In the Matter of U.S.A. Motel Corporation, a California Corporation, Debtor. U.S.A. Motel Corporation v. Curtis B. Danning, Trustee

In an earlier appeal, we reversed the trial court and dismissed the petition of U.S.A. Motel Corporation for reorganization under Chapter X of the Bankruptcy Act on the ground that it was not filed in good faith. We found that U.S.A. Motel Corporation was not insolvent and that the proceedings were filed for two improper purposes: the liquidation of corporate assets and the resolution of internal disputes among shareholders. In re U.S.A. Motel Corporation, 450 F.2d 499 (9th Cir. 1971).

Upon remand, the District Court awarded:

$11,650 to the attorney for the petitioner;

$12,500 to the trustee;

$10,500 to the trustee’s attorney;

$2,500 to the referee/special master.

The District Court ordered these amounts to be paid by U.S.A. Motel Corporation, which is solvent.

The board of U.S.A. Motel Corporation is now controlled by a group of stockholders who opposed the Chapter X proceedings and who now contend that no compensation should be awarded because of this Court’s holding that the proceedings were not filed in good faith. In the alternative, they contend that the allowances were excessive.

The dismissal of a Chapter X petition for lack of good faith will not…