In Re Federated Department Stores Inc. - United States Court Of Appeals For The Sixth Circuit

In Re Federated Department Stores Inc.

By United States Court Of Appeals For The Sixth Circuit

  • Release Date: 1995-01-17
  • Genre: Law
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In Re Federated Department Stores Inc. United States Court Of Appeals For The Sixth Circuit Book Review Score: ★★★★★ 5/5 stars

HARRY W. WELLFORD, Circuit Judge. These consolidated appeals involve Lehman Brothers'*fn1 request for compensation for services rendered to the debtor, Federated Department Stores, Inc., ("Federated") during its Chapter 11 reorganization. The bankruptcy court approved Lehman Brothers' appointment as a financial advisor to Federated over the strong objections of the United States Trustee ("Trustee").*fn2 The Trustee argued that Lehman Brothers was disqualified from serving in that capacity because it was not a "disinterested person" as required under the United States Bankruptcy Code ("Code"). While Lehman Brothers' appointment was on appeal from the bankruptcy court to the district court, Lehman Brothers continued to serve as Federated's financial advisor. After Federated's plan of reorganization was confirmed and Lehman Brothers was no longer employed, Lehman Brothers filed its final application for fees and expenses which was approved by the bankruptcy court. The Trustee appealed the bankruptcy court's award of fees on the grounds that Lehman Brothers never should have been retained in the first instance and, therefore, was not entitled to compensation. After Federated completed its reorganization, the district court, having not yet ruled on the propriety of Lehman Brothers' retention, held that the Trustee's appeal of the retention order was moot. Further, the district court concluded that the bankruptcy court did not abuse its discretion in awarding fees to Lehman Brothers despite the fact that Lehman Brothers was an "interested person" within the meaning of the Code.

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