Matter of Rego Crescent Corp.
| Decision Date | 19 March 1984 |
| Docket Number | 179-03855-16 and 179-03856-16.,Bankruptcy No. 179-03854-16 |
| Citation | 37 BR 1000 |
| Parties | In the Matter of REGO CRESCENT CORP., Edward Tymon and Rose Tymon, Debtors. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
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Abraham, Silver & Rosenberg, New York City, and I. Louis Winokur, Rego Park, N.Y., for debtors.
Glass & Howard, New York City, for petitioning creditors.
MEMORANDUM ON ALLOWANCES
After pending for over four years, during which the assets of these debtors have, for the most part, been reduced to cash, these cases are drawing to a close. A liquidating plan has been approved by this court and applications for allowance for fees and expenses have been filed by the attorneys for the debtors, the attorneys for the petitioning creditors, the attorneys for the creditors' committee, the accountants who acted both for the debtors and the creditors' committee and by various members of the creditors' committee. A hearing was held on the allowances on February 2, 1984 and the matter was marked submitted.
In order to put these applications in proper perspective, a short history of the case is appropriate.
Rego Crescent Corp. ("Rego Crescent") was a corporation owned and controlled by Edward and Rose Tymon (the "Tymons") who were husband and wife. It had been for many years in the business of buying, operating and selling real estate, primarily in Queens County. The Tymons financed their business, for the most part, by having Rego Crescent borrow from individuals at interest rates considerably higher than the prime rate in order to attract lenders. The loans were evidenced by promissory notes made by Rego Crescent which were guaranteed by the Tymons. In many instances, the loans were also secured by mortgages on parcels of property owned by the corporation.
For some time prior to September, 1979, Rego Crescent experienced financial difficulty. It was not able to pay New York City real estate taxes which came due on many of the parcels of property which it owned and the city had placed many of them "in rem." On September 12, 1979, Chemical Bank, its largest creditor, obtained a judgment against it and the Tymons for over $620,000 which it docketed as a lien against all real property owned by them.
On December 11, 1979, three creditors of Rego Crescent and the Tymons filed involuntary petitions for relief pursuant to Chapter 7 of the Bankruptcy Reform Act of 1978 (the "Code"), 11 U.S.C. § 303, against them in this court. Rego Crescent and the Tymons (collectively the "debtors") responded by filing petitions for reorganization pursuant to Chapter 11 of the Code, 11 U.S.C. § 301.
I appointed the same committee of unsecured creditors pursuant to section 1102(a)(1) of the Code, 11 U.S.C. § 1102(a)(1), in all three cases and they have been acting as such ever since.
It was clear from the outset that the business of Rego Crescent could not be reorganized. For one thing, the Tymons were both persons of advanced years. As a matter of fact, Edward Tymon died in February, 1981. Both the attorneys for the debtors and the attorneys for the creditors' committee agreed, at the beginning of the cases, that the assets of the debtors should be sold, the mortgages owned by them should be collected, and that these would be liquidating Chapter 11 proceedings.
Rego Crescent continued the operation of its business for this limited purpose. Rose Tymon continued her employment with the corporation, as did Charles Tirelli, its general manager, and Lillian Fischer, its bookkeeper. Both counsel for the debtors and counsel for the creditors' committee predicted that liquidating the debtors in this manner would result in "a 30-35% distribution to general unsecured creditors" see petition of Abraham, Silver and Rosenberg, Esqs., counsel for the debtors, for interim compensation dated August 17, 1983, page 4, paragraph 6; application of Glass and Howard, P.C., counsel for the creditors' committee for interim compensation, dated August 4, 1983, page 9, paragraph 35, and page 12, paragraph 43.
Over the course of the last four years, the process of liquidation has taken place. Unsecured creditors, whose claims total $2,574,622, have received no payment whatsoever on their claims. The debtors have cash on hand of $574,363.83; it is anticipated that an additional $242,800 will be collected on mortgages and other assets, for a total of $817,163.83. There is owing some $2,500 for current payroll taxes and $24,575.31 for current real estate taxes, for a total of $27,075.31. Accordingly, there will remain for distribution to unsecured creditors $790,088.52 less the balance claimed for fees and expenses by the attorneys, accountants and members of the creditors' committee.
The following fees and expenses have been requested for services rendered in these cases:
Abraham, Silver and Rosenberg
Esqs
Counsel for the debtors $164,875.00
Expenses 2,795.70
I. Louis Winokur, Esq
Co-counsel for the debtors 75,930.00
Glass and Howard, P.C
Counsel for the creditors' committee 161,810.00
Expenses $ 6,142.67
Glass and Howard, P.C
Counsel for petitioning creditors 1,875.00
Expenses 215.00
Main Hurdman and Co.,
Accountants for the debtors and
the creditors' committee 163,355.00
Expenses 7,430.00
Miscellaneous expenses requested
by members of the creditors'
committee 4,088.93
___________
Total fees and expenses requested $588,517.30
The following interim allowances have been made on account of fees during the course of the liquidation:
Abraham, Silver and Rosenberg,
Esqs., $ 80,000.00
I. Louis Winokur, Esq., 45,000.00
Glass and Howard, P.C. 85,000.00
Main Hurdman and Co. 151,300.00
___________
Total $361,300.00
Total amount requested 588,517.30
Interim allowances paid 361,300.00
Balance due if fees and expenses are
allowed as requested $227,217.30
To arrive at the amount which will remain for distribution to unsecured creditors, there must be deducted from $790,088.52 the sum of $227,217.30 which leaves $562,871.22. Thus, if the fees and expenses requested are allowed, the attorneys and accountants will receive just about as much as the unsecured creditors who will receive approximately 22 percent on their claims.
The standards to be applied in determining what constitutes a reasonable fee for services rendered in bankruptcy proceedings have been described many times. More than twenty-five years ago, the Court of Appeals for this circuit enunciated them in the case of In re Paramount Merrick, Inc., 252 F.2d 482 (1958) as follows, at page 485:
"The principal factors which enter into a determination of what is reasonable are the time spent, the intricacy of the questions involved, the size of the estate, the opposition encountered, the results obtained. . . . "
More recently, they have been expanded by Bankruptcy Judge Richard L. Speer in In re Humbert, 21 B.R. 489, 493-494 (Bkrtcy.N.D.Ohio 1982) and the cases cited therein as follows:
The debtors have been represented by co-counsel, Abraham, Silver and Rosenberg, Esqs., (the "Abraham firm") and I. Louis Winokur, Esq. ("Winokur"). Winokur, whose practice was mainly in the field of real estate, had represented the debtors for many years prior to the filing of the petitions. When the involuntary petitions for relief were filed against them, he consulted with the Abraham firm, whose practice was in the field of bankruptcy, for the purpose of retaining it in the bankruptcy proceedings. On January 4, 1980, the debtors submitted an order, pursuant to section 327 of the Code, for the retention of both of them as attorneys for the debtors. I questioned the necessity for co-counsel and I was told that Mr. Winokur was familiar with the real estate aspects of the debtors' business and that he would be concerned with that phase of it. As a matter of fact, in his petition for an interim allowance, dated January 25, 1982, he stated in paragraph 2 that:
"I. Louis Winokur was assigned the duties of handling all contracts of sale and closing of title with respect to real property owned by the Debtor."
Winokur and the Abraham firm have each submitted an application for allowance setting forth the services which each has performed for the debtors. The Abraham firm has requested a fee of $164,875 for its services, while Winokur has requested $75,930. Thus, the total requested fees for services to the debtors amounts to $240,805.
I shall discuss each of the applications for allowance separately.
The Abraham firm's request for $164,875 is based on the claimed expenditure by it of 843.5 hours on these cases. It claims that a partner of the firm, Jacob W. Abraham, ("JWA") has expended 792.5 hours at the rate of $200 an hour, for a total of $158,500 and that Edward R. Dorney, ("Dorney") who had been an associate of the firm and who had...
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