* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion

should not be published and is not precedent except under the limited

circumstances set forth in 5TH CIR. R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

No. 98-20561

Summary Calendar

_______________

IN THE MATTER OF: STANLEY STORE, INC.,

` Debtor.

STANLEY STORES, INC.,

Appellant,

VERSUS

AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.,

Appellee.

_________________________

Appeal from the United States District Court

for the Southern District of Texas

(H-96-CV-3448)

_________________________

December 23, 1998

Before JOLLY, SMITH, and WIENER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

Stanley Stores, Inc. (“SSI”), appeals the district court's

affirmance of the bankruptcy court’s order compelling SSI to pay

the legal fees of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (“Akin

Gump”), which represented the Unsecured Creditors Committee (the

“Committee”). Because we reject SSI’s predicate that the Committee

at any point was liable to Akin Gump for the fees, we affirm.
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I.

SSI filed for bankruptcy under chapter 11. Pursuant to

11 U.S.C. § 1103, the U.S. Trustee appointed the Committee to

pursue the interests of unsecured creditors. The Committee hired

Akin Gump.

In an adversary proceeding, SSI filed a complaint against

American Express Travel Related Services (“AMEX”) and First Data

Corporation (“First Data”) seeking a declaratory judgment that

certain proceeds were the property of SSI’s bankruptcy estate and

not that of AMEX or First Data. Because it did not have a stake in

these funds, SSI agreed to permit the Committee to prosecute this

matter on behalf of SSI’s estate. 

A settlement was reached whereby part of the funds were

designated property of the SSI estate. The settlement agreement

disbanded the Committee but in its place created the Creditor’s

Trust, to which title to the money would pass. Among other things,

the agreement, to which SSI, AMEX, First Data, and the Creditor’s

Trust were the parties, stipulated that each party would bear its

own attorneys' fees and costs. Akin Gump asked the bankruptcy

court for its statutorily-entitled compensation from SSI and, over

SSI’s protestations, the court awarded this compensation.

II.

Despite the multitude of issues SSI raises, the essential

question is whether the Committee could and did waive its “right”

to the claim for attorneys' fees. According to SSI, the Committee
3

waived this “right” when its purported successor in interest, the

Creditor’s Trust, entered into the 1995 settlement agreement that

stipulated that each party would bear its own costs. Because we

conclude that the Committee cannot waive such a right and that

indeed it does not possess such a right, we affirm.

The Bankruptcy code establishes a scheme whereby a reorganized

debtor, such as SSI, is liable for the payment of the attorney’s

fees of an unsecured creditor’s committee. See 11 U.S.C. §§ 330,

503, 1103. These payments are to have priority over all others.

See 11 U.S.C. § 507.

At no point in the bankruptcy process is the Committee

responsible for the fees of its hired counselSSsuch costs are

strictly awarded by the court. See 7 LAWRENCE P. KING, COLLIER ON

BANKRUPTCY ¶ 1103.03[6] (15th ed. 1998). When awarded, these costs

are to be paid from the assets of the debtor’s estate. See

11 U.S.C. § 503(b)(2); See also 7 LAWRENCE P. KING, supra,

¶ 1103.03[6]. Therefore, SSI’s contention that the Committee

somehow could waive its claim to these costs evinces a

misunderstanding. 

The Committee neither holds the claim to these fees nor

insures their payment. Akin Gump holds the claim to its fees, and

by virtue of § 503(b)(2), it holds this claim against the

reorganized debtor, SSI. Thus, the Committee could not possibly

have waived Akin Gump’s rightful claim to the fees, regardless of

the language of the settlement agreement into which it entered.

Being based on the unsound premise that attorneys' fees are
4

the responsibility of the Committee, SSI’s subsequent arguments are

meritless. Accordingly, the judgment is AFFIRMED.