What is an interested party? Consider these everyday scenarios: An unsupervised child encounters a take-one-piece-only Halloween bucket; a teacher administers a your-bonus-rides-on-these-results test; or a football team pays a doctor to conduct in-game concussion evaluations. These conflicts raise concerns about the ability of the conflicted party to be fair and impartial.

In bankruptcy, avoiding conflicts is paramount to the propriety of the process to ensure that professionals employed or compensated by the estate have no adverse interest, as well as to provide undivided loyalty to the estate. This has led to the development of requirements for disinterestedness of certain parties, including trustees and estate professionals.

But does the liquidating trustee of a post-confirmation liquidating trust need to be “disinterested”? In Health Diagnostic Laboratory Inc., the U.S. Bankruptcy Court for the Eastern District of Virginia addressed this issue of first impression and said “no.”