Yoo

MEMORANDUM **

Rus, Miliband, & Smith (“RMS”) appeals the district court’s affirmance of a bankruptcy court’s order disgorging an $84,955.85 retainer (the “Retainer”) paid by Dick Cepek, Inc. to RMS for legal services rendered in Dick Cepek’s Chapter 11 bankruptcy case. After the bankruptcy court first ordered disgorgement in order to equalize payments among all Chapter 11 administrative claimants pursuant to 11 U.S.C. § 726 (b), RMS appealed to the Bankruptcy Appellate Panel for the Ninth Circuit (“BAP”). The BAP held that “a professional with a valid prepetition security retainer that has been properly documented, disclosed, and approved cannot be required to surrender it in the interest of equal treatment under § 726(b).” In re Dick Cepek, Inc., 339 B.R. 730, 732 (9th Cir. BAP 2006). The BAP remanded to the bankruptcy court to decide (1) whether, under California law, Dick Cepek granted RMS “an enforceable security interest in the funds”; and (2) if so, whether RMS “made an adequate disclosure of its secured interest in the Retainer.” Id. at 741 .

On remand, the bankruptcy court again ordered disgorgement, finding that there was neither a secured interest nor, assuming a…