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In re Sonicblue Inc.

Bankruptcy debtors'counsel issued a prepetition opinion letter assuring payment to certain of the debtors'senior bondholders who effectively controlled the creditors'committee in the debtors'bankruptcy. After disclosure of the opinion letter, the U.S. Trustee moved to disqualify the debtors'counsel and to appoint a chapter 11 trustee, and a claims trader which acquired claims against the estate moved to convert the case to chapter 7.
Ruling: 
Debtor's counsel disqualified for failure to disclose connection to senior bondholders who controlled creditors'committee.
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