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 debtor’s 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 debtor’s 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 debtor’s designated representative.  For the reasons set forth below, the court will sustain the debtor’s motion and appoint the firm of Dean, Dorton & Ford, PSC as debtor’s 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 debtor’s 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 debtor’s 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 debtor’s 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. Eppel’s 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 debtor’s records and evaluating the debtor’s 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 debtor’s 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