In re Furniture Corporation of America

• Decision Date: 13 October 1983
• Docket Number: Bankruptcy No. 82-00584-BKC-TCB.
• Citation: 34 BR 46
• Parties: In re FURNITURE CORPORATION OF AMERICA, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Florida

34 B.R. 46 (1983)

In re FURNITURE CORPORATION OF AMERICA, Debtor.

Bankruptcy No. 82-00584-BKC-TCB.

United States Bankruptcy Court, S.D. Florida.

October 13, 1983.

Timothy Norris, Miami, Fla., for debtor.

Jerry Markowitz, Miami, Fla., for creditor.

ORDER ON EXAMINATION OF FEES PAID TO DEBTOR'S FORMER ATTORNEY

THOMAS C. BRITTON, Bankruptcy Judge.

The debtor's chapter 11 plan was confirmed on June 18, 1982. The plan has never been consummated and the debtor has replaced its attorney. On August 30, 1983, the debtor moved under § 329(b) for review of a fee paid the debtor's former attorney, Martin Sandler. Sandler has responded. The matter was heard on September 19.

Sandler's first response is that the fee is not reviewable because payment was made to him by a third party, Budget Furniture Rentals, Inc., who also made the debtor's plan feasible by agreeing to purchase the debtor's stock (issued to satisfy creditors' claims) from those creditors who preferred cash to the stock.

I disagree. Although former B.R. 220 which superseded § 60(d) of the Act restricted review of attorney's fees to "any payment . . . by the bankrupt", e.g., In re O'Bannon 484 F.2d 864 (10th Cir.1973), § 329 is controlling in this case and it is clear from the provisions of that section that any payment made to an attorney representing a debtor in connection with a bankruptcy proceeding is reviewable by the court notwithstanding the source of payment and that the source of payment is relevant only with respect to who will get the return of an excessive payment.

Although the recently adopted B.R. 2017 contains provisions identical to former B.R. 220 and therefore suggests that the scope of review is unchanged, the bankruptcy rules no longer supersede the statute. 28 U.S.C. § 2075. To the extent, therefore, that B.R. 2017 appears to restrict the scope of review under § 329, the rule must yield to the statute and must be disregarded.

In this instance, Sandler was paid $9,000 by Budget shortly after confirmation. He subsequently paid himself an additional $9,000 from funds taken from an escrow account in the name of the debtor and deposited into firm's trust account. The escrow account was established for the purpose of consummating the debtor's plan by paying cash dividends and by funding the purchase of stock from creditors who wished to sell stock to Budget. However, the plan was not consummated and when Sandler was discharged by the debtor, he remitted to the debtor on May...