In re Pettibone Corp.
| Decision Date | 20 May 1987 |
| Docket Number | Bankruptcy No. 86 B 1563-86 B 1572. |
| Citation | 74 BR 293 |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
| Parties | In re PETTIBONE CORPORATION, a Delaware corporation, a/k/a Beardsley & Piper; Johnston & Jennings; Oceco; Pettibone Alabama; Pettibone Mercury; Barko Alabama; Barko Greenville; and f/k/a Magnum Industries; Pettibone Mulliken; Pettibone Georgia; Mercury Manufacturing; Pettibone Minnesota; Pettibone New York; Pettibone Wisconsin; Pettibone Westrac; National Iron Co.; Pettibone Compaction; Sure Seal Division, Debtor. In re BARKO HYDRAULICS, INC., a Minnesota corporation, Pettibone Michigan Corporation, a Michigan corporation, Pettibone International Sales Corporation, a Delaware corporation, Pettibone Tiffin Corporation, an Ohio corporation, a/k/a and f/k/a Hanson Machinery Company, Pettibone Ohio Corporation, an Ohio corporation, a/k/a and f/k/a Cleveland Frog & Crossing Company, Pettibone Credit Corporation, a Delaware corporation, the Universal Engineering Corporation, an Iowa corporation, Pettibone Texas Corporation, a Texas corporation, Hammermills, Inc., a Missouri corporation dissolved in June, 1984, Debtors. |
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James A. Chatz, Antonow & Fink, Chicago, Ill., for movant.
Antonow & Fink ("A & F") as counsel for the Official Unsecured Creditors Committee for Pettibone Corporation has moved for reconsideration of this Courts' October 14, 1986 Order. That Order allowed in part and disallowed in part A & F's petition for fees for services rendered as counsel for the creditors committee between May 5, 1986 and July 31, 1986. This Court has core jurisdiction over matters concerning the administration of the estate. 28 U.S.C. § 157(b). For the reasons set forth below, A & F's motion for reconsideration is denied, except that $2,810.00 in fees that are disallowed may be reconsidered after plan confirmation.
On January 31, 1986, Pettibone Corporation ("Pettibone") and the captioned subsidiaries and affiliates filed their petitions for reorganization pursuant to Chapter 11 of the Bankruptcy Code. Since that date, Pettibone and its affiliates have continued their businesses as Debtors-In-Possession.
Thereafter, the United States Trustee appointed various persons to serve on the Unsecured Creditors' Committee for Pettibone ("Committee"). The Committee subsequently authorized the employment of the law firm of Lord, Bissell & Brook ("LB & B") as counsel for the Committee. However, Alan H. Fox, duly appointed Chairman of the Committee, informed counsel that the Committee itself would not advance or guarantee payment of legal fees for services rendered on its behalf.
The secured lenders ("Private Lenders") also originally indicated that they would not agree to fees being paid from the estate to counsel for any Creditors Committee because their provisionally allowed secured position has priority over all administrative expenses.1 An agreement was eventually reached whereby the secured lenders agreed to allow cash collateral to be used to pay a limited amount of fees for counsel for the Committee.
The terms of this agreement were presented at a hearing on April 2, 1986. Private Lenders agreed to payment of up to $20,000 to Counsel for the Committee. Counsel for the Committee represented that they would "not request during the pendency of the case interim compensation beyond the retainer amount" until a plan was confirmed. Transcript, April 2, 1986, p. 4. The Court allowed payment of a $10,000 retainer and allowed counsel for the Committee to "apply whenever they want to as often as they want to up to $20,000." Transcript, April 2, 1986, p. 16. The actual written order authorizing the employment of LB & B did not mention any fee limit.
On May 30, 1986, the Court entered an Order authorizing LB & B to withdraw appearance of its attorneys herein, and authorizing A & F to substitute its appearances of its attorneys as counsel of record for the Committee, nunc pro tunc May 5, 1986. The substitution Order provided that upon award of any interim fees, the $10,000 retainer would be applied first to the legal services performed by attorneys at LB & B and then to the legal services performed by attorneys at A & F.
On August 22, 1986, this Court established procedures concerning compensation and reimbursement of expenses to professionals. By order, a schedule was set forth under which professionals are to apply to this Court for interim compensation under Section 331 of the Bankruptcy Code. In addition, the Court ordered that all applications comply with the guidelines set forth in In re Continental Illinois Securities Litigation, 572 F.Supp. 931 (N.D.Ill.1983).
On October 14, 1986, the Court considered the applications for fees filed by LB & B and A & F. LB & B requested $8,212.80 in fees and $104.45 in expenses for the period February 26, 1986 through May 5, 1986. A & F requested $21,043.50 in fees2 and $461.21 in expenses for the period May 5, 1986 through July 31, 1986. The majority of work reported by A & F was done by Faye B. Feinstein and James A. Chatz.
No objection to either of the applications were made by any of the parties. The Court, however, had several objections. In general terms, the Court took issue with counsel's failure to husband resources. The substantive functions of the Committee in this case include both analysis of the asserted secured position of the first secured Private Lenders3 and negotiation on behalf of unsecured creditors over a possible plan of reorganization. Less than $900 in time value out of the total of $29,256.30 requested by LB & B and A & F was spent evaluating the position of the secured creditors.4 No work was reported by counsel for the Committee during the period applied for that related to developing a plan of reorganization.
Indeed, the Court found upon considering the two applications that LB & B and A & F had performed very little substantive work, and they had devoted significant time to attending in Court to say they had no objections to particular motions.
This Court also found that some time spent by LB & B and A & F reviewing matters was, in its experience, unreasonable. Based on its findings as to necessity and reasonableness of counsels' work, the Court awarded LB & B only $4,000 in fees and $104.45 in expenses. The Court further allowed A & F $10,500 in fees and $461.21 in expenses. All other fees requested were disallowed.
On October 16, 1986, A & F moved for reconsideration of the interim award to it. It requested opportunity to present evidence from ten witnesses in support of its application, requested the right to supplement its prior application, and again sought the full award earlier requested.
A & F argues that it has performed services at the specific direction and with the approval of its client, the Committee. In addition, A & F claims it was its duty to remain abreast of all actions in this case and to represent the Committee at all hearings where the rights of unsecured creditors may be affected. According to A & F, it was necessary to review every pleading which was filed in the case and appear at virtually every hearing.
The main thrust of A & F's argument is that the Court has mistaken its role. A & F claims the Court is interposing itself between the Committee and its counsel and is determining, without any knowledge of the discussions and consultations which took place between members of the Committee and A & F, that A & F should have omitted some services and instead performed other services — all contrary to the direction of the Committee.
A & F also contends that the $20,000 cap on use of cash collateral for fees should not have been taken into account when determining the necessity and reasonableness of A & F's services. According to A & F, to the extent the Court was influenced by the arbitrary $20,000 cap, its decision was contrary to the principle that fees are not to be determined on the basis of conservation of the estate or economy of administration. A & F argues it and LB & B should have been allowed the amount requested, although in excess of $20,000, with payment deferred until after confirmation of a plan of reorganization.
Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence. Keene Corp. v. International Fidelity Insurance Co., 561 F.Supp. 656, 665 (N.D.Ill.1982) aff'd, 736 F.2d 388 (7th Cir.1984). Such motions cannot in any case be employed as a vehicle to introduce new evidence that could have been adduced during pendency of the original matter. Id.
The first issue presented by A & F's motion for reconsideration is whether the Court should take additional evidence to supplement A & F's application. A & F requests an opportunity to examine ten witnesses. In addition, A & F has submitted several affidavits in support of its motion for reconsideration. An affidavit from Alan H. Fox, Chairman of the Committee attests that A & F acted according to the Committee's directions and that it was the strategic decision of the Committee not to attack the Private Lenders' liens at this time. Alan G. Sweig, attorney for Debtor, states that Attorneys from A & F suggested changes to the indemnification provision of a proposed agreement to retain Dain Bosworth. Jim L. Blanco, attorney for Debtor, attests that attorneys from A & F spoke with him regarding the position of the Committee with respect to a Motion filed by CIT Leasing Corporation and that on behalf of the Committee Faye B. Feinstein agreed to the entry of an agreed order among the interested parties. David A. Golin, attorney for...
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