In Re Inland Gas Corporation
| Citation | 193 F. Supp. 62 |
| Decision Date | 08 April 1961 |
| Docket Number | 115-B.,No. 989-B,991-B,989-B |
| Parties | In the Matter of INLAND GAS CORPORATION, Debtor. In the Matter of KENTUCKY FUEL GAS CORPORATION, Debtor. In the Matter of AMERICAN FUEL & POWER COMPANY et al., Debtors. |
| Court | U.S. District Court — Eastern District of Kentucky |
The three above entitled proceedings for reorganization under the Bankruptcy Act were begun by an involuntary petition under section 77B filed in this Court against Inland Gas Corporation on October 15, 1935, and a like petition filed against Kentucky Fuel Gas Corporation on the same date. Petitions for reorganization of American Fuel and Power Company and its subsidiaries, Buckeye Fuel Company, Buckeye Gas Service Company, Carbreath Gas Company and Inland Gas Distributing Company were first filed in the United States District Court for the District of Delaware on December 30, 1935, which proceedings were thereafter transferred to this Court.
Since the enactment of Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., all the above mentioned proceedings have been carried on in accordance with the provisions of that chapter with the result that a Plan which embraced reorganization of all three of the abovementioned corporations was finally approved and confirmed by this Court on June 2, 1958, but which did not become effective until the conclusion of the final litigation by denial of certiorari by the Supreme Court on June 6, 1960. Kern v. Columbia Gas System, Inc., 363 U.S. 813, 80 S.Ct. 1246, 4 L.Ed.2d 1154.
Articles I, II, III and IV of the approved Plan contain comprehensive statements of the complicated and apparently hopeless financial condition of each of these companies at the beginning of the proceedings.
The innumerable problems which have given rise to the prolonged litigation which has ensued are disclosed in the following opinions of the Appellate court: In re Inland Gas Corporation et al. (Columbia Gas & Electric Corp. v. Lockhart et al.), 6 Cir., 1937, 91 F.2d 113; Hamilton Gas Co. v. Inland Gas Corp. (Piney Oil & Gas Co. v. Inland Gas Corp.), 6 Cir., 1939, 102 F.2d 131; In re American Fuel & Power Co., 6 Cir., 1941, 122 F.2d 223; Columbia Gas & Electric Corp. v. United States, 6 Cir., 1945, 151 F.2d 461; Columbia Gas & Electric Corp. v. United States, 6 Cir., 1946, 153 F.2d 101; In re Inland Gas Corporation, 6 Cir., 1951, 187 F.2d 813; In re Inland Gas Corporation, 6 Cir., 1953, 208 F.2d 13; In re Inland Gas Corporation, 6 Cir., 1954, 211 F.2d 381; In re Inland Gas Corporation, 6 Cir., 1954, 217 F.2d 207; In re Inland Gas Corporation, 6 Cir., 1957, 241 F.2d 374; In re Inland Gas Corporation, 6 Cir., 1959, 262 F.2d 510, and In the Matter of Inland Gas Corporation et al., 6 Cir., 1960, 275 F.2d 509.
If we make allowance for the time during which the progress of reorganization efforts were necessarily suspended, awaiting determination of questions involved in this mass of litigation, perhaps the prolonged period from the beginning to the end of it does not seem so amazing. Moreover, it should not be overlooked that during all this time the operations of Inland were managed and carried on by the Trustee so successfully and so profitably to the creditors that in the end we find a solvent reorganized company.
I am now confronted with numerous claims for allowances for compensation for services and reimbursement of expenses, aggregating $1,726,453.76 (see summary attached to the Commission's report) a large number of which involve claims for allowances in addition to those previously made. The problem presented has frequently been referred to as one of the most "perplexing tasks which falls to the lot of a District Judge". Silver v. Scullin Steel Co., 8 Cir., 98 F.2d 503, 506.
On July 6, 1960, I entered an order directing that all applicants for claims for allowances for services rendered in the above proceedings and for reimbursement for expenses be filed in the office of the Clerk on or before October 3, 1960, and in the same order provided for a hearing of all such applications before the Court beginning on October 31, 1960. The hearing was duly held on October 31, November 1 and November 2, 1960, and the testimony presented has been transcribed by the Court Reporter and is filed as a part of this record.
At the conclusion of the hearing the Court requested the Securities and Exchange Commission to consider and file its report and recommendations upon the applications so presented and granted leave to the applicants to file briefs in support of their respective claims within 15 days after the filing of the Commission's report. The report of the Commission was filed on March 13, 1961, and briefs have since been filed by numerous applicants in support of their respective applications, all of which have been considered by the Court.
The Securities and Exchange Commission has been a party and an active participant in these proceedings almost from the beginning, and I recognize that the recommendations of its counsel, though purely advisory as an aid to the judge in performing his difficult task, they nevertheless represent the expert opinion of a disinterested agency, experienced in corporate reorganization proceedings and are entitled to great weight. After all, however, the ultimate responsibility for determining fair and reasonable compensation for services rendered rests upon the Court. Sections 242 and 243, Chapter X of the Bankruptcy Act, 11 U.S.C.A. §§ 642 and 643; In re Detroit International Bridge Co., 6 Cir., 111 F.2d 235, 237; In re Mt. Forest Fur Farms of America, 6 Cir., 157 F.2d 640; Finn v. Childs Co., 2 Cir., 181 F.2d 431.
The applications for allowances are considered in the following order:
Milbank, Tweed, Hope & Hadley, counsel for Vanston Committee, applied for additional compensation in the sum of $65,000 and for additional expenses in the sum of $9,396.05. I am of the opinion that for the reasons stated in the report of the Commission, its recommendation (pp. 47-53) for allowance of the additional sum of $40,000 as compensation for services and $8,855.34 for additional expenses should be and is approved.
Edward J. Caughlin, individually and as committee for the protection of holders of 7% Ten-Year Inland Debentures, applied for compensation for services in the sum of $17,500 and reimbursement of expenses in the sum of $7,632.42. I am of the opinion that for the reasons stated in the report of the Commission (pp. 54-58) its recommendation for allowances to this applicant in the sum of $9,000 for services and $6,470.79 for expenses should be and is approved.
Morgan, Lewis & Bockius, attorneys for Edward J. Caughlin, individually and as a committeeman for holders of 10-year 7% Inland Debentures, through Anthony H. Whitaker, a member of the firm, applied for compensation for services in the sum of $60,000 and $1,421.77 for reimbursement of expenses. I am of the opinion that for the reasons stated in the report of the Commission (pp. 58-63) its recommendation for allowance to this applicant in the sum of $30,000 for services and $921.77 for expenses should be and is approved.
Bradley & Bradley, associate counsel for Edward J. Caughlin, applied for compensation for services in the sum of $12,500. The Commission recommends allowance of $6,000. In view of the limited nature and extent of the services rendered, as shown by the report of the Commission (pp. 64-65), I am of the opinion that reasonable compensation therefor is the sum of $2,500, for which allowance will be made accordingly.
Charles J. Gregory, member of the so-called "Paul Committee" for Inland Debentures and Kentucky Debentures for compensation and reimbursement of Out-of-Pocket Expenses, applied for compensation in the sum of $5,000 for services and in the sum of $667.40 for personal expenses and the further sum of $9,561 balance owing by the Committee to the First National City Trust Company for the Committee's obligation resulting from its borrowing on June 5, 1931 to meet Committee expenses.
The Commission recommends allowance to Charles J. Gregory in the sum of $2,000 for services, the further sum of $617.40 for expenses, and the further sum of $9,561 to cover the Committee's obligation to the First National City Trust Company and to be paid directly to the First National City Trust Company.
I am of the opinion that for the reasons stated in the report of the Commission (pp. 65-69) its recommendation for the allowance in the sum of $2,000 to Charles J. Gregory for services, and the sum of $617.40 for his expenses, and the further sum of $9,561 for the balance owing by the Committee to the First National City Trust Company to be paid directly to the First National City Trust Company for the Committee's obligation resulting from its borrowing on June 5, 1931 to meet Committee expenses should be and is approved.
Willkie, Farr, Gallagher, Walton & Fitzgibbon, and John L. Smith, deceased, attorneys for Protective Committee for Holders of Inland and Kentucky Debentures and for New York Trust Company, Indenture Trustee, jointly applied for additional amount for services in the sum of $75,000 and for additional expenses in the sum of $8,281.81. I am of the opinion that for the reasons stated in the report of the Commission (pp. 69-78), its recommendation should be approved and the allowance of the additional sum of $35,000 for services to the firm of Willkie, Farr, Gallagher Walton & Fitzgibbon and $15,000 for services to the executor of the estate of John L. Smith, deceased, and for $7,330.30 for expenses should be and is approved.
Paul E. Kern applied for reimbursement of expenses and for advances and payments to his counsel and others in the sum of $173,966.20. For the reasons set out in the report of the Commission (pp. 78-95) I am of the opinion that this application should be and is denied.
Rembar, Zolotar & Leavy and Middleton, Seelbach, Wolford, Willis & Cochran, have jointly...
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