Applicability of Conflict of Interest Laws to Current and Former Executive Branch Employees Serving as Trustees in Bankruptcy Cases

Headnotes: 

Sections 203 and 205 of title 18 do not prohibit current executive branch employees from serving as bankruptcy trustees, if the United States is not a party to and lacks a “direct and substantial interest” in the particular bankruptcy proceeding. Otherwise, the sections bar current employees, except for United States Trustees and their employees, from serving as trustees in bankruptcy.

Subsections (a) and (b) of 18 U.S.C. § 207 do not prohibit former executive branch employees from serving as trustees, if the United States is not a party to and does not have a “direct and substantial interest” in the particular bankruptcy proceeding. Where the United States has such an interest, the subsections would prohibit a former executive branch employee from serving as a trustee in matters with respect to which he participated, or which fell under his supervision, while he was in governmentservice.

The narrow class of former high-level executive officials covered by 18 U.S.C. § 207(c) may not serve as trustees where the matter involved is one pending before the official’s former agency or is one in which that agency has a “direct and substantial interest.”

Updated July 9, 2014