Opinion ID: 419205
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 Southwestern Media, was formed in 1976 to buy and operate a radio station in Phoenix, Arizona. Southwestern Media purchased from KBUZ, Inc. (KBUZ) two broadcasting licenses and broadcasting equipment for $1,200,000, paying $200,000 down and issuing to KBUZ a promissory note for the $1,000,000 balance. The note was secured by the transferred assets, and the principal shareholders personally guaranteed $400,000 of the deferred purchase price. 3 On April 6, 1978, Southwestern Media filed a Chapter XI bankruptcy petition. At the time, the corporation had liabilities of $1,721,890 but assets at book of only $1,113,032, resulting in a deficit net worth of $608,858. On July 3, 1978, the SWM Group estimated the fair market value of the corporation's assets to be approximately $1,800,000. 4 Albert Rau was appointed receiver on June 26, 1978 and trustee on August 2, 1978. Attorney Henry Jacobowitz represented Rau in both of Rau's capacities. 5 When Rau began his duties, he found the corporation in serious financial difficulty and in danger of going off of the air, which would have decreased Southwestern Media's value. Rau kept the stations running while he and Jacobowitz looked for a purchaser. Tentative agreement was reached on a sale to Capitol Radio, Inc. This buyer agreed to purchase all assets for $1,500,000, subject to KBUZ's lien that secured a promissory note of $1,000,000 plus interest, and to assume the promissory note or issue its own note to the bankruptcy court. 6 Before this sale was confirmed, another prospective purchaser called the Forney Group made a more favorable offer, to purchase the station for $1,850,000, also subject to the lien securing the KBUZ note. The Forney Group, as had Capitol Radio, agreed to obtain the release of the two shareholders from their personal guarantees to KBUZ. KBUZ agreed not to oppose the sale as long as the Forney Group met certain conditions and assumed the promissory note. Provided the same conditions were met, KBUZ also agreed to reinstate the promissory note's term-payment provisions. The bankruptcy court approved and confirmed the sale. The Forney Group paid $160,000 down and later paid $142,000 in expense money, which the trustee used to operate the station. When the Forney Group could not post a letter of credit, the bankruptcy court cancelled the sale and ordered the trustee to refund the $160,000 down payment, but not the $142,000 expense money. 7 Rau was thus forced to raise $160,000 to repay to the Forney Group, and to find a new buyer. Meanwhile, as a result of a successful change in format, the value of the radio station licenses increased. Western Cities Broadcasting, Inc. (Western Cities) offered to purchase the station's licenses and other assets for $2,500,000 in cash, the assets to be transferred free and clear of all liens. The form of this transaction enabled the trustee to pay the outstanding balance on the KBUZ note, secure the release of the lien, and thereby eliminate the need to obtain KBUZ approval of the buyer. In addition, the terms of the sale allowed the trustee to make the refund to the Forney Group and to pay for operating expenses. The bankruptcy court approved the sale to Western Cities on August 7, 1979. The sale was closed on February 15, 1980. On that same day, the remaining purchase price was collected and the KBUZ promissory note was paid. By the end of 1980, over $600,000 had been distributed to the two shareholder groups. All creditors were paid in full, and more money may be returned to the shareholders in the future. 8 On April 8, 1981, Rau and Jacobowitz applied for final compensation for their services in connection with the bankrupt estate. Rau requested $15,000 for his services as receiver and $66,020.06 for his fee as trustee. Jacobowitz asked for $5,000 for his work as attorney for Rau in his capacity as receiver and for a fee of $51,712.23 for his services on behalf of Rau in his capacity as trustee. The bankruptcy court approved these requested fees. In its order granting the fees, the court stated that the requested fees were fair, reasonable and proper, and that the administration of the estate had been very successful. The bankruptcy court further ordered $71,617.43 paid into the referees' salary and expense fund. 9 The SWM Group of minority shareholders appealed from the fee awards to the district court, which affirmed. The SWM Group's attorney then filed a timely notice of appeal to this court. On the notice of appeal, Southwestern Media, Inc., rather than the SWM Group, was listed as the appellant. We consider the variance to constitute a simple misnomer 2 and turn to the merits of the appeal.