In re Thomas, Inc.
| Decision Date | 08 June 1984 |
| Docket Number | Bankruptcy No. 83-00467-L. |
| Citation | 43 BR 510 |
| Parties | In re THOMAS, INC., d/b/a Satch's, Debtor. |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
John D. Hanify, Hanify & King, Boston, Mass., for debtor.
Herbert C. Kahn, Boston, Mass., for Creditors' Committee.
Richard L. Levine, Hill & Barlow, Boston, Mass., for H.N. Gorin Associates.
M.G. Sherman, M.G. Sherman & Co., Boston, Mass., accountant.
Before the Court are the final fee applications of the various professionals who have rendered services in this reorganization proceeding. After appropriate notice, hearings on these applications were held on March 27 and May 31, 1984. Three objections to the application of Hanify & King, debtor's counsel, were originally filed, but the objection of the United States Trustee was subsequently withdrawn after debtor's counsel demonstrated to the United States Trustee's satisfaction its entitlement to the full amount requested. No objections have been filed with respect to the fee applications of Herbert C. Kahn, counsel to the creditors' committee, and M.G. Sherman, accountant. Nevertheless, this Court has a duty independent of any objection to determine the reasonableness of the amounts requested. The legal principles and standards applicable in granting final fee awards have been enunciated in prior opinions of the now-defunct Bankruptcy Appellate Panel, see In re Casco Bay Lines, Inc., 25 B.R. 747 (Bankr.1st Cir.1982), and by this Court, see, e.g. In re Bolton Hall Nursing Home, et al., 40 B.R. 657 (Bankr.D.Mass.1984) and, to the extent relevant, are incorporated herein in the interest of judicial economy. Based upon my own observation of the quality and quantity of the work performed and the results obtained, I find as follows:
Debtor's counsel, principally John D. Hanify, Esq., was primarily responsible for the favorable results obtained in this proceeding. At the outset of the case, the prospects for a significant return to creditors appeared bleak. As is the case in so many of the restaurant and lounge businesses that come before the Court, the debtor's tangible assets were minimal. The debtor's principal asset consisted of its leasehold interest in a building in the Back Bay; the value of the leasehold interest was entirely speculative at the commencement of the case. It was apparent that the past performance of the debtor suggested that its business operation could not be sustained without the infusion of funds by third parties. It was equally apparent, however, that an immediate sale of the debtor's assets would not have generated a favorable sales price. Debtor's counsel, by means of a variety of devices, was able to keep the business operating while he maximized the value of the debtor's tangible and intangible assets. Debtor's counsel negotiated loans of $45,000 through two separate borrowings that enabled the debtor to operate during the summer of 1983. In the fall of 1983, when continued operation by debtor's management became impossible, debtor's counsel negotiated an interim management agreement with a prospective third party plan proponent that provided for the funding of the plan of reorganization and the underwriting of losses during the period of management. The interim management agreement not only assured the continued operation of the debtor's business, but also put the prospective purchaser of the building (in which the debtor's leased premises were located) on notice of the serious intention of the debtor and the plan proponent of their intention to utilize the full term of the lease.
Other litigation initiated by the debtor's counsel was equally successful in maintaining the debtor's operations until the best possible price could be obtained. As a consequence of the landlord's failure to pay water bill arrearages, the Boston Water and Sewer Commission ("BWSC") threatened to terminate water service to the debtor. To solve this critical problem, debtor's counsel filed an application for a restraining order against both the landlord and the BWSC, repeatedly appeared before the Court and ultimately succeeded in obtaining relief that enabled the debtor to continue its operations.
Additionally, litigation arose out of the imminent prospect of a sale of the building in which the debtor had a leasehold interest to a third party. See 37 B.R. 387. The debtor filed an adversary proceeding in which it asserted the existence of a joint venture with the landlord and a claim of ownership in the leased property. Hotly contested by the landlord and the prospective third party purchaser of the building, the joint venture claim was ultimately rendered moot when the purchaser of the building acquired the debtor's assets, including the joint venture claim, for a price substantially in excess of the plan of reorganization filed by the interim management group. Among other things, the confirmed plan of reorganization filed by the acquirer of the building provides for a sale of all assets of the debtor in return for a total dividend which may be available to unsecured creditors of $238,000 payable over four years (seventy percent × $340,000). The plan also provides that the dividend available to unsecured creditors will be reduced one dollar for every dollar by which the allowed administrative claims...
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