UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
LEXINGTON DIVISION
IN RE:
RUSSELL
CAVE COMPANY, INC. CASE NO. 99-50142
DEBTOR
OPINION AND ORDER
This matter is before the court upon the Motion to
Appoint Dean, Dorton & Ford, PSC as Designated Representative filed with
the court on April 14, 2000 by the debtor.
That motion seeks to have Dean, Dorton & Ford, a Lexington
accounting firm, appointed as the debtors designated representative pursuant
to the terms of the confirmed Chapter 11 Plan in this proceeding. Additionally, the debtor seeks to have
Elizabeth Woodward, Certified Public Accountant with that firm, approved as
primary contact for the debtors designated representative.
The Official Committee of Unsecured Creditors filed
their Objection of the Official Committee of Unsecured Creditors to Motion to
Appoint Dean, Dorton & Ford, PSC as Designated Representative on April 21,
2000. The committee asserts that
Leonard Z. Eppel and his firm, Financial Resource Associates, Inc., should be
appointed as the debtors designated representative. For the reasons set forth below, the court will sustain the debtors
motion and appoint the firm of Dean, Dorton & Ford, PSC as debtors
representative with Elizabeth Woodward to be the primary contact therein.
The court has previously confirmed a liquidating plan
in this Chapter 11 proceeding. As such,
what remains to be accomplished, broadly speaking, is the liquidation of
remaining assets of the debtor, mainly causes of action, and the evaluation and
payment of claims filed in the case.
The debtors previous designated representative, John Rice, has resigned
and it is necessary to have a designated representative of the debtor to
supervise the execution of the debtors obligations under the confirmed
plan. Additionally, Mr. Rice has
asserted a claim against the estate related to his employment, and it would be
inappropriate for him to continue to serve as designated representative during
the evaluation of his and other claims.
The court heard arguments of counsel on April 21,
2000. Neither the Unsecured Creditors
Committee nor the debtor contends that the candidate which the other party puts
forth is unqualified. Both simply
contend that their candidate is the more qualified under the circumstances to
be the designated representative.
Additionally, the committee also contends that since it represents the
class of creditors who will ultimately receive payment of the bulk of the funds
being administered in the estate, that it should have priority in choosing the
designated representative.
Article IX, Section 9.3 of the Joint Liquidating Plan
of Reorganization, confirmed by this court on November 18, 1999 provides that
the committee must approve the debtors selection of a designated
representative. It is clear, pursuant
to the terms of the plan, and the provisions of 11 U.S.C. §105 and §1142 et
seq., this court retains jurisdiction to resolve the dispute between the
debtor and the Unsecured Creditors Committee in this matter.
The debtor has retained three employees who are
presently in the process of evaluating the claims made by creditors in the case
and have or will assist the debtor or the Committee in the collection and
liquidation of other assets. These
other assets consist primarily of preference claims and any other causes of
action which the estate might have and will be prosecuted by debtor or
Committee pursuant to the terms of the plan.
The supervision necessary of these employees does not require a
full-time, on-premises designated representative, but does require a designated
representative who is familiar with the handling of corporate records and the
assembling and processing of the data they contain to accomplish the
requirements of the plan. It is
apparent to the court that some hands-on work is necessary on the part of the
designated representative at the site of the records of the debtor.
The designated representative proposed by the debtor,
Dean, Dorton & Ford, PSC, is a large accounting firm with broad experience
in all areas of accounting. The
specific contact in that firm, Elizabeth Woodward, is a Certified Public
Accountant, whose hourly billing rate is $105 per hour. The firm maintains a Lexington office with
close proximity to the books and records of the debtor.
The candidate put forth by the Committee of Unsecured
Creditors, Leonard Z. Eppel and his firm, Financial Resource Associates, Inc.,
maintains offices in Cincinnati, Ohio, and is experienced in bankruptcy
liquidation and crisis management. As
such, Eppel and his firm, have qualities that are not asserted on behalf of
Dean, Dorton & Ford. Mr. Eppels
hourly rate is $175 and he would clearly be required to travel to Lexington on
occasion to properly perform the task of designated representative.
In considering this matter, the court finds that both
parties are qualified to serve as designated representative of the debtor. While Mr. Eppel has bankruptcy liquidation
and crisis management experience that Dean, Dorton & Ford does not claim,
it does not appear that that experience would give a significant advantage in the
process of evaluating claims from the debtors records and evaluating the
debtors causes of action, mainly preference actions, which will need to be
brought. Evaluation of such claims is
primarily a function for attorneys. In
fact, the accounting experience of Dean, Dorton & Ford may prove the more
valuable experience in winding down the liquidation process. Additionally, the higher hourly charge of
Mr. Eppel and the necessity of his travel to Lexington and consequent request
for compensation for such travel lead the court to conclude that Dean, Dorton
& Ford is the appropriate choice under these circumstances.
IT IS THEREFORE ORDERED that the debtors Motion to
Appoint Dean, Dorton & Ford, PSC as Designated Representative be, and the
same hereby is, SUSTAINED.
Dated this day of April, 2000.
BY
THE COURT
JUDGE
COPIES TO:
Gregory D. Pavey, Esq.
W. Timothy Miller, Esq.
Frank T. Becker, Esq.
U.S. Trustee