before this Commission and in the Courts, the present applicants, with one exception, opposed the plan, principally on the ground that the Note holders were entitled to be paid in full in cash.

Subsequent to the decision of the Court of Appeals, the market values of the portfolio stocks proposed to be distributed under the amended plan increased substantially, and certain preferred stockholders and Standard requested the District Court either to declare the plan unfair or to remand it to this Commission for reconsideration. The District Court issued a decree remanding the plan to us and stating that Standard had a right, subject to the approval of this Commission, to make a call for redemption of its Notes. Standard then, with out approval, retired the Notes by payment of their call prices with cash derived from the issue and sale of certain bank loan notes.

Applicable Standards

8

In passing on applications for fees and expenses in reorganizations under Section 11, we have consistently held that compensation may be paid out of the estate only for such services as have contributed to the formulation of the plan finally adopted, or to the defeat of a proposed plan, or which were otherwise beneficial in the administration of the estate.' Although the primary test of the amount of compensation to be awarded an applicant is the measure of benefit to the reorganization conferred by his activities, other factors to be considered include the difficulty, novelty and importance of the problems involved, the time properly required to be spent on the matter, and the experience and ability of the applicant. In addition, we have recognized that compensation should not be paid for activitiy which merely duplicates the work of others and does not represent a real contribution.

The proceedings before this Commission and the Courts in connection with the retirement of Standard's Notes extended over a period of approximately three years. They embraced many difficult and complicated legal and economic questions relating to the rights of the Note holders and the valuation of portfolio and other securities. The question of whether, in a Section 11 reorganization, the claim of holders of debt securities of a holding company can be discharged by the distribution to them of equity securities was an important and difficult legal issue not previously litigated. The proceedings moreover involved substantial interests of a large number of investors (the $59,000,000 principal amount of Notes were owned by approximately 19,000 holders), and they ended with the eventual payment of the Note holders in cash in the full amount of the call prices of the Notes.

8 Standard Gas and Electric Company, 22 S. E. C, 103 (1946).

National Power and Light Co., 27 S. E. C. 752 (1948); The Laclede Gas & Light Co., 25 S. E. C. 382 (1947); Columbia Gas & Electric Corporation, 17 S. E. C. 549 (1944).

Standard and the Division have stated that in their opinion the applicants are entitled to compensation for their activities in connection with the proceedings, but that the total amount of fees and expenses requested is excessive. They have accordingly recommended that lesser amounts be approved.

We turn now to a consideration of each application.

Applications of Guaranty Trust Company, its Counsel and its Engineers.

Guaranty Trust Company ("Guaranty'') was Indenture Trustee under three trust agreements of Standard pursuant to which approximately $39,000,000 principal amount of Notes were issued. Guaranty retained Davis, Polk, Wardwell, Sunderland & Kiendl ("Davis'') as its attorney and J. H. Manning & Company ("Manning''), an engineering firm, as an expert. The trust agreements provided that the Trustee was entitled to reasonable compensation for all services rendered by it in the execution of the trusts, including reasonable counsel fees, and Standard has stated that it recognizes an obligation to pay such compensation.10

As noted above, Guaranty has requested a fee of $30,000, Davis a fee of $92,500, and Manning a fee of $31,460.59. Standard and the Division recommend that a fee of $25,000 should be allowed Guaranty, and $65,000 for Davis. Standard has suggested that Manning be allowed a fee of $25,000, whereas the Division feels that $20,000 would be reasonable. Guaranty and Davis participated actively in the proceedings from the time of the filing of the original Section 11 (e) plan in 1943 to the redemption of the Notes in 1946. Their main contention throughout was that the Notes should be paid in in cash. In the proceedings on the original plan they objected to the proposal to distribute common stock of Standard to Note holders and attacked the valuations placed by Standard on the stocks proposed to be distributed. In the proceedings on the amended plan Guaranty and Davis did not object to the valuations assigned to the stocks proposed to be distributed but they did object to other features of the plan and continued their objection that Note holders could not be paid off otherwise than in cash. They opposed the amended plan before this Commission, in the District Court, and in the Court of Appeals, and joined in a petition for a writ of certiorari to the Supreme Court, which petition was denied. Guaranty estimates that approximately 2,000 hours were spent by it in connection with this matter. Davis states that approximately 4,200 hours were spent by it.

10 At the time the Notes were redeemed by Standard, Guaranty executed releases in satisfaction of the trust agreements, and Standard, in consideration of such releases, agreed to pay such compensation and expenses of the Trustee, including compensation and expenses of its counsel and other experts, as was required under those agreements.

Manning was retained by Guaranty to make an independent appraisal and valuation of Standard's investments and testify at the hearings on the original plan as an expert witness. Manning has estimated that 2,700 hours were spent by it.

In its capacity as Indenture Trustee, it was appropriate for Guaranty to take an active part in the proceedings and to retain the services of counsel and expert witnesses in connection therewith. We believe that Guaranty, its counsel and expert rendered valuable services to the estate and should receive substantial compensation. However, the amounts requested by them, aggregating approximately $154,000 in fees and almost $11,000 for expenses, are in our opinion excessive in the light of the contribution made." As Indenture Trustee, Guaranty had an obligation to protect the rights and interests of Note holders, but since these interests were also represented by others, the burden on the Trustee and his counsel was somewhat reduced. For example, the original plan was opposed by all other representatives of Note holders, and Guaranty and its counsel thus were enabled to share with them the responsibility of and effort involved in securing rejection of that plan. Members of Guaranty's personnel attended all of the proceedings before this Commission and the Courts and aided Guaranty's counsel and engineers in the analysis of the plans, participated in the preparation for the hearings and helped its counsel in preparing briefs. Although Guaranty performed valuable services, we feel that an unnecessarily large amount of time was spent by it and that there was some duplication of services as between Guaranty and Manning. It appears that in many instances several of Guaranty's personnel attended hearings, although its counsel was also present and transcripts of testimony were available. Guaranty's application also shows that a substantial amount of time was spent in the preparation of statistical studies, activity which appears to have been excessive in view of the extensive activities of its counsel and engineers. After a full consideration of the record, we are of the opinion that a fee of $25,000 constitutes reasonable compensation for the services rendered by Guaranty, and that Guaranty should also be reimbursed for the expenses incurred by it.

Davis, as counsel for the Trustee, performed legal services which were required in the Trustee's fulfillment of its trust obligations. Davis participated actively throughout the entire proceedings and, although we are of the opinion that the requested fee of $92,500 is excessive," we find that Davis

In addition, it is appropriate to note that, according to the testimony, Guaranty urged the clients of Holthusen & Pinkham, whose application for a legal fee we have approved in the amount of $10,000, to participate in the reorganization and that Holthusen & Pinkham were helpful to Guaranty and its counsel in the proceedings.

12 While, as indicated before, the amount of time spent is only one of the factors to be considered, we note that Davis' requested fee represents an average of $22.00 per hour and that only about 30% of the estimated time expended on the case represented services rendered by partners of the firm, 70% representing the work of associates.

is entitled to substantial compensation and that under all of the circumstances a fee of $65,000 and reimbursement of expenses is not unreasonable.

Manning, as consulting engineers, assisted Guaranty and its counsel. It made a study of the original plan and an analysis of the value of the securities proposed to be distributed. It also made a field investigation and analysis of Philadelphia Company (a subsidiary of Standard) and attended hearings and testified before the Commission. We have found that Guaranty was justified in employing Manning for assistance. Under all the circumstances, however, having in mind the active participation of the Trustee and its counsel, we think an excessive amount of time was spent by Manning on the case. 13 Accordingly, we are of the opinion that a fee of $20,000 is reasonable compensation for Manning and that it may be reimbursed for its expenses.

Applications of Representatives of Individual Note Holders.

Applications for fees and expenses have been filed by various counsel for individual Note holders. Standard and the Division have indicated that, in their opinion, representation of individual Note holders was appropriate and helpful in the proceedings, even though Guaranty, as Trustee, participated on behalf of Note holders generally. Here too, however, Standard and the Division believe that the requested fees are too high because of duplication of effort and other factors.

Pam, Hurd & Reichmann.

Pam, Hurd & Reichmann ("Pam") represented A. O. Stewart and other individual holders of Notes and has requested approval of a fee of $75,000. The firm estimates that approximately 3,100 hours were spent by it in connection with the proceedings relating to the retirement of the Notes. Standard has stated that a fee of $50,000 would not be unreasonable for Pam, and the Division has recommended a fee of $25,000.

Pam participated in the proceedings from the beginning and joined with other applicants in opposing the original plan, which was rejected by this Commission. Pam asserts that it assisted in the formulation of Standard's amended plan and it alone of all the applicants supported that plan before us and the District Court. Although Pam did not participate in the appeal to the Court of Appeals, it actively opposed abandonment of the amended plan and contends that its active support of that plan was a factor in leading Standard to redeem the Notes by payment in cash of their call prices.

13 Manning has contended that it was performing services for its client, Guaranty, at its client's instructions and request, and that Guaranty was satisfied that the time spent was not excessive. However, Manning is here claiming compensation not from Guaranty but from the estate in reorganization.

We believe that Pam made a contribution to the case and furthered the progress of the proceedings, for which it should receive compensation. We find, however, that Pam's efforts involved duplication of the efforts of others. Pam was the principal independent supporter of the amended plan, which was opposed by all other representatives of Note holders. Pam also spent a substantial part of its time in connection with the hearings on the original plan, at which time, however, it was taking a position similar to that of the other applicants. Considering the time spent, the duplication of effort, and all the other factors appearing from the entire record, we find that a fee of $35,000 is reasonable compensation for Pam's services and that it may also be reimbursed for its expenses. Albert J. Fleischmann

Albert J. Fleischmann ("Fleischmann''), with whom was associated William Taft Feldman, represented only himself as an individual holder of Notes. He participated throughout the proceedings, and estimates that the time spent by him and Feldman totalled 5,200 hours. He has requested a fee of $60,000, which includes compensation for Feldman. Standard has expressed no judgment as to what fee, if any, should be paid to Fleischmann. The Division has recommended a fee of $10,000.

Fleischmann actively opposed the original plan before us, on much the same grounds as did the other applicants. He also opposed the amended plan before us and before the District Court. In common with Davis, counsel for the Trustee, he contended throughout the proceedings that the Note holders could be paid only in cash. In addition, he attacked the valua tions in both the original plan and the amended plan. He emphasizes that he participated in the proceedings from the very beginning, at which time Pam was the only other representative of individual Note holders, and that Pam supported the amended plan, whereas he opposed it. He contends that he was largely responsible for an amendment to the plan, deleting a provision for a new issue of debentures. He also testified that after the decision of the Court of Appeals he had conferences with officers of Standard at which he suggested the desirability of redemption of the Notes in cash upon a rise in the market prices of Standard's portfolio securities.

We think that, under all the circumstances of the case, Fleischmann contributed to the progress of the proceedings by his active participation and by assisting in the determination of the issues. He joined with Davis and Pam in opposing the original plan and securing our disapproval of it. We find that in his case, as in the others, however, there was a considerable amount of duplication of effort which makes the allowance he has requested excessive. Accordingly, after consideration of all the circumstances, we find that a fee of $20,000 is reasonable compensation to him, and that he should be reimbursed for his expenses.