This receivership of The Pittsburg, Shawmut & Northern Railroad Company presented many legal problems that had never heretofore arisen in the course of railroad receiverships. Very few railroads in the course of this country's history have ever been abandoned outright because it was no longer financially feasible to continue to operate them at great losses. The situation that confronted counsel for the Receivers was not only the necessity of an abandonment of operations of an interstate railroad with approximately 200 miles of trackage in New York and Pennsylvania, but also the necessity of conveying a valid title to the purchasers of the railroad's assets.
To plan and carry through the many complicated legal devices set forth herein required legal skill of the highest order and special knowledge of the Acts of Congress relating to Bankruptcy. Such skill and knowledge was furnished to the Receivers and Trustees by their counsel and was an indispensable aid to the successful termination of the receivership and the orderly liquidation of all its assets. The skill, knowledge and advice of counsel was of inestimable aid to the Court.
Each of the counsel had already received an interim allowance of $ 5,000 for legal services rendered to the Receivers, and it is now suggested that in addition to such interim allowances, Bernard Goodman, Esquire, be granted an allowance of $ 50,000, and John T. Duff, Jr., Esquire, be granted an allowance of $ 40,000, as total compensation for their services to the Receivers and Trustees.
In view of the services rendered, the complexity of the legal problems handled, the responsibilities assumed by counsel in advising the Receivers and Trustees, and the successful termination of the receivership, and considering that the sale of the assets realized $ 1,505,000, I will award to Bernard Goodman, Esquire, an additional $ 45,000, and to John T. Duff, Jr., Esquire, an additional $ 35,000.
The Interstate Commerce Commission has not determined the maximum compensation allowable to counsel for their services in connection with the trusteeship. Of the additional $ 45,000 which I am awarding Mr. Goodman, the sum of $ 5,500 is awarded for his services to the trusteeship, and the remaining $ 39,500 for his services to the receivership. Of the additional $ 35,000 which I am awarding Mr. Duff, the sum of $ 5,500 is awarded for his services to the trusteeship, and the remaining $ 29,500 for his services to the receivership.
Adrian Block, Esquire, and Isador Setel, Esquire, attorneys in the City of Buffalo, New York, have rendered valuable legal services to Messrs. Buchanan and Sproul in the State of New York, particularly with respect to certain real estate of the debtor located within that state. For their counsel, I will award Mr. Block the sum of $ 3,000, and to Mr. Setel the sum of $ 1,750.
V. Summary of the Services of the Receivers, Trustees and Counsel.
The receivership estate at the time of the appointment of the Receivers was such as would have warranted a summary liquidation thereof. On December 1, 1945, the cash on hand amounted to $ 21,000; current obligations exceeded $ 450,000; Receiver's Certificates totalling $ 2,100,000 had been in default since 1931; consequently, the estate was without any credit for working capital. Through their zeal, experience, business ability and attention to the task confronting them, the Receivers and Trustees accomplished the following major operations:
a. Succeeded in leasing the mines within two months after their appointment;
b. In March, 1946, they refused an offer for the railroad assets of $ 450,000, although the Receivers were under intense pressure from many interests to liquidate the estate at that time;
c. In this critical situation with no cash and with their efforts to secure working capital frustrated, coupled with indifference on the part of the holders of the Receiver's Certificates, they concluded that the railroad operation could not be continued without great losses due to the national coal and railroad strikes and the deteriorated condition of the railroad right of way and equipment, and, therefore, applied to the Court for immediate authority to curtail certain operations and to apply to the Interstate Commerce Commission for abandonment of the railroad, which authority was given in May, 1946, and immediately acted upon by the Receivers;
d. In order to continue the railroad as a going concern and thereby secure to the creditors of all classes the full value of the railroad's assets (until abandonment was authorized by the Interstate Commerce Commission), the Receivers resorted to the expedient of placing all shipments originating on the lines of the railroad upon a prepaid basis. This afforded them a revolving fund, involuntarily contributed by the connecting railroads, which enable the Receivers to continue its operations until a sale could be had of all its assets;
e. Through ingenuity and resourcefulness, and a well planned and managed sale, the much higher price of $ 1,505,000 was secured for all the joint assets in March, 1947, as compared with the value fixed by the offers in the Spring of 1946;
f. They devoted themselves to technical accounting duties, which were necessary to disentangle the complicated and incomplete accounting in the various companies within the receivership. In particular the preparation and filing of the account of the prior receivership was of primary importance. Had outside accountants been employed for these purposes, the costs involved would have amounted to thousands of dollars;
g. Claims of the present and prior receiverships have been collected through intensive effort and the moneys so collected, plus the fund realized from the sale of the assets, have been invested promptly to the best advantage of the estate. The whole administration of the estate has been businesslike and efficient, with complete consideration being given to the public interest involved in the successful liquidation within a year and a half of a 42 year old railroad receivership;
h. In connection with the foregoing, counsel for the Receivers and Trustees were of material assistance in the successful liquidation of this estate. Their excellent legal backgrounds and specialized knowledge of receivership and trusteeship matters assisted the Receivers and Trustees immeasurably in speedily, efficiently and effectively meeting the multitude of legal problems which arose in the course of the period of liquidation.
VI. Time of Payment.
Although the bulk of the work in this proceeding has been performed, some of it in 1945, and the majority of it in 1946 and 1947, there still remain a few items of work to be completed, and a residue of details to be given attention. Accordingly, I will direct that 60 per cent of the sums awarded herein (exclusive of interim allowances previously made) be paid immediately, the distribution of the remaining 40 per cent to await the further order of the Court.
The petitioners herein will be allowed no additional awards of compensation, unless such awards may be justified by future rendition of services which are presently unforeseen, and which would entail an inordinate additional expenditure of time or effort.
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