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In the Matter of Seatrain Lines, Inc.

United States Bankruptcy Court, S.D. New York
Sep 14, 1981
13 B.R. 980 (Bankr. S.D.N.Y. 1981)

Summary

holding that maritime engineers employed in the course of Debtor's business would "play an important role in the mechanics of [Debtor's] operation," but were not professionals under § 327 because their retention would not "affect the administration of [Debtor's] reorganization."

Summary of this case from In re Partnership

Opinion

Bankruptcy No. 81 B 10311 (EJR).

September 14, 1981.

Stroock Stroock Lavan, New York City, for debtor.

Fried, Frank, Harris, Shriver Jacobson, New York City, for Official Creditors' Committee.


On February 11, 1981, a petition under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101, et seq., was filed against Seatrain Lines, Inc. ("Seatrain"). Seatrain consented to the entry of an order for relief and such an order was granted on February 18, 1981. Seatrain continues to operate its business as debtor in possession.

On May 13, 1981, Seatrain applied to this court for an order authorizing the retention of two maritime engineers as "consultants." The proposed order set forth the terms under which these consultants were to be employed, including their compensation.

The United States Trustee objected to the proposed order, arguing that one order both authorizing retention and approving compensation was improper in light of 11 U.S.C. § 330. The United States Trustee also asserted that the consultants were not "professional persons" within the meaning of 11 U.S.C. § 327 and, therefore, an order authorizing their retention was neither necessary nor appropriate.

The United States Trustee appeared pursuant to 28 U.S.C. § 586(a)(3).

Section 330 of the Bankruptcy Code allows the court to award reasonable compensation to "professional persons" for services rendered. The United States Trustee argued that an order providing for compensation of professional persons is inappropriate until the contemplated services have been performed.

By its own terms, section 330 is subject to section 328. Section 328(a) provides that the trustee, with court approval, may employ professional persons on any reasonable terms. The debtor in possession may provide for the reasonable compensation of "professional persons" pursuant to section 328(a). Section 328, unlike section 330, does not require that compensation be awarded after services are rendered. If maritime engineers were determined to be "professional persons" within the meaning of section 327, one order authorizing both their retention and their compensation would be proper. It is important to note, however, that compensation approved under section 328(a) is subject to review by the court after the conclusion of employment. See, 11 U.S.C. § 328.

Section 1107 of the Bankruptcy Code gives the debtor in possession the rights and duties of the trustee.

The primary issue in this case is whether a court order is at all necessary for the retention by Seatrain of maritime engineers. In a reorganization case the debtor in possession may continue the actual operation of its business without the necessity of specific court orders. See, 11 U.S.C. § 1107, 1108. One exception to the general rule that the debtor in possession may make business decisions without court approval is contained in section 327(a) of the Code. Section 327(a) requires court approval for the employment of attorneys, accountants, appraisers, auctioneers, or other "professional persons" by the debtor in possession.

At the hearing before this court on May 20, 1981, an attorney for the Securities and Exchange Commission argued that if auctioneers are professional persons, then maritime engineers must also be professionals. The court rejects this assertion. In the context of a debtor proceeding, persons in occupations ordinarily considered professions are not necessarily professionals whose retention by the estate requires court approval. For the purposes of section 327(a), "professional person" is limited to persons in those occupations which play a central role in the administration of the debtor proceeding. Court approval is required for the retention of attorneys, accountants, appraisers, auctioneers and persons in other professions intimately involved in the administration of the debtor's estate.

The Securities and Exchange Commission appeared pursuant to 11 U.S.C. § 1109(a).

The court recognizes that the maritime engineers proposed by Seatrain will play an important role in the mechanics of Seatrain's operation. Their retention, however, will not affect the administration of Seatrain's reorganization.

After careful consideration of the arguments presented, this court is not persuaded that maritime engineers are professional persons whose retention requires approval by the court. Accordingly, the order is filed unsigned.


Summaries of

In the Matter of Seatrain Lines, Inc.

United States Bankruptcy Court, S.D. New York
Sep 14, 1981
13 B.R. 980 (Bankr. S.D.N.Y. 1981)

holding that maritime engineers employed in the course of Debtor's business would "play an important role in the mechanics of [Debtor's] operation," but were not professionals under § 327 because their retention would not "affect the administration of [Debtor's] reorganization."

Summary of this case from In re Partnership

holding that a professional is one who plays a central role in a debtor's case

Summary of this case from Matter of Concrete Products, Inc.

concluding that maritime engineers hired by the debtor were not "professional persons" because they did not play a central role in the administration of the bankruptcy case and the need for their employment did not arise from the bankruptcy itself

Summary of this case from In re Nine W. Holdings, Inc.

In Seatrain Lines, there was no indication that any part of the engineers' work was attributable to the administration of the estate.

Summary of this case from U.S. ex Rel. Kraft v. Aetna Cas. Sur. Co.

defining a "professional person" who may be employed under § 327 to include "persons in those occupations which play a central role in the administration of the debtor proceeding"

Summary of this case from In re Cornerstone Products, Inc.

In Seatrain, a distinction was made between the employment of professionals who actually administer the estate and those who serve mechanical functions necessary for a debtor's operations. 13 B.R. at 981 ("persons in occupations ordinarily considered professions are not necessarily professionals whose retention by the estate requires court approval").

Summary of this case from In re Sieling Assoc. Ltd. Partnership

In Seatrain Lines, the debtor-in-possession asked the court for approval of the employment of two maritime engineers as consultants.

Summary of this case from In re Neidig Corp.
Case details for

In the Matter of Seatrain Lines, Inc.

Case Details

Full title:In the Matter of SEATRAIN LINES, INC., Debtor

Court:United States Bankruptcy Court, S.D. New York

Date published: Sep 14, 1981

Citations

13 B.R. 980 (Bankr. S.D.N.Y. 1981)

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