Court Opinion

ID: 8880803
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:29:18.271023+00
Date Added: 2024-06-11T17:06:38.351937
License: Public Domain

SEITZ, Circuit Judge
(concurring).
I would affirm the judgment of the district court but based on a different approach.
The order appointing the receiver in the Chapter XI proceedings vested him with possession of the assets and full administrative power. Indeed, it explicitly provided that he was not to be a “mere Custodian”. See § 48(a) (2) of the Bankruptcy Act (11 U.S.C.A. § 76(a) (2); see also § 2(a) (3) of the Act (11 U.S.C.A. § 11(a) (3)). Subsequent orders of the referee appointed two sets of attorneys to represent the receiver generally. Accountants were also appointed by order of the referee.
The effect of these orders was not only to give to the receiver full control of the operation and administration of the debtor corporation under Chapter XI but also to provide him with the necessary legal and accounting assistance to discharge his duties. These duties would certainly include examining and settling creditors’ claims and negotiating the removal of the government’s jeopardy assessment, which were the services allegedly performed by these appellants. Thus, the appellants necessarily performed the alleged services for the benefit of the receivership estate and not for the debtor out of possession. General Order 44 requires, inter alia, court appointment of attorneys who do work for the receiver. The employment of appellants was admittedly not authorized by the court. Therefore, appellants were not entitled to be compensated from the estate for failure to comply with General Order 44.
I recognize that the result is harsh, but necessary if the strong policy considerations underlying the requirement of strict compliance with General Order 44 are to be implemented. A similar result in a Chapter X context, for failure to comply with the order was reached by this court in In re Nat’l Tool & Mfg. Co., 209 F.2d 256 (1954). The rationale of that ease seems equally applicable in a Chapter XI context under the circumstances of this case.
I find it unnecessary to consider the correctness of the position advanced by the S.E.C. that where the powers of the Receiver are vague, the attorney for a debtor out of possession may be compensated for non-duplicative work done in the undefined area. I say this because a reading of the referee’s orders makes it clear that rather than being vague the receiver’s powers fully encompassed the area of service for which appellants seek compensation.
Judge VAN DUSEN concurs in the foregoing opinion.