[1]     

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

, [5]     

Argued January 10, 1996

, [6]      IN RE: AMES DEPARTMENT STORES, INC.; EASTERN RETAILERS SERVICE CORPORATION; AND ALL SUBSIDIARIES OF AMES DEPARTMENT STORES, INC.; IN RE: ZAYRE CENTRAL CORP., SUCCESSOR IN INTEREST TO AMES-G.C. COMPANY, INC., " />

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In Re Ames Department Stores Inc., 76 F.3D 66, 19 Employee Benefits Cas. 2675 (2d Cir. 02/05/1996)

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Nos. 869, 1051 -- August Term 1995

Docket Nos. 93-5001, 95-5049

76 F.3d 66, 19 Employee Benefits Cas. 2675, 1996.C02.0000050 <http://www.versuslaw.com>

Argued January 10, 1996

IN RE: AMES DEPARTMENT STORES, INC.; EASTERN RETAILERS SERVICE CORPORATION; AND ALL SUBSIDIARIES OF AMES DEPARTMENT STORES, INC.; IN RE: ZAYRE CENTRAL CORP., SUCCESSOR IN INTEREST TO AMES-G.C. COMPANY, INC.,

Before: VAN GRAAFEILAND, MINER and CABRANES, Circuit Judges.

[8]    

Decided February 5, 1996

[9]    

Debtors.

SKADDEN, ARPS, SLATE, MEAGHER & FLOM, ESQS.,

Appellant.

Appeal from an order of the United States District Court for the Southern District of New York (Duffy, J.) affirming the United States Bankruptcy Court's (Goodman, J.) denial of attorneys fees.

Vacated and remanded.

MICHAEL L. COOK, New York, New York (Brad J. Axelrod, Dennis F. Dunne, Neal Jacobson, Skadden, Arps, Slate, Meagher & Flom, New York, New York, of counsel), for Appellant Skadden, Arps, Slate, Meagher & Flom.

Unopposed.

VAN GRAAFEILAND, Circuit Judge:

Skadden, Arps, Slate, Meagher & Flom ("Skadden"), a nationally known and highly regarded law firm, appeals from a final order of the United States District Court for the Southern District of New York (Duffy, J.). The order affirmed a final order of the United States Bankruptcy Court for the Southern District of New York (Goodman, J.) which denied Skadden $35,000 in attorneys fees. For the reasons that follow, we vacate and remand.

Skadden represented Ames Department Stores, its affiliates and subsidiaries (collectively "Ames") in its successful reorganization under Chapter 11 of the Bankruptcy Code. 11 U.S.C. Section(s) 101 et seq. One of the problems that arose during the Chapter 11 proceeding was whether Ames could exercise its contractual right to terminate a group life insurance plan. The plan, which was adopted in 1918 by G.C. Murphy Co., one of Ames' affiliated companies, provided modest life insurance benefits for its employees. When the Ames group acquired Murphy in 1985, it continued the plan in operation for Murphy retirees, a group that numbered approximately 2500 when Ames petitioned to terminate the plan in 1992. At that time, the annual cost of the plan exceeded $400,000, and it was estimated that, unless the plan was terminated, Ames would have to pay in excess of $4.7 million during the remainder of the plan's existence. Obviously, Ames would save a substantial sum if it could exercise the option given it by the terms of the plan to terminate it at will. However, developments in the law which antedated Ames' reorganization created a question as to whether Ames' option could be exercised.

In 1986, The LTV Corporation petitioned for Chapter 11 reorganization and then promptly announced the termination of the life and health insurance benefits of approximately 78,000 employees. A widespread adverse reaction to this move prompted Congress to enact amelioratory legislation, the end result of which was the Retiree Benefits Bankruptcy Protection Act of 1988, Pub. L. 100-334, 102 Stat. 610, codified in pertinent part in 11 U.S.C. Section(s) 1114 and 1129(a)(13). See Pension Benefit Guar. Corp. v. The LTV Corp.


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