561 F.3d 1106 (10th Cir. 2009), 08-5160, In re Southwest Food Distributors, LLC

Docket Nº:08-5160.
Citation:561 F.3d 1106
Party Name:In re SOUTHWEST FOOD DISTRIBUTORS, LLC, d/b/a The Fadler Company, Debtor. Official Committee of Unsecured Creditors, Appellant, v. Eugene Harris, Receiver for JFC Management, Inc.; F & M Bank & Trust Company, Appellees.
Case Date:March 31, 2009
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1106

561 F.3d 1106 (10th Cir. 2009)

In re SOUTHWEST FOOD DISTRIBUTORS, LLC, d/b/a The Fadler Company, Debtor.

Official Committee of Unsecured Creditors, Appellant,

v.

Eugene Harris, Receiver for JFC Management, Inc.; F & M Bank & Trust Company, Appellees.

No. 08-5160.

United States Court of Appeals, Tenth Circuit

March 31, 2009

Page 1107

Harley J. Goldstein, Bell, Boyd & Lloyd, LLP, Chicago, IL, for Appellant.

Terry M. Thomas, Kayci Bair Hughes, Michael R. Pacewicz, Crowe & Dunlevy, PC, J. Schaad Titus, Kelley G. Loud, Titus, Hillis, Reynolds, Love, Dickman & McCalmon, Tulsa, OK, for Appellees.

Before KELLY, ANDERSON, and BRISCOE, Circuit Judges.

ANDERSON, Circuit Judge.

Appellant, the Official Committee of Unsecured Creditors (" Committee" ), appeals the district court's affirmance of a bankruptcy court's order denying the appointment of certain counsel.[*] We affirm.

BACKGROUND

On January 8, 2008, Southwest Food Distributors, LLC d/b/a The Fadler Company (" Debtor" ), filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court in the Northern District of Oklahoma. On the same day, the Debtor filed its " List of Creditors Holding 20 Largest Unsecured Claims," which included unsecured creditors in Texas, Illinois, Pennsylvania, Nebraska, Minnesota, and Georgia. On January 23, 2008, the Debtor filed its Summary of Schedules and Schedules A-H (collectively " Summaries and Schedules" ), which listed total assets of $1,157,651 and total liabilities of $12,240,882.

On January 31, 2008, the Office of the United States Trustee (" UST" ) appointed the Committee as an official committee to represent the interests of the unsecured creditors of the Debtor, pursuant to 11 U.S.C. § 1102, and filed a formal notice the next day reflecting this appointment. At the time of the Committee's appointment, the Committee was composed of five entities, each represented by an individual located outside the Northern District of Oklahoma.1 Also on January 31, 2008, the Committee selected Bell, Boyd & Lloyd LLP (" Bell Boyd" ) of Chicago, Illinois, as its lead counsel. Bell Boyd, in turn, selected Gable & Gotwals of Tulsa, Oklahoma, as its local counsel.

The Committee filed an " Application for Order Authorizing Official Committee of Unsecured Creditors to Retain and Employ Bell, Boyd & Lloyd LLP as Counsel" and an " Application for Order Authorizing Official Committee of Unsecured Creditors

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to Retain and Employ Gable [& ] Gotwals as Local Counsel" in February 2008. The application to employ Bell Boyd included (1) a summary of Bell Boyd's qualifications to represent the Committee; (2) the professional services to be provided to the Committee; (3) the names and hourly rates of the professionals expected to be providing services to the Committee; (4) an explanation of the formula used to calculate Bell Boyd's legal fees; (5) a request that the application be approved retroactive to the date of the appointment of the Committee; and (6) a statement that Bell Boyd has no connection with the Debtor, its creditors, or other parties in interest except as set forth in counsel's declaration. See Doc. 68, Appellant's App. at 165-69. The application represented that the rates for the Bell Boyd attorneys expected to perform work on the case ranged from $250 to $505 per hour, and that rates for legal assistants ranged from $180 to $225 per hour. The application also stated that the listed rates for Bell Boyd personnel would be subject to " periodic adjustments." The declaration to which the application referred affirmed the accuracy of the statements in the application, described the conflict check process utilized by Bell Boyd, and included a disclosure of Bell Boyd's current and previous representation of certain affiliates, subsidiaries, joint ventures, and/or entities associated with creditors of the Debtor in matters unrelated to the Debtor's bankruptcy. The next day, the Committee filed an application seeking the appointment of Gable & Gotwals as local counsel. That application made substantially the same representations, with the exception of fees, as the application for Bell Boyd's retention.

Appellee F & M Bank & Trust Company (" F & M" ), a secured creditor of the Debtor, filed an objection to both applications. Among other things, F & M objected to the Committee's proposed retention of " ‘ national’ counsel at rates twice the rates of highly competent local, state or regional counsel." F & M's Objection to Application to Retain Bell Boyd at 1, Appellant's App. at 189. F & M went on to argue that " Gable Gotwals is a regional firm that could more than adequately represent the Committee. Bell Boyd's rates are not competitive with the rates of Gable Gotwals or other local firms in this market," and that " retaining Bell Boyd will require the bankruptcy estate to incur significant expenses for travel time that could be avoided if a regional firm were retained." Id. at 190-91. In its objection to the retention of Gable & Gotwals, F & M stated that " Gable Gotwals is a regional firm that can more than adequately represent the Committee in this case. F & M Bank therefore objects to the Application to Employ Gable Gotwals only in so far as Gable Gotwals would be local counsel supporting Bell Boyd as lead counsel." F & M's Objection to Application to Retain Gable Gotwals at 1-2, Appellant's App. at 197-98.

On February 19, 2008, the UST filed his comments on the applications for the retention of Bell Boyd and Gable & Gotwals. The UST explained:

The UST has discussed with all parties his concern about administrative expenses in this case. The...

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