florida law to
         analyze [Shumaker’s] conduct, rather than negligence standard.”
         Appellants’ Br. at 37. And, Wilkes contends, the District Court
         erred in not vacating the Bankruptcy Court’s decision and remand-
         ing the case for further proceedings. See id. at 26.
                This is essentially the same argument Wilkes made to the
         District Court. Berman and Shumaker had a “duty to thoroughly
         investigate and disclose any connections that might be relevant to
         their disinterestedness.” Id. at 42. Whether their investigation was
         “reasonable” under the circumstances would determine whether
         they were negligent. See id. at 43. In Wilkes’s view:
               It was and is manifestly unreasonable that, [Shu-
               maker] failed to disclose the true nature of its HCN
               relationship which, at a minimum, included: (1) HCN
               and [Shumaker]’s status as litigation adversaries to the
               Townsend Estate just prior to Berman’s employment;
               (2) HCN’s ownership at the time of Berman’s employ-
               ment of the nursing homes where four of the six Creditor
               Estates’ decedents resided and were injured; and (3)
               [Shumaker]’s role in drafting HCN’s master lease
               agreement governing the subject-nursing homes at is-
               sue in this bankruptcy. That the HCN connections
               went undisclosed for so long implies an unreasonable
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         21-10587              Opinion of the Court                      137

               lack of disclosure, or an unreasonable system for
               compliance with Rule 2014.
         Id. at 43–44 (emphasis added). The ﬁrst item is inaccurate and
         meaningless. HCN was an adversary purely on paper, added to the
         complaint by Wilkes in shotgun fashion, and was ultimately dis-
         missed from the case. Shumaker did not enter the case as HCN’s
         counsel. The second item, as previously discussed, was false.
              The District Court disagreed with Wilkes’s treatment of the
         Bankruptcy Court’s order—thus addressing the third item:
               [T]he Bankruptcy Court speciﬁcally examined the cir-
               cumstances under which Shumaker failed to disclose
               its connections. In concluding that the omission was
               not the result of negligence, the Bankruptcy Court
               not only considered what Shumaker purportedly
               knew through its conﬂict check system, but also
               noted that (1) Shumaker never represented HCN in
               any pre-bankruptcy litigation involving the Estates,
               (2) HCN never surfaced as a target in the bankruptcy
               action despite exhaustive discovery on potential tar-
               gets, and (3) Shumaker never represented Lyric or
               HQM, but only dealt with them in an adverse posture
               as counsel for their landlords.
         In re Fundamental Long Term Care, Inc., 2021 WL 222779, at *5 (cita-
         tions omitted). The District Court found that the Bankruptcy
         Court fully considered the circumstances under which the alleged
         failure to disclose occurred and concluded that the failure was not
         the result of negligence. Id. We agree with the District Court’s
         conclusion and accordingly aﬃrm its judgment.
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         138                   Opinion of the Court                 21-10587

                                         VI.
                In conclusion, Chief Judge Williamson was right: this expan-
         sive and decade-plus dispute is, at its heart, a fraudulent transfer
         case. Wilkes, in representing the Probate Estates, sought huge
         sums in the form of damages in state court against the companies
         aﬃliated with the decedents’ nursing homes. After having received
         one multimillion-dollar judgment in Jackson, Wilkes realized that
         the powers that be in the THI corporate structure had executed a
         bust-out scheme to separate THMI’s liabilities from its assets and
         to hide those assets to avoid paying the Jackson judgment—as well
         as any potential future judgments awarded to the other estates.
                Upon learning of this scheme, which THI and company
         went to great lengths to hide, Wilkes could still have obtained some
         recovery for its clients by placing THMI in Chapter 7 bankruptcy
         or by pursuing fraudulent transfer actions against FLTCH and the
         Targets. This likely would have resulted in a smaller total recovery
         for the Probate Estates—and smaller attorney’s fees—because a
         bankruptcy court, rather than a jury, would evaluate the Estates’
         claims. Instead, Wilkes concocted a scheme of its own in which it
         placed FLTCI—THMI’s assetless parent company—into Chapter 7
         bankruptcy. Once the Bankruptcy Court appointed a trustee for
         FLTCI, Wilkes could then use the Trustee and the Trustee’s strong-
         arm power to enhance its own discovery and pursue causes of ac-
         tion that it would not be able to pursue alone, attempting to get at
         THMI’s assets through FLTCI.
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         21-10587              Opinion of the Court                      139

                 Though this scheme was an abuse of the bankruptcy pro-
         cess, it appeared to work for Wilkes, until the ﬁnal compromises
         were approved and Wilkes saw how much less in attorney’s fees it
         stood to earn—receiving far less than it stood to receive as contin-
         gency fees for roughly $2 billion in state court judgments. Wilkes
         then turned on the Trustee, Shumaker, and the Bankruptcy Court,
         seeking Chief Judge Williamson’s recusal, as well as Shumaker’s
         disqualiﬁcation as the Trustee’s special counsel and disgorgement
         of the fees Shumaker received. The Bankruptcy Court held that
         Shumaker was disinterested, as required by 11 U.S.C. § 327(a), and
         that sanctions were not warranted because any violation of Rule
         2014 was non-negligent. The District Court agreed.
                Not only do we agree with the Bankruptcy and District
         Courts’ reasoning, but when this saga is viewed as a whole, it is
         clear that the idea that Shumaker had a bias against Wilkes and the
         Probate Estates is baseless; if anything, Shumaker acted in a way
         that suggested a bias toward Wilkes and the Probate Estates.
               The judgment of the District Court is therefore
                      AFFIRMED.