Appeal from the United States District Court for the Northern District of Illinois, Eastern Division No. 68 C 1053 JULIUS J. HOFFMAN, Judge.
En Banc. Sprecher, Tone and Bauer, Circuit Judges.
The difficult issue in this appeal is whether the attorney for a creditors committee is entitled to a fee from a securities law receivership.
The Securities and Exchange Commission commenced this receivership action against First Securities Company of Chicago within a week after Leston B. Nay, its president, committed suicide and left a note stating that the firm was insolvent because of his thefts and the spurious escrow accounts he had created. A week after the action was filed, Keith B. McKy was appointed receiver on June 17, 1968. One day later, attorneys were appointed for the receiver and two days after that Charles A. Bane was appointed as special master to hear claims and other matters pertaining to the receivership estate.
The history of the more than seven years of receivership is outlined in S.E.C. v. First Securities Co., 463 F.2d 981 (7th Cir.), cert. denied sub nom. McKy v. Hochfelder, 409 U.S. 880, 34 L. Ed. 2d 134, 93 S. Ct. 85 (1972); S.E.C. v. First Securities Co., 466 F.2d 1035 (7th Cir.), cert. denied sub nom. McKy v. Union Bank & Trust Co., 409 U.S. 1041, 34 L. Ed. 2d 491, 93 S. Ct. 528 (1972); and S.E.C. v. First Securities Co., 507 F.2d 417 (7th Cir. 1974).*fn1
By order dated July 15, 1975, the district court granted the receiver compensation of $47,064 at $30 per hour for the hours devoted to accounting matters and at $15 per hour for the 15 percent of his time devoted to ministerial matters; granted the receiver's attorneys compensation of $197,713.75 at $55 per hour for partners' time and at $25 per hour for associate lawyers' time; and granted the special master compensation of $43,680 at $60 per hour.
By the same order, the district court denied compensation to Samuel H. Young, attorney for the Customer Creditors Committee, which committee had been granted leave to file its appearance, not on behalf of the entire class of customer creditors, but as representative of 116 customer creditors named in the order entered on May 14, 1970, but made nunc pro tunc as of September 11, 1969, the date when the committee and its counsel had begun to function in these proceedings.
Also, the order of July 15, 1975 ordered that the escrow claimants be granted a partial distribution of 12 1/2 percent of their claims from the estate's general fund.
The Customer Creditors Committee has appealed (1) the awarding of $197,713.75 to the receiver's attorneys; (2) the partial distribution of 12 1/2 percent to the escrow claimants; and (3) the denial of compensation to the committee's attorney. The receiver and the Securities and Exchange Commission have filed answering briefs.
Both the receiver and the S.E.C. have argued that the disposition of the fee issues will enable the district court to make prompt and final distribution to creditors of all classes, rendering the issue of partial distribution moot. The appealing committee has not questioned this conclusion in its reply brief. We therefore decline to consider the partial distribution issue, it being moot.
In awarding $197,713.75 to the receiver's attorneys, the district court reduced the fee sought from $230,000. The ...