Matter of DH Overmyer Co., Inc.

• Citation: 3 BR 678
• Decision Date: 22 April 1980
• Docket Number: Bankruptcy No. 73 B 1129.
• Parties: In The Matter of D.H. OVERMYER CO., INC. (Ohio) et al., Debtors.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York

3 B.R. 678 (1980)

In The Matter of D.H. OVERMYER CO., INC. (Ohio) et al., Debtors.

Bankruptcy No. 73 B 1129.

United States Bankruptcy Court, S.D. New York.

April 22, 1980.

Robson & Toboroff, New York City, Attorneys for Debtor, Morton S. Robson, New York City, of counsel.

Booth, Lipton & Lipton, New York City, Attorneys for Receiver, Edgar H. Booth, New York City, of counsel.

Finley, Kumble, Wagner, Heine & Underberg, New York City, Attorneys for Debtor, Burton R. Lifland, New York City, of counsel.

Hahn, Hessen, Margolis & Ryan, New York City, Attorneys for Committee, Harry A. Margolis, New York City, of counsel.

Anderson, Russell, Kill & Olick, New York City, Special Counsel for the Receiver, Robert P. Herzog, New York City, Arthur S. Olick, New York City, of counsel.

OPINION AND ORDER

JOEL LEWITTES, Bankruptcy Judge.

On November 16, 1973, thirty-seven Overmyer Corporations separately filed petitions for arrangement under Chapter XI of the 1898 Bankruptcy Act. One month later, two additional Overmyer Corporations sought relief under Chapter XI.

On or about December 5, 1973, upon application therefor, District Judge Dudley B. Bonsal appointed Robert P. Herzog, Esq., the receiver ("receiver") of these debtor corporations.¹

On December 6, 1973, Bankruptcy Judge Babitt, to whom the Overmyer cases were originally referred, signed orders, in each of the then unconsolidated cases,² authorizing the Receiver, subject to the control of the Bankruptcy Court, to operate the businesses of the debtors.³

The Receiver retained, by order of the Bankruptcy Court, dated December 6, 1973, the law firm of Booth, Lipton & Lipton ("Booth") to act as his attorneys.⁴

The Overmyer enterprises' parent company, D.H. Overmyer Co. Inc. (Ohio), at the time of the Chapter XI filing, to date, owns all of the outstanding shares of the capital stock of some 36 separate corporations bearing the same name, but which are organized under the laws of the separate states indicated parenthetically after the name of each. Both the parent and its subsidiaries were engaged in the business of operating warehouses throughout the United States.⁵ The nature of the activities of these warehouses are set forth, with some specificity in the opinion by Bankruptcy Judge Babitt in In re D.H. Overmyer Co. Inc.⁶ By his investiture, as Receiver, Mr. Herzog became the functional head of this vast empire.

The applications submitted by both the Receiver and Booth here recount, with fine particularity, a history of the long sojourn of the consolidated debtors in this Court during the Receiver's stewardship. We are approaching the possible close of this case and presently, before this Court, are applications for compensation by the Receiver, and Booth, the accountants to the Receiver and Special Counsel to the Receiver.

Hearings were held by the Court in connection with the applications for final compensation and in awarding the fees to these applicants, the Court has taken into consideration the written applications therefor, both oral and written objections to the allowances, as well as replies to such objections. In addition, the Court has requisitioned critical transcripts relating to previous interim applications by some of the petitioners here as well as the complete transcript of the November 12, 1976 hearing, a portion of which the principal of the debtor, Mr. Daniel H. Overmyer, relies upon, in great part, in his objection to the applications of the Receiver and his attorneys and accountants.

In determining what this Court deems to be fair and reasonable fees for the professionals, we have applied the various criteria enunciated by the Courts in connection with such applications. We are told that, among the factors to be considered are ". . . the time spent, the intricacy of the questions involved, the size of the estate, the results obtained and the `economic spirit' of the Bankruptcy Act to curtail unnecessary expenses."⁷

Of course, in determining the compensation of the Receiver, we are limited to the applicable statutory structures of Bankruptcy Act § 48, 11 U.S.C. § 76. The schedule of commissions set forth in that provision reflects only the maximum commission this Court may allow.⁸

Before we proceed to the individual applications we must take note, inter alia, of a major objection, alluded to above, by Mr. D.H. Overmyer, to this Court's consideration of the present applications for commissions and compensation, insofar as these applicants seek an award for the period subsequent to July 1, 1976. This contention, which we find to be wholly without merit, is based upon the following statements by Bankruptcy Judge Babitt during the course of the November 12, 1976 statutory hearing on this case.

"I have also made up my mind that one of the ways to solve this problem which seems to bother so many people is that as far as the Court is concerned, all compensable services shall have terminated effective July 1, 1976 save those that are expressly shown to the Court not to be within the swim of the overall services of the Receiver and his counsel when they submit their final applications for compensation. So, at this point I am asking the Receiver if I permit him to remain to indeed labor for the continuation of this case without expecting any additional compensation from July 1st. That is a heavy burden to lay on any officer of this Court. That should allay any concern that this XI will become a receiver\'s relief act."⁹

The objectant, Mr. Daniel H. Overmyer ("objectant"), further points to Bankruptcy Judge Babitt's remarks made later during the course of the November 12 hearing that:

". . . Any applications for compensation at any stage of the proceedings whether it be at confirmation or at the liquidating bankruptcy are as of a cutoff date of June 30, 1976 for all concerned in the employ of the receiver and probably his accountants. . . . "¹⁰

If these above-quoted statements by the presiding Bankruptcy Judge were viewed in a vacuum, as the objectant apparently would have us do, perhaps we would not quarrel with him in the absence of some finding of extraordinary services rendered by the Receiver and the professionals in his employ. But surely the objectant cannot seriously expect a court to countenance such a myopic examination of the record. Rather, a careful and dispassionate reading of the November 12, 1976 hearing, in its totality, reveals that neither the Receiver, his attorney, his accountants, nor special counsel are barred from seeking an award of compensation beyond July 1, 1976 under the circumstances present here.

A major portion of the November 12, 1976 hearing, the transcript of which covers two hundred pages, was devoted to the objectant's motion, on behalf of the consolidated debtors, to terminate the receivership and to restore the debtors to possession.¹¹ The thrust of the objectant's motion was that in light of the conceded experience of the objectant in the operation of the warehouse business, the more manageable size of the estate, and in order to reduce the expenses of the receivership (presumably the commissions of the Receiver and the Receiver's counsel),¹² the receivership should be terminated. Doubtless, in order to assuage Judge Babitt's oft-stated apprehension in a termination of the receivership,¹³ special counsel to the debtors argued that no untoward risk would be occasioned by an immediate displacement of the Receiver since the Chapter XI case was on the verge of confirmation and "we are talking about ninety — a hundred twenty days to put these things together."¹⁴ Although the Court declined to terminate the receivership,¹⁵ in order to relieve the main concern of both the objectant and the creditors, i.e. the costs of the receivership, Bankruptcy Judge Babitt stated

". . . that the receiver and his attorneys can on the basis of hours they have earned already, for which they have not been compensated, or commissions which he has earned, carry us for those three months in the status quo so it does not cost us a nickel more and by the end of those three months we will know if we are dealing with the sale of those three properties . . . which will fund a plan and if not, the case goes."¹⁶

Later, the Court observed:

"Don\'t you think I am able to note there is nothing really meaningful that has been done here since July of \'76; don\'t you think I am better off keeping them the Receiver and his counsel and knowing compensation has got to be left to my somewhat less than tender hand? Isn\'t it as easy for the receiver now, since you say anyone can learn the warehouse business in two weeks, for the receiver to stay and wind it up in ninety days or one hundred twenty days? They know they are not going to be compensated.

". . . We are talking about ninety days. . . . "¹⁷

Again,

"Can I if I confirm in three months or four months and the order of confirmation revests in the debtor?"¹⁸

Further,

"I have pretty much set a deadline for myself the Court of ninety days to see a final agreement . . . for the sale of property which will yield those funds that I need to fund the now accepted plan."¹⁹

In view of the debtor's representation, therefore, that the case would confirm within ninety to one hundred days, we can now properly reflect upon the statement by the Court upon which the objectant would have this Court totally bar compensation to the Receiver and his counsel from July 1, 1976. Thus the Court pertinently stated:

". . . the question boils down to whether or not I should upset the status quo for ninety days or whether I should keep the status quo for ninety days.

". . . If I keep the status quo for ninety days, I suspect one of the things that has loomed large here is the fact that the receiver and his accountants and his attorneys have the right to expect compensation for those services which have been rendered for the betterment of the receivership. . . .

". . . one of the ways of solving this problem which

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