Scribner & Miller v. Conway, 152

• Decision Date: 06 December 1956
• Docket Number: No. 152,Docket 24255.,152
• Citation: 238 F.2d 905
• Parties: SCRIBNER & MILLER and Paul Emery Kern, Claimants-Appellants, v. Francis X. CONWAY, Trustee of Silesian-American Corporation, and Goldwater & Flynn, Attorneys for the Trustee, Respondents-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

238 F.2d 905 (1956)

SCRIBNER & MILLER and Paul Emery Kern, Claimants-Appellants, v. Francis X. CONWAY, Trustee of Silesian-American Corporation, and Goldwater & Flynn, Attorneys for the Trustee, Respondents-Appellees.

No. 152, Docket 24255.

United States Court of Appeals Second Circuit.

Argued November 15, 1956.

Decided December 6, 1956.

Charles E. Scribner and Paul Emery Kern, New York City (Scribner & Miller, New York City, on the brief), for claimants-appellants.

Oliver T. Cowan, New York City (Francis X. Conway and Goldwater & Flynn, New York City, on the brief), for respondents-appellees.

David Ferber, Asst. Gen. Counsel, Securities and Exchange Commission, Washington, D. C. (Thomas G. Meeker, Gen. Counsel, and Stuart C. Law, Atty., Securities and Exchange Commission, Washington, D. C., and Richard V. Bandler and Kiva Berke, Attys., Securities and Exchange Commission, New York City, on the brief), for Securities and Exchange Commission.

Before CLARK, Chief Judge, and FRANK and HINCKS, Circuit Judges.

PER CURIAM.

The "`most thankless and delicate task'" in corporate reorganizations, that of fixing allowances for services rendered in the proceedings, Finn v. Childs Co., 2 Cir., 181 F.2d 431, 435, is here especially difficult because of the nature of the problems faced and the divergence of views which developed as to their solution. The Silesian-American Corporation was formed in the twenties to mine, exploit, and develop extensive zinc and coal deposits in Upper Silesia; but the events of World War II left in substance only rights of action as its assets in the reorganization proceedings initiated in 1941. Among these rights, those against the American promoters or their holding company "Sihoc" and against certain Swiss banks which had accepted deposits on sales of zinc have alone shown any promise so far.¹ The trustee negotiated a settlement with the Swiss banks and proposed a plan based upon it, which met with the approval of the district court. It was opposed, however, by a Bondholders' Protective Committee and other interests, including the S. E. C., which made investigations and filed extensive and valuable reports. An extensive description of the proceedings and the negotiations will be found in our opinion on appeal, wherein we reversed the order approving the plan because we, too, thought the settlement offer inadequate. Conway v. Silesian-American Corp., 2 Cir., 186 F.2d 201. A later appeal discloses how local jurisdiction over the Swiss banks was lost by the expiration of a "bar" order procured by the trustee. Conway v. Union Bank of Switzerland, 2 Cir., 204 F.2d 603. Thereafter a new settlement was reached involving an increase in the Swiss offer by nearly $100,000 to a total of $750,000 and a payment from "Sihoc" of $375,000, less its distributable cash on its own bondholdings; and a plan based on these receipts, approved with some reluctance by the S. E. C., has been confirmed and put into effect. It is obvious that the trustee and his counsel, supported by the district judge, have had much less belief in these claims than had the bondholders and the S. E. C., and, so far as they have come before us, ourselves. The situation is too complicated for us to attempt definitive judgment upon what we did regard as "the defeatist point of view" of the trustee and his counsel. Conway v. Silesian-American Corp., 2 Cir., 186 F.2d 201, 213. But it is clear that they worked hard and at length in a difficult situation; even though we have disagreed with their approach, we shall say no more than that they seem to us to have received rather high fees in a not too successful reorganization. The over-all allowances of about $288,000 are payable out of an estate of only some $1,500,000.

The present appeal is taken by the attorneys for the Bondholders' Protective Committee who are primarily seeking an increase in their own allowance, rather than a return to the reorganized corporation; but this appeal permits of full representation by the S. E. C., which had participated in the proceedings below. Bankruptcy Act § 208, 11 U.S.C. § 608; S. E. C. v. United States Realty & Improvement Co., 310 U.S. 434, 458, 60 S.Ct. 1044, 84 L.Ed. 1293.² The issues are framed with respect to the allowances to the trustee, his counsel, and the counsel for the Bondholders' Protective...