UNITED STATES BANKRUPTCY COURT

DISTRICT OF MAINE

In re: ) Case No. 93-20821

Catherine Duffy Petit ) Chapter 11

)

Debtor )

MOTION FOR APPROVAL OF COMPROMISE

Peter C. Fessenden, the duly appointed Chapter 11 Trustee in this case, moves this Court for approval of a compromise with Poulos & Campbell, P.A., John S. Campbell, and Richard

E. Poulos. In consideration of a waiver of claims against the estate totaling approximately $107,000, the Trustee will release the aforesaid law firm and lawyers of and from any and all malpractice claims as generally alleged by the Debtor, Catherine Duffy Petit against them.

In support of this Motion for Approval of Compromise, the Movant respectively states as follows:

1. On June 4, 1993, an Involuntary Petition in bankruptcy was filed against the Debtor, Catherine Duffy Petit. Peter C. Fessenden, the Movant, was appointed the Chapter 11 Trustee on this case on June 6, 1994.

2. The Debtor, Old Orchard Ocean Pier Co. ("OOOPCO"), CDP, Inc. ("OOOPCO") and Whiteway Amusements, Inc. ("Whiteway") (corporations solely owned or controlled by the Debtor), have been represented at various times since 1986 in the case filed by them against Bernstein, Shur, Sawyer & Nelson and Key Bank (York County Superior Court CV-8&608) by Looney & Grossman, 101 Arch Street, Boston, Massachusetts, through Richard J. Grahn and William F. Looney, Jr.; Poulos & Campbell, P.A., 183 Middle Street, Portland, Maine, through John S. Campbell and Richard E. Poulos; and Paul Redmond, Boyce Farm Road, Lincoln, Massachusetts.

3. The Debtor filed a schedule of assets and liabilities with this Court on February 24, 1994. In Schedule B (Personal Property) she listed as an asset "possible attorney malpractice claims" stating that the value of such claims was unknown.

4. On numerous occasions since June 1994, the Debtor and her bankruptcy attorney have represented to the Court and the Movant that they were unaware of any malpractice claims against any of her former attorneys. They explained that the inclusion of such a possible asset was solely as the result of statements made by Attorney John Connor, counsel for New England Mortgage Services, Inc.; over the course of the involuntary bankruptcy proceedings. They merely wished to make sure that those schedules were complete.

S. In November 1994, Movant consulted independent counsel as to whether any viable malpractice claims exist against any of the former attorneys for the Debtor with respect to the BSS&N and Key Bank litigation. On the basis of the information that was then available, the independent counsel advised Movant that there were no such viable claims.

6. Recently, immediately following the granting of Key Bank's Motion for Summary Judgment on the remaining count, on May 8,1995, Steven F. Gordon (counsel for the Debtor) provided the Movant for the first time with more information regarding malpractice claims against her former counsel. In general, Mr. Gordon orally outlined the following claims:

7. Despite my request, Mr. Gordon has failed to provide Movant with a written explanation, detailing as fully as possible all attorney malpractice claims which the estate does or may have against any and all of the Debtor's attorneys. In addition, neither Mr. Gordon nor the Debtor during her B.R. 2004 examination provided requested information regarding the identity of each possible defendant, the breach of duty, the evidence necessary to prosecute such claim, and the projected damage amount of each claim.

8. On June 2, 1995, Movant sent a letter to all former counsel of the Debtor in which he outlined the malpractice claims asserted by the Debtor. Richard E. Poulos vigorously denies any wrongdoing whatsoever with respect to his and his firm's role as counsel for the Debtor in the BSSN and Key Bank litigation.

9. Based on my independent investigation and the advice previously received from his independent counsel, the Movant has concluded that the malpractice claims generally asserted by the Debtor are without merit and have no significant value to the estate. All but the claim of falling to take depositions of critical witnesses (see subparagraph (c) of paragraph 6 above), are based on 20120 hindsight. Even if true, which the Trustee does not believe to be the case, the Debtor was an active participant in all strategy decisions.

10. The Movant is satisfied that the Debtor was at all times represented by other independent counsel upon whom she relied in making any final decision or taking any appropriate action to protect her interests.

11. In addition to the lack of merit regarding any malpractice claims, the cost of proving negligence on the part of her former counsel and the requirement of proving a case within a case would be prohibitive to the estate, especially where the case is complex and entirely new counsel would have to be retained.

12. Any potential malpractice claims against the Debtor's former counsel, as set forth are assets of the bankruptcy estate and therefore within the power of the Trustee to settle, and/or release, subject to the approval of the Court.

13. Poulos & Campbell, P.A. has an unsecured claim in the amount of $107,489.86. A proof of claim in that amount was filed by Poulos & Campbell, P.A. in this case on June 22, 1995.

14. Movant Trustee has agreed, subject to this Court's approval, to release Poulos & Campbell, P.A., John S. Campbell, and Richard E. Poulos, of and from any and all claims based on allegations that such releasees acted wrongfully in connection with their having served as counsel to the Debtor in the litigation against Bernstein, Shur, Sawyer & Nelson and Key Bank. No other claims are released; all other claims, including but not limited to any claims that counsel mayu have been overpaid in such fashion as would constitute a fraudulent conveyance pursuant to 14 M.R.S.A. § 3571, et seq., are expressly retained by the estate. In exchange, the former counsel would, in consideration of the Trustee's release, waive the aforesaid unsecured claim against the estate.

15. Movant Trustee believes that this settlement is fair and reasonable and in the best interests of the estate and should be approved by this Court. The estate loses nothing in releasing such malpractice claims because, as noted previously, they are worthless. In exchange for such a release, however, the estate gains by the waiver of an unsecured claim in the amount of $107,489.86.

WHEREFORE, Peter C. Fessenden, the duly appointed Chapter 11 Trustee in this matter, moves that this Court approve the above-described compromise.

Dated: June 29, 1995. Peter C. Fessenden, Esq.

Chapter 11 Trustee, Bar No. 27

Peter C. Fessenden, Esq.

20 Federal Street

P.O Box 694

Brunswick, MB 04011-0694

UNITED STATES BANKRUPTCY COURT

DISTRICT OF MAINE

In re: ) Case No.93-20821

Catherine Duffy Petit ) Chapter 11

Debtor

)

)

)

To all creditors, Debtor, and parties-in-interest: notice is hereby given of a Motion for Approval of Compromise. The undersigned has filed with the Court a Motion for Approval of

Compromise with Poulos & Campbell, P.A., John S. Campbell, and Richard E. Poulos. Any

objection to the Motion for Approval of Compromise must be filed with the Clerk of the United

States Bankruptcy Court for the District of Maine, and served upon Movant Peter C. Fessenden,

Chapter 11 Trustee, at the Movant's address: 20 Federal Street, P.O. Box 694, Brunswick, ME

04011-0694, within twenty (20) days from the date of mailing of this Notice.

Any objection not timely filed and served may be considered waived. If a timely objection is made, the Court will set a hearing and will so notify such parties as the Court may direct.

Peter C. Fessenden, Esq.

20 Federal Street

P.O. Box 694

Brunswick, ME 04011-0694