In Re Edward R. Fitzsimmons, Debtor. Edward R. Fitzsimmons v. Edward M. Walsh, Trustee, and Official Creditors' Committee

Edward M. Walsh, trustee in bankruptcy of the estate of Edward R. FitzSimmons, appeals from a decision of the Bankruptcy Appellate Panels of the Ninth Circuit.

Edward FitzSimmons is an attorney who operates as a sole proprietorship a law practice known as “Law Offices of Edward R. FitzSimmons.” The practice employs other attorneys, along with various other staff members. In July of 1980, FitzSimmons filed a voluntary petition in the United States Bankruptcy Court for the Northern District of California seeking relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 1101 et seq.

At first, FitzSimmons was debtor-in-possession of his entire estate, including his law practice. The Bankruptcy Court subsequently appointed Walsh trustee of Fitz-Simmons’ estate, with the exception of his law practice, and entered an order regulating FitzSimmons’ operation of the law practice. This order allowed FitzSimmons to continue to operate the law practice as debtor-in-possession on behalf of the estate, subject to various restrictions. It permitted FitzSimmons to pay himself a salary of $3,500 per month out of the funds of the law practice and required him to remit to the Trustee at the end…