Matter of Pride Foods, Inc.
| Decision Date | 09 August 1982 |
| Docket Number | Bankruptcy No. BK81-1733. |
| Citation | 22 BR 356 |
| Parties | In the Matter of PRIDE FOODS, INC., Debtor. |
| Court | U.S. Bankruptcy Court — District of Nebraska |
Edward D. Hotz, Omaha, Neb., for Daisley Packaging Corp.
Douglas Quinn, Omaha, Neb., for trustee.
This matter came on for hearing on May 12, 1982, as a trustee's objection to an application of allowance of administrative expenses by Daisley Packaging Corporation (Daisley). Mr. Nicola, trustee of the debtor, objects on the grounds that some or all of the expenses and fees for which Daisley seeks compensation are not actual and necessary as required under Bankruptcy Code § 503 and additionally that a portion of those expenses and fees were incurred before the date of the filing of the petition of the debtor and are, therefore, not compensable pursuant to Code §§ 503 and 543.
The facts surrounding the controversy are these. On July 29, 1981, four vehicles belonging to the debtor and the subject of a prejudgment attachment order issued by the District Court of Douglas County, Nebraska, were released to the custody of Daisley Packaging Corporation for storage pending further order of that court. On August 28, 1981, Pride Foods Corporation (Pride Foods) filed a petition for relief under Chapter 7 of the Bankruptcy Code. In December, 1981, pursuant to 11 U.S.C. § 543, the vehicles were turned over to the trustee in bankruptcy. Subsequently, Daisley filed application for allowance of the following administrative expenses pursuant to Code §§ 503(b)(3)(E) and 543(c)(2): $3,832 for reimbursement of actual and necessary costs and expenses, $1,320 for attorney fees, and $178.56 for costs and reimbursement for legal and professional expenses incurred as a result of obtaining and preserving the subject property of the debtor.
The trustee's objection to payment of prepetition administrative expenses was disposed of in open court. The objection was overruled for the reason that Bankruptcy Code § 503 provides that certain qualifying administrative expenses incurred prepetition may be allowed.
11 U.S.C. § 543(c)(2) provides for the payment of reasonable compensation for services rendered and costs and expenses incurred by a custodian. Having found in open court the expenses applied for in this matter to be fair and reasonable, the sole issue remaining for consideration is the possible custodian status of Daisley through which it claims entitlement to this compensation.
Case law on the issue of who may properly fall within the definition of custodian is sparse. Recognition by the Code of a prebankruptcy custodian's charges and expenses is new to bankruptcy law and, therefore, not traceable through the statutory language of the prior Bankruptcy Act See 1 Norton Bankruptcy Law and Practice § 12.08, page 13, n. 1 (1981) . A recent Georgia court decision, In re Lewis, 7 B.C.D. 1023, 12 B.R. 106 (Bkrtcy.N.D.Ga. 1981), found that a secured creditor holding repossessed property as a result of self-help enforcement of its security interest was not a custodian. That court premised its holding upon the requirement that a custodian be a third party, who, acting under mandatory authority, takes charge of the debtor's property for the benefit of the debtor's creditors as a whole. A creditor acting for its own benefit and under permissive authority could not so qualify. Lewis, supra, at p. 108. The section seems to anticipate mandatory duties of the trustee, receiver or agent arising from court appointment or ...
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