was recovered in substantial part together with an agreement of the attorney involved not to claim any amount for representing the Debtor in the bankruptcy proceedings.
The question of valuable consideration for promotional stock also presented a difficult problem which was settled advantageously to the Debtor. There were also attempts on the part of some co-owners to take motels out of the Chapter X proceeding. Further attempts at this were frustrated after the decisions in In re Imperial '400' National, Inc., 429 F.2d 671 (3rd Cir. 1970), and In re Imperial '400' National, Inc., 429 F.2d 680 (3rd Cir. 1970). Many more examples of the difficulties encountered in the administration of this estate could be related with commendation to the Trustee and counsel to the Trustee for the manner in which they were solved and the extent to which favorable disposition enhanced the financial status of the estate. One outstanding example that comes to mind readily is the recovery of the Little Rock, Arkansas, motel which had been turned over to a bank on a quit claim deed in the Chapter XI proceeding without any consideration and without exoneration of the Debtor from outstanding liabilities. There has also been a continuing reduction of liabilities of the Debtor by disposition of claims and motels operating at a loss with no likely prospects of future profit. Due to the quality of the services performed and the almost daily attention to the affairs of the Debtor, its financial status has reached a point where it has attracted a number of good proposals for a plan of reorganization. It is true that this has taken a substantial period of time and that more time will be necessary before it can be determined which of the proposed plans of reorganization is the most fair, equitable and feasible for all interests concerned. It is understandable that a large creditor such as a bank would desire substantial salvage at the earliest possible date. But the application of equitable principles requires that the multitude of small people involved in the venture with their life savings, including creditors, stockholders, and co-owners, together with the large creditors, obtain the best possible return of their investments. Shrewd promotion made this corporate monstrosity of financing possible and the undoing of it in substantial degree could not be accomplished overnight.
The burden of work cast upon the Court in this litigation since 1966 has been constant and great and the Court is extremely anxious to take the Debtor out of bankruptcy at the earliest possible date. The Court is also satisfied that the Trustee and counsel for the Trustee are equally anxious to unburden themselves of the daily supervision and attention which the administration of the estate requires. There have been recurring instances where economic hardship to counsel for the Trustee would provide tempting motivation to devote more time to the general practice of law, but he has been instructed by the Court from time to time to give priority of attention to the problems of this estate and, together with the Trustee, to move the estate toward a plan of reorganization as expeditiously as practicable.
The Court finds that counsel for the Trustee has been loyal and faithful to his commitment and has, in accordance with instructions of the Court, given priority to all matters which would contribute to increased financial success and to all other matters to take the Debtor out of bankruptcy at the earliest possible date. In reaching a determination as to the amount of a reasonable allowance which will alleviate severe economic hardship, the Court has taken into consideration the time spent, the intricacy of the problems involved, the size of the estate, the vexatious litigation that had to be conducted in many States, the assets retrieved, the improved operation of motels, the financial ability of the Debtor to pay an allowance, the results achieved in improving the financial condition of the estate, the character, ability and experience of counsel and the skill employed. The Court has concluded that compensation at the rate of $25 per hour for partner time and $15 per hour for associate time is reasonable and sufficient to alleviate the economic hardship that has developed.
There has been satisfactory proof that counsel for the Trustee kept contemporaneous accurate records of time. The total partner hours amount to 1,714 1/4 hours inclusive of time spent on fee litigation which should be deducted. That time amounts to 99 1/4 hours, which, when deducted, leaves 1,615 partner hours at the rate of $25 per hour producing a total of $40,375. The total of associate hours is 1,804 3/4 from which 286 1/2 hours should be deducted as time spent in fee litigation. This leaves a total of 1,518 1/4 associate hours at the rate of $15 per hour which (eliminating the fraction) produces a total sum of $22,770. Combining compensation for partner hours and associate hours the total is $63,145. A very conservative figure of overhead in this metropolitan area would be 45%. Applying that, the take-home pay for Mr. Nolan and his partners would be approximately $34,730. It is the opinion of this Court that this amount representing compensation to counsel for the Trustee and his two partners for a period of one year for almost full-time work is not exorbitant and could not be considered as full compensation, but only such as would relieve economic hardship and make it possible for counsel for the Trustee to continue the kind of attention that the Court has demanded and he has given to the affairs of the Debtor.
The total out-of-pocket disbursements for Xeroxing is claimed to be $3,101.25. At the hearing before the Special Master counsel admitted that actual cost would be approximately one-half that amount. Whether or not this was based upon cost of leasing the Xerox equipment is not entirely clear. Nevertheless, in the light of the statement by counsel, only one-half will be allowed amounting to $1,550.62. If at the time of final allowance it can be shown that in addition to costs arising out of a rental agreement there were other out-of-pocket disbursements such as paper and related supplies, that may be claimed.
Accordingly, counsel for the Trustee will be allowed as compensation for services for the period from September 1, 1969, to August 31, 1970, the sum of $63,145 and the sum of $2,878.30 for disbursements.
An appropriate order may be submitted.
Report of Special Master
To the Honorable Robert Shaw
Judge of the United States District Court for the District of New Jersey
Honorable Vincent J. Commisa, Referee in Bankruptcy, duly appointed special master herein, by Order dated May 26, 1971 heard the evidence on the issues presented by the Petition of Joseph M. Nolan, Esq., Attorney for the Trustee, for a fourth interim allowance and out of pocket disbursements filed with the District Court on April 15, 1971 and having considered the Petition filed and the testimony of May 10, 1971, May 12, 1971 and June 8, 1971, the exhibits marked into evidence and the recommendation of the Securities Exchange Commission and after due deliberation respectfully reports as follows:
FINDINGS OF FACT
1. That Joseph M. Nolan, Esq. was appointed attorney to the Trustee of the above-named Debtor Corporations by Order of this Court dated February 24, 1966.
2. That Joseph M. Nolan, Esq. was admitted to the Bar of the State of New Jersey in November of 1949.
3. That he maintains law offices under the firm name of Nolan and Lynes, P.A., at 60 Park Place, Newark, New Jersey.
4. That Joseph M. Nolan, Esq. is a graduate of New York University where he majored in the field of accounting and is a Registered Municipal Accountant in the State of New Jersey and a Registered Board of Education Accountant in that state.
5. That Joseph M. Nolan, Esq. is a graduate of Rutgers University School of Law.
6. That he has an extensive experience in the public accounting field and in the auditing of business concerns.
7. That he was, for a period of five (5) years, a Treasury Agent for the United States Internal Revenue Service and had extensive experience in the audit of individual, corporate and Trust returns.
8. That he was employed, after graduation from Law School, as an associate by the firm of Pitney, Hardin, Ward and Brennan, now known as Pitney, Hardin and Kipp, and was associated with that firm for a period of five (5) years before establishing his own law firm.
9. That he has extensive investigatory experience not only as an agent in the Treasury Department but also as General Counsel in the investigation of the Municipal affairs of the City of Jersey City; this appointment was made by a Judge of the Superior Court of New Jersey.
10. That he has been engaged in his own practice for a period of fifteen (15) years and has had extensive experience in reorganization and bankruptcy work.
11. That he has been appointed by the Bankruptcy Court and by the District Court of New Jersey in other matters involving Chapter X and XI proceedings and has had extensive experience in this type of work.
12. That he is a member of the American Bar Association and a member of the Taxation Committee of that Association.
13. That he is a member of the New Jersey Bar Association and a Trustee of that Association and a member of numerous committees.
14. That he is a member of the Essex County Bar Association and also holds membership on many committees.
15. That he was appointed a Special Master in railroad reorganization proceedings by the United States Court of Appeals for the Third Circuit in September of 1970.
16. That Joseph M. Nolan, Esq., attorney for the Trustee, had previously received interim compensation as follows:
Period Covered Interim Allowance
February 24, 1966 -- April 15, 1967 $ 45,000.00
April 16, 1967 -- July 1, 1968 60,000.00
July 2, 1968 -- August 31, 1969 45,000.00
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