United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
______
No. 02-6031EM
______
In re: *
*
Thermadyne Holdings *
Corporation, et al. *
*
Debtors. *
*
Unsecured Creditors’ Committee, *
Houlihan, Lokey, Howard & Zukin *
Financial Advisors, Inc., *
*
Appellants, * Appeal from the United States
* Bankruptcy Court for the Eastern
v. * District of Missouri
*
Joel Pelofsky, United States Trustee *
*
Appellee *
______
Submitted: September 17, 2002
Filed: October 3, 2002
______
Before KOGER, Chief Judge, KRESSEL and DREHER, Bankruptcy Judges.
______
KRESSEL, Bankruptcy Judge.
The Creditors’ Committee and Houlihan, Lokey, Howard & Zukin Financial
Advisors, Inc., appeal from the bankruptcy court order1 denying the approval of
indemnification and exculpation provisions within the appellants’ letter of
engagement. The Creditors’ Committee and Houlihan Lokey also appeal the denial
of their “motion for reconsideration.” Because we believe the bankruptcy judge did
not abuse his discretion, we affirm.
BACKGROUND
The material facts are not in dispute. On November 19, 2001, Thermadyne
Holdings, Inc.2 and twenty of its subsidiaries filed petitions for relief under Chapter
11. Thereafter, the U.S. Trustee appointed an unsecured creditors’ committee. On
December 21, 2001, the committee filed its application for retention of Houlihan
Lokey. Through the application, the committee sought approval to retain Houlihan
Lokey to provide an array of financial advisory services.3 For such services Houlihan
Lokey requested compensation of $125,000 per month and a transaction fee.
1
The Honorable Barry S. Schermer, United States Bankruptcy Judge for the
Eastern District of Missouri.
2
The debtors’ primary business is the manufacturing of cutting and welding
equipment. They employ approximately 1,400 people.
3
Houlihan Lokey agreed to perform the following: evaluate the assets and
liabilities of the debtors and their subsidiaries, analyze and review the financial and
operating statements of the debtors, evaluate all aspects of any debtor financing and
any exit financing in connection with any plan, provide valuation or other financial
analyses as the committee may require, assess the financial issues and options
concerning a sale of the debtor or reorganization plan, prepare, analyze and explain
any plan to the committee, and provide testimony.
2
The application attached and referred to an engagement letter dated December
14, 2001. This letter contained indemnification and exculpation provisions which
stated the following:
the Estates shall indemnify and the Committee (including
its individual members and advisors) and the Estates (and
its affiliates and advisors) shall hold harmless Houlihan
Lokey and its affiliates, and their respective past, present
and future directors, officers, shareholders, employees,
agents and controlling persons within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as
amended (collectively, the “Indemnified Parties”), to the
fullest extent lawful, from and against any and all losses,
claims, damages or liabilities, (or actions in respect
thereof), joint or several, arising out of or related to the
Agreement, any actions taken or omitted to be taken by an
Indemnified Party in connection with Houlihan Lokey’s
provision of services to the Committee and/or Committee
Counsel, the Debtors and/or Debtors’ Counsel, or any
Transaction (as defined herein) or proposed Transaction
contemplated thereby. In addition, the Estates shall
reimburse the Indemnified Parties for any legal or other
expenses reasonably incurred by them in respect thereof at
the time such expenses are incurred; provided, however,
there shall be no liability under the foregoing indemnity
and reimbursement agreement for any loss, claim, damage
or liability which is finally judicially determined to have
resulted from the willful misconduct or gross negligence of
any Indemnified Party.
3
To resolve numerous objections4 from the U.S. Trustee and the debtors5 regarding the
indemnity and exculpation provisions, Houlihan Lokey agreed to modify the scope
of the disputed provisions within the engagement letter by including the following in
a proposed order:
(a) Houlihan Lokey shall not be entitled to indemnification,
contribution or reimbursement pursuant to the Engagement
Letter for Services other than the financial advisory and
investment banking services provided under the
Engagement Letter, unless such services and the
indemnification, contribution or reimbursement therefore
are approved by the Court;
(b) The Debtors shall have no obligation to indemnify
Houlihan Lokey, or provide contribution or reimbursement
to Houlihan Lokey, for any claim or expense that is either
(i) judicially determined (the determination having become
final) to have arisen solely from Houlihan Lokey’s gross
negligence, willful misconduct, breach of fiduciary duty, or
bad faith or self-dealing; or (ii) settled prior to a judicial
determination as to Houlihan Lokey’s gross negligence,
willful misconduct, breach of fiduciary duty, or bad faith or
self-dealing but determined by this Court, after notice and
a hearing to be a claim or expense for which Houlihan
4
ABN AMRO Bank N.V. objected to the committee seeking approval of
Houlihan Lokey’s retention pursuant to 11 U.S.C. § 328(a), and also objected to the
monthly fee and transaction fee requested by Houlihan Lokey, stating it was
excessive.
5
The debtors, in their objection, stated that the portion of the indemnification
provision that releases Houlihan for any liability arising from its engagement other
than that judicially determined to be willful misconduct or gross negligence is
inappropriate. They further stated that the proposed indemnity is inappropriate
because the debtors have no control or supervision over Houlihan, the activities it will
undertake, the people it will communicate with or what its representatives are saying.
4
Lokey should not receive indemnity, contribution or
reimbursement under the terms of the Engagement Letter
as modified in this Order;
(c) If, before the earlier of (i) the entry of an order
confirming a chapter 11 plan in these cases (that order
having become a final order no longer subject to appeal),
and (ii) the entry of an order closing these chapter 11 cases,
Houlihan Lokey believes that it is entitled to the payment
of any amounts by the Debtors on account of the Debtors’
indemnification, contribution and/or reimbursement
obligations under the Engagement Letter (as modified by
this Order), including without limitation the advancement
of defense costs, Houlihan Lokey must file an application
therefore with this Court, and the Debtors may not pay any
such amounts to Houlihan Lokey before the entry of an
order by this Court approving the payment. This
subparagraph (c) is intended only to specify the period of
time under which the Court shall have jurisdiction over any
request for fees and expenses by Houlihan Lokey for
indemnification, contribution or reimbursement, and not a
provision limiting the duration of the Debtors’ obligation
to indemnify Houlihan Lokey. Notwithstanding this
subparagraph, the United States Trustee shall retain the
right to object to any demand by Houlihan Lokey for
indemnification, contribution and reimbursement; and
(d) The limitation on any amounts to be contributed by all
Indemnified Persons in the aggregate shall be eliminated.
By the time of hearings, the U.S. Trustee was the only party that continued to
object to the indemnification and exculpation provisions, arguing that the provisions
were per se inconsistent with the notions of professionalism, they placed creditors at
risk of financial injury, and they could not be considered reasonable under the
standards of 11 U.S.C. § 328(a). The application was heard by the bankruptcy court
5
on January 29, 2002. On February 12, 2002 the bankruptcy court issued its
memorandum opinion and order allowing the employment of Houlihan Lokey, but
disapproving the indemnification and exculpation provisions in the engagement
agreement.6 The committee and Houlihan Lokey filed a “motion for reconsideration
of the order” which was denied by the bankruptcy court on April 29, 2002. Houlihan
Lokey filed a timely appeal.
DISCUSSION
Standard of Review
We review the bankruptcy court’s findings of fact for clear error and review its
legal conclusions de novo. Fed. R. Bankr. P. 8013; First Nat’l Bank of Olathe, Kan.
v. Pontow, 111 F.3d 604, 609 (8th Cir. 1997); Hartford Cas. Ins. Co. v. Food Barn
Stores, Inc. (In re Food Barn Stores, Inc.), 214 B.R. 197, 199 (B.A.P. 8th Cir. 1997).
We review for clear error the bankruptcy court’s factual finding that under 11 U.S.C.
§ 328(a), the indemnification and exculpation provisions were not reasonable under
the circumstances. We review the bankruptcy court’s discretionary decision to deny
the application under the proposed terms pursuant to 11 U.S.C. § 1103(a)7 for abuse
6
In one sense, it is not really appropriate for the bankruptcy court to change the
arrangements made between the committee and Houlihan Lokey. Its role is to approve
the employment pursuant to the proposed terms or disapprove it. See Regen Capital,
III, Inc. v. Official Committee of Unsecured Creditors (In re Trism, Inc.), 2002 WL
31039681, *5 (B.A.P. 8th Cir. 2002) (stating that the bankruptcy court’s role was to
either approve or disapprove the settlement as presented). In this case, however,
Houlihan Lokey remained free to decide whether or not to work for the committee.
Houlihan Lokey is not obligated to work for the committee on terms different than
it negotiated. For purposes of this appeal, we treat the order of the bankruptcy court
as denying the application under the proposed terms.
7
Under 11 U.S.C. § 1103(a) the bankruptcy judge can approve or deny
employment of a professional whom the committee seeks to retain. This provision
states:
6
of discretion. Matters committed to the bankruptcy court’s discretion will be reversed
only if the court abused its discretion. City of Sioux City, Iowa v. Midland Marina,
Inc. ( In re Midland Marina, Inc.), 259 B.R. 683, 686 (B.A.P. 8th Cir. 2001). An
abuse of discretion occurs if the bankruptcy court fails to apply the proper legal
standard or fails to follow proper procedures in making its determination, or if the
court bases an award upon findings of fact that are clearly erroneous. Chamberlain
v. Kula (In re Kula), 213 B.R. 729, 735 (B.A.P. 8th Cir. 1997); Agate Holdings, Inc.
v. Ceresota Mill, L.P. (In re Ceresota Mill, L.P.), 211 B.R. 315 (B.A.P. 8th Cir.
1997); Mathenia v. Delo, 99 F.3d 1476, 1480 (8th Cir. 1996), cert. denied, 477 U.S.
909 (1986). A finding of fact will not be reversed as clearly erroneous unless the
reviewing court is left with a definite and firm conviction that a mistake has been
committed. Wintz v. American Freight Ways, Inc. (In re Wintz Cos.), 230 B.R. 840,
844 (B.A.P. 8th Cir. 1999) (citing Waugh v. Eldridge (In re Waugh), 95 F. 3d 706,
711 (8th Cir. 1996)). Finally, we review a bankruptcy court’s denial of a “motion to
reconsider”8 for abuse of discretion. Kocher v. Dow Chem. Co., 132 F.3d 1225, 1229
(8th Cir. 1997); Kansas Pub. Employees Ret. Sys. v. Reimer & Koger Assoc., Inc., 194
F.3d 922, 925 (8th Cir. 1999); Crofford v. Conseco Fin. Servicing Corp. (In re
Crofford), 277 B.R. 109, 111 (B.A.P. 8th Cir. 2002).
At a scheduled meeting of a committee appointed under
section 1102 of this title, at which a majority of the
members of such committee are present, and with the
court’s approval, such committee may select and authorize
the employment by such committee of one or more
attorneys, accountants, or other agents, to represent or
perform services for such committee.
11 U.S.C. § 1103(a).
8
Neither the Bankruptcy Code nor the Rules recognize any such motion.
Arleaux v. Arleaux (In re Arleaux), 229 B.R. 182, 184 (B.A.P. 8th Cir. 1999). The
appellant, however, characterizes this motion as a Fed. R. Civ. P. 60(b)(6) motion,
made applicable to this case by Fed. R. Bankr. P. 9024.
7
Per Se Rule
The appellants argue that the bankruptcy court adopted a per se rule and made
a legal determination that the indemnification and exculpation provisions are, as a
matter of law, unreasonable under 11 U.S.C. § 328(a).9 Although the U.S. Trustee did
argue that indemnification and exculpation are unreasonable as a matter of law, the
bankruptcy court neither adopted nor rejected a per se rule. Furthermore, though the
bankruptcy court, in isolated statements, expressed strong views on indemnification
and exculpation of professionals employed in a bankruptcy case in general, it did not
apply a per se rule in this case. Reading the bankruptcy court’s opinion in totality, we
9
11 U.S.C. § 328(a) is the provision which iterates terms under which a trustee,
debtor in possession or committee can employ a professional. It is not itself a separate
source of employment approval. If such terms and conditions are not reasonable, the
bankruptcy judge may exercise his discretion, and deny the employment under 11
U.S.C. § 1103(a). 11 U.S.C. § 328(a) provides:
(a)The trustee, or a committee appointed under section
1102 of this title, with the court’s approval, may employ or
authorize the employment of a professional person under
section 327 or 1103 of this title, as the case may be, on any
reasonable terms or conditions of employment, including
on a retainer, on an hourly basis, or on a contingent fee
basis. Notwithstanding such terms and conditions, the court
may allow compensation different from the compensation
provided under such terms and conditions after the
conclusion of such employment, if such terms and
conditions prove to have been improvident in light of
developments not capable of being anticipated at the time
of the fixing of such terms and conditions.
11 U.S.C. § 328(a) (emphasis added).
8
find that the opinion definitely discusses reasons why the indemnity and exculpation
provisions were not reasonable under the circumstances of this case.
The bankruptcy judge considered and discussed factors such as market
conditions, current economic conditions, and the potential economic costs to the
estate to ultimately find that the indemnity and exculpation provisions were not
reasonable under 11 U.S.C. § 328(a) and not in the best interest of the estate. Pursuant
to 11 U.S.C. § 1103(a), the bankruptcy court exercised its discretion to deny
employment in this case under an arrangement which provided indemnification and
exculpation to Houlihan Lokey. The bankruptcy court did not apply a per se rule.
For example, the bankruptcy court in its opinion and order held that “for the
reasons set forth below, the Court concludes that in this case the indemnification
provisions are unreasonable” In re Thermadyne Holdings, Inc., No. 01-52840-399 at
1 (Bankr. E.D. Mo. Feb. 12, 2002) (emphasis added). With regard to the fact-sensitive
analysis under 11 U.S.C. § 328(a), the bankruptcy court further stated in its
discussion that “The focus of the Court’s analysis in regard to this section is on the
term ‘reasonable’, specifically whether the terms of the indemnity agreement included
in the engagement letter are reasonable.” Id. at 3. With regard to Houlihan Lokey’s
market condition argument, the bankruptcy court stated :
This argument is unavailing under the circumstances of
this case...non-monetary terms, should be considered in
terms of the debtor’s bankruptcy environment. What is
reasonable is not and has not been defined solely by what
market conditions suggest...What is reasonable must be
assessed with due regard for the particular and unique
circumstances of each bankruptcy case.
Id. at 4-5 (emphasis added). Keeping within the analysis of reasonableness under the
circumstances, the bankruptcy court found that for this estate to bear the risk of
9
unlimited liability and exculpation was simply unreasonable. Id. at 5. Finally, the
bankruptcy court found that the impact and financial risk to this estate should be
finite and certain, and because such risks were not, it was unreasonable under the
circumstances of this case to approve the indemnification and exculpation provisions.
Reasonable Terms and Conditions of Employment
In their brief, the appellants state that the only issue on appeal is whether the
bankruptcy judge erred as a matter of law in making a per se ruling that indemnity
and exculpation is per se improper. The appellants further argue that we should
review this legal conclusion de novo. Having ruled that the bankruptcy judge did not
adopt a per se rule, it is not clear to us that the appellants have preserved any other
issues. However, we nevertheless discuss whether the bankruptcy judge erred in
finding that the indemnity and exculpation provisions were unreasonable under the
circumstances of this case.
The appellants correctly state that the Bankruptcy Code does not prohibit
indemnification or exculpation of professionals hired by creditors’ committees or the
debtor. Yet the appropriate inquiry, and the inquiry made by the bankruptcy court, is
whether taken as a whole the terms of the retention are reasonable. 11 U.S.C. § 328(a)
requires the bankruptcy judge to find what is reasonable under the circumstances and
such a finding can only be made on a case by case basis. See In re Mortgage & Realty
Trust, 123 B.R. 626, 630 (Bankr. C.D. Cal. 1991) (stating that Section 328(a)
authorizes a condition of employment only if it is reasonable); In re Allegheny Int’l
Inc., 100 B.R. 244, 246 (Bankr. W.D. Pa. 1989) (stating that Section 328(a)
empowers a debtor in possession or a committee to employ professionals on any
reasonable terms and conditions of employment subject to court approval) (emphasis
in the original).
10
Thus, the question for the bankruptcy court was whether the terms and
conditions of Houlihan Lokey’s employment were reasonable under the
circumstances. Moreover, as the proponent of the application for approval of the
provision in dispute, the committee bore the burden of establishing that such terms
of employment were reasonable under the circumstances. In re Metricom, Inc., 275
B.R. 364, 371 (Bankr. N.D. Cal. 2002). The bankruptcy court must be persuaded that
the terms and conditions are in the best interest of the estate. In re Gillett Holdings,
Inc., 137 B.R. 452, 455 (Bankr. D. Colo. 1991) (quoting In re C&P Auto Transp.,
Inc., 94 B.R. 682, 686 (Bankr. E.D. Cal. 1988)). The bankruptcy court found that
from the evidence available, the committee had not met its burden and for the
following reasons we agree.
Though the majority of the appellants’ argument discusses how the per se rule,
supposedly adopted by the bankruptcy court, is not warranted by case law and the
Bankruptcy Code, the appellants in the same vein seem to argue that indemnity and
exculpation are per se reasonable because such provisions are routine outside of
bankruptcy, and because they agreed to it after arms length negotiations. The
appellants also discuss and cite numerous cases to support their proposition that the
indemnity and exculpation provisions are reasonable under 11 U.S.C. § 328(a).
Unfortunately, the appellants neglect the fact that 11 U.S.C. § 328(a) requires that
they prove the disputed provisions are reasonable under the circumstances of this
case, and the appellants simply do not address this issue.
The main argument the appellants discuss is that prevalent terms and
conditions of employment available and included in employment agreements for
professionals outside of bankruptcy, should similarly be available and included in
employment agreements for professionals in bankruptcy cases. See In re Joan and
David Halpern Inc., 248 B.R. 43, 46-47 (Bankr. S.D. N.Y. 2000) (stating that
common law principles permit indemnity of fiduciaries, and that the indemnity sought
by the professionals procured by the debtor in the case was fair and reasonable and
11
in the best interest of the estate); In re United Artists, No. 00-3514 (Bankr. D. Del
December 1, 2000) (stating that because Delaware law permits indemnification of
fiduciaries for ordinary negligence, the fact of bankruptcy does not detract from the
recognized need for indemnification of such officials, and the debtors’ motion to
retain financial advisors under such conditions of indemnity is granted).
Regarding this argument, the bankruptcy court found that prevailing
employment terms and conditions are to be considered, but should only be one factor
in the analysis of “reasonable” in the totality of the circumstances. Additionally, the
bankruptcy court found that non-monetary terms of engagement should be considered
in terms of the circumstances of each bankruptcy case, as well as for the fair and
equitable administration of the bankruptcy estate, and what is reasonable is not and
has not been defined solely by what market conditions suggest. We agree.
Although due deference should be given to the standards applicable to certain
professions outside the bankruptcy context, the bankruptcy court is not bound
absolutely by those standards. In re Gillett Holdings, Inc., 137 B.R. at 456. Rather,
the court is first bound by the dictates of the Bankruptcy Code. Id. Moreover,
prevailing employment terms and conditions outside the bankruptcy context should
be considered, but should only be one of many factors in the analysis of what is
“reasonable” in the totality of the circumstances. The bankruptcy court correctly
found that there is no blanket mandate that all terms or conditions of employment for
professionals allowed or approved outside of bankruptcy must be similarly allowed
or approved within bankruptcy. These considerations, however, should be but one
factor in the analysis of what is reasonable under the circumstances. See In re
Metrocom, Inc., 275 B.R. at 372 (stating that no matter how “standard” such
protections may be, they are not the norm in this Chapter 11 case).
The appellants also argue that the need for indemnification is imperative in the
existing economic and corporate litigation climate. The bankruptcy court responded
12
to this argument by finding that if economic conditions are such as to spur dissatisfied
parties to litigation, there is even greater cause to protect the estate from that risk.
Additionally, the bankruptcy court found that under the circumstances, it is prudent
and reasonable that such a risk be borne by the party providing the service. This
finding by the bankruptcy court is not clearly erroneous. Furthermore, there is not
sufficient evidence that indemnity insurance would be unavailable to Houlihan Lokey
or is too expensive to procure.10 Nor is there sufficient evidence that the committee
could not have obtained comparable services for the same price from another
financial advisor without having to agree to the disputed provisions. Again, the
appellants are arguing why indemnity and exculpation is reasonable for itself, not why
it is reasonable for the estate to bear such a risk in the totality of the circumstances.
Finally, the appellants argue that without the indemnification and exculpation
provisions in the employment agreement, the estate would be burdened with
potentially increased economic costs in the form of increased fees, or the committee
may lose the financial advisor of its choosing. In response to this argument the
bankruptcy court found, in essence, that assuming the committee would have to
employ a financial advisor for higher fees without the indemnity provisions required
10
In paragraph nine of the Declaration of Jonathan Cleveland, Cleveland, who
is a director in the financial restructuring group of Houlihan Lokey, states “the risks
to Houlihan Lokey from any claim relating to a financial restructuring engagement
that involves hundreds of millions of dollars, and often more, is enormous...this is a
risk that Houlihan Lokey–a privately owned organization with less than 250
professional employees–does not, and cannot insure against.” Yet in the same
paragraph Mr. Cleveland seems to contradict this statement by saying “absent limited
indemnification and exculpation of the type contained in the Indemnification
Provisions, Houlihan Lokey would be required to either substantially increase the fees
its charges for its services (to cover additional insurance if it is available, or ‘self
insure’ against the risk), or forego the engagement.” Thus, the statement that
Houlihan Lokey cannot insure against the risk of potential claims made against it in
a financial restructuring engagement not only lacks foundation, but is also internally
inconsistent.
13
by Houlihan Lokey, such a result would have a finite and certain impact on the value
of the estate, which is better than the potentially unlimited impact the estate would
face if such provisions were approved. This finding was not clearly erroneous.
Moreover, other bankruptcy courts have rejected this argument made by the
appellants. See In re Mortgage & Realty Trust, 123 B.R. at 631 (finding that the
argument made by Dean Whitter, that without indemnity it would have to decline
employment and this would cause great harm to the debtor, was not a legitimate
ground for authorizing an indemnity agreement). Finally, Houlihan Lokey has
continued to provide its services to the committee, without the indemnification and
exculpation provisions, and has been compensated by the estate for such services.
There is no reason why it cannot continue this in the absence of the disputed
provisions.
In addition, we note that the majority of the bankruptcy cases the appellants
cite to support their proposition that indemnity and exculpation is reasonable within
bankruptcy cases, deal with situations where the debtor not only indemnifies the
proposed professional, but also seeks to retain that professional for its own use during
the bankruptcy case.11 Very few of the cases cited by the appellants, however, discuss
the situation we are confronted with in this case: a professional firm hired by the
committee for its own use during the bankruptcy, yet requiring the debtor, a non-
client, to indemnify the firm. Neglecting this unique difference causes the appellants’
argument, that market conditions warrant the finding that the disputed provisions
under the circumstances of this case are reasonable, to be highly speculative at best.
In situations where the debtor is the client indemnifying the professional it hires, the
11
The appellants cite such cases as In re Geneva Steel Co., 258 B.R. 799, 803
(Bankr. D. Utah 2001); In re Comdisco, Inc., No. 01 B 24795 (N.D. Ill. Jan. 24,
2002); In re Kmart Corp., No. 02 B 02474 (Bankr. N.D. Ill. Mar. 28, 2002); and In
re LTV Steel Co., Inc., No. 4:01 CV1116 (N.D. Ohio), among others, to support their
market conditions argument.
14
debtor has a certain amount of control over the acts of the firm and can minimize the
risk of negligent acts. In contrast, when the debtor is not the client yet is still
responsible for indemnification of its opponent, there is virtually no control over the
acts of the firm, and consequently there is no control over potential negligent acts the
firm may commit.
Moreover, the appellants have stated that the indemnification provisions in no
way implicate the “giving away of claims” against professionals, but rather
reimbursing Houlihan Lokey in the unlikely event that a claim is asserted against it.
The appellants further state that Houlihan Lokey established with the bankruptcy
court that it was aware of no such claim having ever been made by a Chapter 11
debtor, thus it was not difficult for the committee and the debtors to conclude the
indemnification and exculpation protections presented them with little if any financial
risk. While there may be no current apparent harm in binding the estate to perform a
future act that it probably will not be called on to perform, that does not mean that it
is reasonable to impose such a burden on the estate in the first place, even if the risk
is de minimus. In re Metrocom, Inc., 275 B.R. at 374. Nevertheless, it was the
committee’s burden under 11 U.S.C. § 328(a) to show it was reasonable for the estate
to be exposed to any risk at all. Id. at 374-375. The bankruptcy court found this
burden had not been met.
“Motion to Reconsider”
Regarding the bankruptcy court’s denial of the appellants’ 60(b)(6) motion,
“motion to reconsider”12, we hold that the bankruptcy court did not abuse its
discretion. Rule 60(b)(6) permits a court to grant relief “from a final judgment, order
or proceeding for...any other reason justifying relief from the operation of the
judgment.” Fed. R. Civ. P. 60(b)(6). Relief under Rule 60(b) is an extraordinary
12
See footnote 8.
15
remedy. Watkins v. Lundell, 169 F.3d 540, 544 (8th Cir. 1999) (quoting Nucor Corp.
v. Nebraska Pub. Power Dist., 999 F.2d 372, 374 (8th Cir. 1993)). Rule 60(b)(6) does
not give courts unlimited authority to fashion relief as they deem appropriate. Doe v.
Zimmerman (In re Zimmerman), 869 F.2d 1126, 1128 (8th Cir. 1989). It is not a
substitute for other legal remedies. Id. Relief under Rule 60(b) will be granted only
where the movant has shown exceptional circumstances. Hepper v. Adams County,
133 F.3d 1094, 1096 (8th Cir. 1998). The appellants have shown none. If we were to
revisit the factual findings of the bankruptcy court without some showing of
exceptional circumstances, then Rule 60(b)(6) would be “nothing more than and end-
run around the entire judicial process.” Watkins v. Lundell, 169 F.3d at 545.
CONCLUSION
The bankruptcy court found that the indemnity and exculpation provisions in
the Houlihan Lokey engagement agreement were not reasonable under the
circumstances of the case. This finding was not clearly erroneous. Finally, the
bankruptcy court did not abuse its discretion in not approving the employment under
the proposed terms, and did not abuse its discretion in denying the “motion to
reconsider.” The judgment of the bankruptcy court is therefore affirmed.
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE
PANEL, EIGHTH CIRCUIT.
16