UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
TACTICAL AEROSPACE CORP., No. 97-12149
Memorandum of Decision
Creditors Reiner Revocable Trust, Diane Fantl and Janet Richmond filed the involuntary petition
which commenced this case. The debtor at first contested the petition, then entered into settlement
negotiations, and then consented to an order for relief under Chapter 11. The debtor's Chapter 11 plan
was confirmed on August 11, 1998. The petitioning creditors now seek reimbursement for $637.50 in
travel expenses and $16,420.01 in legal expenses. The debtor objects.
There are two separate possible bases for the petitioning creditors to recover their fees and
expenses. Pursuant to § 503(b)(3)(D) of the Bankruptcy Code, any creditor which makes a substantial
contribution to a case is entitled to payment from the estate for its fees and expenses. However, §
503(b)(3)(A) provides for the recovery of fees and expenses of a creditor that files an involuntary
petition, without any requirement that the estate benefitted
. Much of the debtor's objection seems to
be based on the incorrect premise that the application is brought under § 503(b)(3)(D) and that
accordingly fees must be disallowed to the extent that the estate did not benefit.
Section 503(b)(3)(A) does not require a petitioning creditor to show benefit to anyone else in
order to recover its fees and expenses. There is no requirement of a showing that the outcome of the
case was more favorable to creditors than if no case had been filed. 4 Collier on Bankruptcy
Rev.), ¶ 503.10[a]. Nor is there any basis for excluding fees incurred in attempting settlement of the
involuntary petition. Accordingly, the petitioning creditors are entitled to recover their actual and
necessary expenses. They are also entitled to recover reasonable attorneys' fees pursuant to §
The amount sought by the petitioning creditors is extremely reasonable. The debtor incurred far
more in contesting the petition. However, part of the attorneys' records are unreadable. The court
must accordingly reduce the allowed amount by $2,291.00 notwithstanding the overall reasonableness.
The debtor is technically correct in arguing that the attorney's declaration does not disclose
what payments were made to him, the source of such payments, and any agreements regarding the
sharing of compensation as required by FRBP 2016(a). The objection to $83.00 in interest is also
For the foregoing reasons, the motion of the petitioning creditors will be granted and they shall
recover expenses in the amount of $637.50 and attorneys' fees and costs in the amount of $14,046.01.
Provided, however, that the latter amount will be paid 10 days after a declaration meeting the
requirements of FRBP 2016(a) has been filed and served on counsel for the debtor. In the unlikely
event that the contents of such declaration reveal grounds for reconsideration, the debtor may make an
Counsel for the petitioning creditors shall submit an appropriate form of order conforming to
this memorandum of decision.
Dated: July 18, 1999 ____________________________
United States Bankruptcy