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June 21, 1976


The opinion of the court was delivered by: LORD, III

JOSEPH S. LORD, III, Chief Judge.

 The bankruptcy of the Penn Central Transportation Company has provided no dearth of business for the courts. As a result, the financial morass into which the various Penn Central companies fell has kept occupied a significant number of lawyers. Those lawyers who have prosecuted the Penn Central Securities Litigation to settlement have now petitioned for the award of counsel fees.

 I. Background

 Fortunately it is unnecessary for the purposes of this opinion to discuss in any detail the history of this case, most of which may be gleaned from a number of previously published opinions. *fn1" However, even for the limited purpose of awarding counsel fees it will be necessary to relate briefly some aspects of this litigation.

 On June 21, 1970, the Penn Central Transportation Company (hereafter Transportation Company) filed a petition for reorganization pursuant to section 77 of the Bankruptcy Act, 11 U.S.C. ยง 205. The Transportation Company, a wholly owned subsidiary of the Penn Central Company (hereafter Holding Company), operated the railroad aspects of the business. *fn2" Shortly after the reorganization petition was filed, Trustees were appointed and given full authority over the assets of the debtor by the Reorganization Court.

 Beginning in July of 1970, a number of suits were filed as a result of the reorganization petition. These actions alleged numerous violations of the federal securities laws *fn3" and state common law fiduciary obligations and were asserted as both derivative and class action claims. The activities complained of occurred from around February, 1968 to June 20, 1970. Plaintiffs were stockholders of the Holding Company. Named as defendants were various officers of the Holding and Transportation Companies, a number of auditors, accountants, banks and brokers related to the companies, and certain subsidiaries and related companies and individuals.

 In 1971, the Judicial Panel on Multidistrict Litigation transferred all of the stockholder suits to us. *fn4" In re Penn Central Securities Litigation, 322 F. Supp. 1021 (Jud. Pan. Mult. Lit. 1971). Because of the number of suits involved, we appointed co-liaison counsel to help in the management of the efforts of counsel in the prosecution of this coordinated litigation. David Berger, P.A. and Julien & Schlesinger were so appointed in April, 1971. Later that year the Holding Company and the Trustees for the Transportation Company sought control of the derivative actions; the Trustees asked to intervene and the Holding Company requested that it be realigned as a party plaintiff. We granted these motions. *fn5" Since that time the Trustees and the Holding Company have been represented by counsel and have participated as plaintiffs in this case. See In re Penn Central Securities Litigation, 335 F. Supp. 1026 (E.D.Pa. 1971).

  In 1973 we approved the stockholders' suit for class action status. However, at that time we held that only purchasers or sellers (as opposed to holders) could assert section 10(b) and rule 10b-5 claims. We therefore dismissed the rule 10b-5 claims of those plaintiffs who had merely held their stock from February, 1968 through June 20, 1970. However, these plaintiffs were permitted to remain in this action with respect to claims asserted under section 14(a) of the Securities Exchange Act of 1934, which has no purchase or sale requirement.

 The Multidistrict Panel also transferred to us as related a number of actions involving the Great Southwest Corporation (GSC). In re Penn Central Securities Litigation, 333 F. Supp. 382 (Jud. Pan. Mult. Lit. 1971). These suits were both direct and derivative, and similarly asserted violations of the federal securities laws and of the common law. Over eighty percent of the stock of GSC was held by Pennsylvania Company (Pennco), which is a subsidiary of the Transportation Company. The GSC actions proceeded in two parts, one based upon the derivative claims, the other certified as a class action on behalf of the direct claims of the GSC minority stockholders. In re Penn Central Securities Litigation, 62 F.R.D. 181 (E.D.Pa. 1974). Thus, there were five distinct plaintiff entities with which defendants negotiated a "global settlement": the Holding and Transportation Companies, the Holding Company stockholders, the GSC stockholders and the GSC derivative plaintiffs. The settlement agreement was signed on December 2, 1974. The agreement provided for the payment of approximately $8.7 million to the five plaintiff entities. n6 This amount has been held in an escrow account since that time, and it is projected that at the time of distribution the fund will total approximately $10.6 million. In addition to the cash, certain defendants surrendered a number of shares of common and preferred stock of GSC and defendant Pennco agreed to waive its rights to certain accrued, but unpaid, preferred dividends of GSC. Since the plaintiff entities could not agree on the allocation of the cash fund, we were requested to make an equitable division of that fund. We decided on the following allocation: Holding Company stockholders 37.7358% or guaranteed minimum of $4 million Holding Company 12.2642% Transportation Company 37.7358% GSC stockholders 9.4340% or guaranteed minimum of $1 million GSC derivative 2.8302%


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