properly participate in a reorganization in the belief that a sound plan can be worked out and that if it is done he will have a good investment. The purpose or desire to acquire a larger interest and to obtain control of the reorganized corporation does not, of itself, make his interest hostile to the others. An investor who intends to expand his holdings certainly should not be penalized in a reorganization.
However, in the work done by these attorneys there was a definite element of private, as distinguished from general representation -- more pronounced than in the ordinary case. It is reasonable that they should look to their client for a portion of their fee.
I believe that a fee of $ 27,500 from the estate is reasonable under the circumstances and that amount will be allowed.
Jacob I. Weinstein and A. Jere Creskoff.
These claimants for attorneys' fees filed objections to the feature of the plan which provided for making the stocks and bonds inseparable. However, their objections were overruled and the plan approved. They also filed other objections all of which were overruled. Neither of these claimants had anything to do with the P.S.T. plan which provided for separation of bonds and stock. Of course, a claimant whose suggestion has been incorporated into a plan is not to be denied an allowance merely because his suggestion was not adopted when he presented it; but in this case the claimants' suggestion is a rather obvious one and little ingenuity, study or research on their part was needed. I do not think that they are entitled to anything like the amount they ask for. On the other hand, it should be said that there was no formal organization representing bondholders and in 1942 that their clients were the only bondholders who objected to the plan. In view of these facts I will allow them $ 1,000 and $ 275 respectively.
Norman J. Griffin and Reuben Singer.
These claimants appeared for a group of preferred stockholders in January, 1944, approximately 10 years after the inception of the reorganization proceedings. The time for appeal from the order determining insolvency had long since passed. Their efforts were to get the Court to reopen the proceedings in view of the increased business of the Debtor, in order to permit the stockholders to participate in the new company. They attended several hearings and did some research in checking over the proceedings in the court.
Only those who contribute to a reorganization are entitled to compensation and I do not think that a stockholder who attempts unsuccessfully to regain a portion of his former equity, eliminated beyond recovery by the Court's finding of insolvency, is entitled to compensation, since obviously he contributes nothing to the ultimate plan and is attempting to protect his own interests. The question might be a little different had these claimants come in before insolvency had been adjudicated or even before the reorganization had proceeded to the extent that it had. This claim is disallowed.
Girard Trust Co.
In passing upon the claim of the Girard Trust Co. for allowance of compensation both as the agent for the Debtor under the first plan and as trustee under the mortgage of the new company, I am satisfied that, as urged by counsel for the Trust Company, the over-all picture should be examined and all of the services rendered should be considered. In its claim, the charge of 50 cents for receiving each.bond and 50 cents for issuing each receipt for bonds is unquestionably higher than charges for similar services in comparable cases made by other institutions in New York. However, the Trust Company made no charge for maintenance of accounts which appears to be a customary charge and which has been allowed at 25 cents per account per year in two cases brought to my attention. In re Paramount-Publix Corporation, D.C., 12 F.Supp. 823, 832, and In re United Cigar Stores Co. of America, D.C., 21 F.Supp. 869, 877. In view of this, it is unnecessary to rule upon the claim item by item. I am of the opinion that the total charge for all services as agent for the Debtor under the first plan of reorganization is not unreasonable and it will be allowed.
The same considerations apply to the claim as trustee under the mortgage of the new company. The initial charge of $ 500 is materially larger than similar charges in selected typical cases submitted by the Commission. On the other hand, the annual charge for the maintenance of the trust is materially lower. Without approving the charge of $ 500 as reasonable I am willing to approve the entire arrangement as reasonable or as so slightly above what is reasonable as to make the difference de minimis.
Drexel & Co.
This firm acted as exchange agent in connection with the consummated plan of reorganization. Their charge is based on a rate of 40 cents per item for receipt of old bonds and stock and delivery of new bonds and stock. Again, this rate is higher than charges made by some other banks in New York to which my attention has been called by the Commission. However, under all the circumstances and taking into consideration the volume of the transactions involved and present-day costs of doing business, I am not prepared to say that the charge is unreasonable. It will be allowed.
Fidelity-Philadelphia Bank & Trust Co.
The claim of this Company is for services as agent of the Debtor in the payment of coupons, in connection with the 7 1/2 per cent interim distribution of principal and for services in connection with the cremation of the bonds and the release of the mortgage. The fee requested as agent for payment of coupons is one-fourth of one per cent on the total amount. The usual, and much more reasonable basis, is a charge per item, and I think the charge should be on that basis. The Commission recommends 5 cents per coupon as reasonable compensation and I think that recommendation is sound. As to the services in the payment of the interim distribution of principal, a comparison of charges for similar services made by leading banks and trust companies in New York in reorganization cases indicates that this charge is too high. Some of those cases involved much larger amounts and I appreciate the force of the Trust Company's argument that some differential in favor of the services in making payment on smaller amounts is proper, and that will be taken into consideration. Also, the fact that services rendered in connection with a partial payment are more extensive than where obligations are redeemed or otherwise retired in their entirety. Taking all these conditions into consideration I allow this item in the amount of $ 1,500. The charge for release and satisfaction of the mortgage will be allowed at $ 100. The other charges are not objected to and are proper.
After having had to do with a number of these reorganizations in which claims for services by banks, transfer and exchange agents, etc., have had to be determined, I am impressed by the very great difficulty which confronts the Court in arriving at a reasonable figure, and I am ready to subscribe to the view which has been urged upon me in prior cases by the Commission that competitive bidding is a proper and desirable method of fixing compensation in such cases.
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