In Re: First Merch. Accept. Corp. v. JC Bradford & Co. ( 1999 )

  •                                                                                                                            Opinions of the United
    1999 Decisions                                                                                                             States Court of Appeals
                                                                                                                                  for the Third Circuit
    In Re: First Merch. Accept. Corp. v. JC Bradford &
    Precedential or Non-Precedential:
    Docket 98-5377
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    "In Re: First Merch. Accept. Corp. v. JC Bradford & Co." (1999). 1999 Decisions. Paper 322.
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    Filed December 14, 1999
    No. 98-5377
    J. C. BRADFORD & CO.,
    On Appeal from the United States District Court
    for the District of Delaware
    (D.C. No. 97-cv-01500)
    District Judge: Hon. Joseph J. Farnan, Jr.
    Argued July 26, 1999
    Before: SLOVITER, NYGAARD and McKEE, Circuit Judges
    (Filed: December 14, 1999)
           Lawrence R. Ahern, III (Argued)
           Gullett, Sanford, Robinson & Martin
           Nashville, TN 37219-888
            Attorney for Appellant
           Laura Davis Jones
           James P. Hughes, Jr.
           Brendan L. Shannon (Argued)
           Christian Douglas Wright
           Young, Conaway, Stargatt & Taylor
           Wilmington, DE 19899-0391
            Attorneys for In Re: First
            Merchants Acceptance Corp.
           P. Matthew Sutco (Argued)
           Martha L. Davis
           United States Department of Justice
           Washington, D.C. 20530
           Patricia A. Staiano
           John D. McLaughlin, Jr.
           Frederic J. Baker
           Daniel K. Astin
           United States Department of Justice
           Philadelphia, PA 19106
            Attorneys for United States
    SLOVITER, Circuit Judge.
    This appeal raises a statutory interpretation question of
    first impression in this court and, as far as can be
    ascertained, in any of the courts of appeals. At issue is
    whether the 1994 amendment to S 503 of the Bankruptcy
    Code which added the authorization for reimbursement of
    expenses to a member of a creditors committee thereby also
    authorized reimbursement of attorney's fees incurred by
    such a member. The Bankruptcy Court1 ruled that the
    Code prohibits any reimbursement of professional fees
    incurred by committee members. The creditor appeals.
    First Merchants Acceptance Corp. ("FMAC" or"the
    Debtor"), a company that purchases used-car loans from
    auto dealers, filed a petition for reorganization under
    Chapter 11 of the Bankruptcy Code on July 11, 1997.
    Appellant J.C. Bradford & Co. ("Bradford"), which holds a
    number of FMAC promissory notes, is a general unsecured
    1. The District Court sat as the Bankruptcy Court. Because the rulings
    at issue are in the province of a Bankruptcy Court in the first instance,
    we will refer to the court in that capacity.
    creditor of FMAC. Bradford states that the assets and
    liabilities of FMAC were each over $100 million and that
    there were between 200 and 299 creditors.
    Shortly after the petition was filed the United States
    Trustee formed an eight-member committee of unsecured
    creditors ("the committee"). Bradford, being a holder of one
    of the largest claims against the Debtor, was appointed to
    the committee and served as its chairman.
    Pursuant to S 1103(a) of the Bankruptcy Code, which
    permits the committee to employ attorneys and other
    professionals with the approval of court, the committee filed
    two successive applications with the Bankruptcy Court to
    retain the services of two firms as legal counsel. The
    Bankruptcy Court in successive orders granted the
    applications to employ the law firm of Pepper, Hamilton &
    Scheetz LLP (now Pepper Hamilton LLP) and Faegre &
    Bensen LLP as counsel.
    Bradford retained the law firm of Bass, Berry & Sims,
    PLC ("Bass"), as its own counsel in the course of the
    bankruptcy. Bass had apparently represented Bradford
    with respect to the notes before the bankruptcy. According
    to Bradford, Bass was retained by Bradford to assist it both
    in its capacity as a creditor and as a member and chair of
    the committee. Bradford also contends that some services
    Bass performed were with the knowledge of, and at the
    request of, the committee's counsel and members of the
    The Bankruptcy Court approved a Chapter 11 plan for
    FMAC on March 16, 1998. Shortly thereafter, Bradford
    applied for reimbursement, as an administrative expense, of
    some of the attorney's fees it paid to Bass that it incurred
    as a member and the chairman of the committee.
    Applications for reimbursement for legal services and
    financial services were also filed by the Debtor and by the
    committee as a whole. The Bankruptcy Court approved the
    applications filed by the Debtor and the committee, but
    denied Bradford's application. In so doing, the court
    reasoned that the relevant statutory provisions, 11 U.S.C.
    S 503(b)(3) and (4), were ambiguous with respect to whether
    an individual committee member may obtain
    reimbursement for professional fees and that the legislative
    history and the policies of the Bankruptcy Code suggest
    that Congress intended to prohibit recovery of such fees as
    administrative expenses. See In Re First Merchants
    Acceptance Corp., No. 97-1500, slip op. at 5-8 (Bankr. D.
    Del. June 26, 1998) (herein slip op.). Bradford timely
    appealed this decision.
    Bradford's position is based squarely on the language of
    the statute. It contends that S 503(b) of the Code, as
    amended in 1994, expressly permits a member of a
    creditors committee to recover reasonable compensation for
    professional services incurred in its capacity as a member
    of that committee. It argues that because the meaning of
    the statute is clear on its face, our inquiry should be
    limited to the text of the provision, without recourse to
    other evidence of congressional intent.
    The Debtor, following the District Court's reasoning,
    urges that the 1994 amendment to S 503(b) created an
    ambiguity in the statute because S 503(b)(4) authorizes fees
    for reimbursable professional services rendered by the
    attorney of an "entity," but a "member of a committee" is
    not included within the definition of an "entity" in S 101(15)
    of the Code. The Debtor then argues that as a result of this
    ambiguity we can resort to the statute's purpose and its
    legislative history to ascertain whether a member of a
    committee is included within an "entity." The Trustee, who
    also urges affirmance, places his principal emphasis on the
    argument that Bradford's reading of the statute is
    demonstrably at odds with the purpose of the Bankruptcy
    Code as a whole and the legislative history of S 503(b)(3)(F).
    He argues that the better reading of S 503(b) would not
    allow recovery of attorney's fees by a member of a
    We turn first to the text of S 503(b)(3)(F) and S 503(b)(4)
    because their interaction is central to this appeal. Section
    503(b)(3) lists those entities who are entitled to recover as
    administrative expenses their "actual, necessary expenses"
    (other than the professional fees specified in subsection
    (b)(4)). That section reads:
           (b) After notice and a hearing, there shall be all owed,
           administrative expenses . . . of this title, including --
           . . .
           (3) the actual, necessary expenses, other than
           compensation and reimbursement specified in
           paragraph (4) of this subsection, incurred by--
            (A) a creditor that files a petition under s ection
           303 of this title;
            (B) a creditor that recovers, after the court' s
           approval, for the benefit of the estate any property
           transferred or concealed by the debtor;
            (C) a creditor in connection with the prosecut ion of
           a criminal offense relating to the case or to the
           business or property of the debtor;
            (D) a creditor, an indenture trustee, an equit y
           security holder, or a committee representing
           creditors or equity security holders other than a
           committee appointed under section 1102 of this
           title, in making a substantial contribution in a
           case under chapter 9 or 11 of this title;
            (E) a custodian superseded under section 543 o f
           this title, and compensation for the services of
           such custodian; or
            (F) a member of a committee appointed under
           section 1102 of this title, if such expenses are
           incurred in the performance of the duties of such
    11 U.S.C. S 503. It was Subsection (F), the last of the six
    subsections, that was added to S 503 by the Bankruptcy
    Reform Act of 1994, Pub. L. No. 103-394, S 110, 108 Stat.
    4106, 4113. It is that section that authorizes members of
    creditors committees (who are among those who are
    "appointed under section 1102") to recover their "actual"
    and "necessary expenses." No party to this appeal questions
    The case has arisen because the addition of S 503(b)(3)(F)
    affects those who are authorized under S 503(b)(4) to seek
    reasonable compensation for professional services, such as,
    inter alia, an attorney. Section 503(b)(4) allows as
    "administrative expenses"
           (4) reasonable compensation for professional services
           rendered by an attorney or an accountant of an entity
           whose expense is allowable under paragraph (3) of this
           subsection, based on the time, the nature, the extent,
           and the value of such services, and the cost of
           comparable services other than in a case under this
           title, and reimbursement for actual, necessary
           expenses incurred by such attorney or accountant[.]
    11 U.S.C. S 503(b)(4) (emphasis added).
    Section 503(b)(4) was not amended in 1994. However,
    because the two subsections, (b)(3) and (b)(4), are
    interdependent, and the allowance for reimbursement of
    professional fees in (b)(4) is tied to the list of"entities" in
    (b)(3), Bradford sees the language as unambiguous. Section
    503(b)(4) authorizes claims for attorney's and accountant's
    fees incurred by all entities who are allowed to claim
    administrative expenses under S 503(b)(3). Members of a
    creditors committee are plainly entitled to recover
    administrative expenses under S 503(b)(3)(F). A
    straightforward reading of the statute, therefore, authorizes
    reasonable allowances for attorney's fees or other
    professional fees incurred by a member of a committee, "if
    such expenses are incurred in the performance of the
    duties of such committee." 11 U.S.C. S 503(b)(3)(F). It seems
    inescapable from the statutory language that when
    Congress enacted the 1994 Bankruptcy Reform Act and
    added members of creditors committees to the list in
    S 503(b)(3) of those who can claim "actual" and "necessary
    expenses," it simultaneously expanded the list of entities
    who are entitled to reimbursement for professional fees
    under S 503(b)(4).
    Notwithstanding what appears to be the unambiguous
    language of S 503(b) to the effect that a committee member
    may recover attorney's fees, the Bankruptcy Court found an
    ambiguity in the term "entity" as used inS 503(b)(4) insofar
    as it applies to a member of a creditors committee. Slip op.
    at 4-5. The Bankruptcy Court followed the earlier holding of
    a California bankruptcy court, see In Re County of Orange,
    179 B.R. 195
     (Bankr. C.D. Cal. 1995), when it denied
    Bradford's application for attorney's fees. In doing so, it
    stated that "[s]ection 101(15) does not specifically include `a
    member of a committee' as that phrase is specifically
    utilized in Section 503(b)(3)(F), and the Court will not graft
    that language into the provision in the context of a Section
    503(b)(4) application." Slip op. at 5.
    We do not find that reasoning persuasive. The term
    "entity" is defined by the Bankruptcy Code as a person,
    estate, trust, governmental unit, and United States trustee.
    11 U.S.C. S 101(15). A "person" is defined broadly to
    include individuals, partnerships, and corporations. 11
    U.S.C. S 101(41). Bradford, as a corporation, falls within the
    broad definition of "entity." In addition, Bradford falls
    within the definition of a creditor, defined by the Code as
    an "entity that has a claim against the debtor. . . ." 11
    U.S.C. S 101(10) (emphasis added).
    The Debtor seeks to avoid the inevitable logic of these
    definitions by arguing that Bradford does not request
    reimbursement as a "corporation" or as a "creditor" but as
    a "member of a committee," which is not specifically defined
    as an entity in S 101(15). This is the same point made by
    the Bankruptcy Court. However, S 503 itself plainly
    provides that a member of a committee is an entity entitled
    to reimbursement for administrative expenses. Section
    503(a) begins with the broad authorization that"[a]n entity
    may timely file a request for payment of an administrative
    expense," 11 U.S.C.S 503(a) (emphasis added), and the next
    subsection proceeds to list all entities entitled to
    reimbursement, see 11 U.S.C. S 503(b)(3), which specifically
    includes committee members, see 11 U.S.C.S 503(b)(3)(F).
    Although finding an ambiguity in the language would
    have the advantage of permitting the court to resort to the
    legislative history, we cannot turn the language upside
    down and inside out to do so. To say that a member of a
    creditors committee -- who is, ipso facto, a creditor -- is
    not an entity under the Code flatly contradicts both the
    ordinary understanding of the term "entity" and its usage in
    the Code. We therefore disagree with the Bankruptcy
    Court's conclusion that the term "entity" or its use in
    S 503(b)(4) is ambiguous.
    The Trustee takes a slightly less jarring position. The
    Trustee focuses on the phrase "if such expenses are
    incurred in the performance of the duties of such
    committee," and contends that the language of
    S 503(b)(3)(F) supports an alternative interpretation. The
    Trustee argues that this language limits reimbursement to
    committee members for expenses incurred in performance
    of "duties `of ' the committee," and does not permit
    reimbursement for duties that merely "pertain" or "relate"
    to the committee. Trustee's Br. at 19. Therefore, the Trustee
    continues, the duties of the committee must "involve formal
    committee work . . . , not a member's informal or personal
    response to its formal committee appointment." Id.
    According to the Trustee's interpretation, a member's
    voluntary consultation with private counsel is not incurred
    in the performance of the duties of the committee even if it
    pertains to the work of the committee and inures to its
    benefit. Presumably, it follows that if a member's personal
    lawyer successfully negotiated a substantial reduction of a
    creditor's large claim, that service would not qualify as
    incurred in the performance of the duties of the committee
    because that lawyer had not been authorized to represent
    the committee. However, as interpreted by the Trustee, if
    the identical service was performed by one of the
    committee's lawyers it would be considered as incurred in
    the performance of the duties of such committee.
    Although there may be reasons why the work done by the
    attorney for the creditor should not be reimbursed, we do
    not think they can be found in the phrase "duties of the
    committee." The nature of the services does not depend on
    the identity of the actor; either the service is or is not
    incurred in the performance of the duties of such
    committee. For example, a phone call to a creditor to
    negotiate a reduction in the Debtor's liability is an expense
    incurred in the performance of the duties of such
    committee, whether the call was made by a committee
    member, an aide to that member, or the member's attorney.
    We fail to find an ambiguity in S 503(b)(3)(F) or S 503(b)(4)
    that would overcome the straightforward reading of the
    provision as permitting committee members to recover
    attorney's fees for work performed in connection with that
    entity's service on the committee. There is no principled
    way to read the language of S 503(b)(4) that allows recovery
    of attorney's and accountant's fees "of an entity whose
    expense is allowable under paragraph (3)" to include as
    "entities" those in subsections (A)-(E) of paragraph (3) but
    not those in subsection (F).
    Our conclusion that the language of S 503 is not
    ambiguous does not mean that creditors committee
    members may necessarily receive compensation for their
    lawyer's fees incurred in relation to their duties as
    committee members. However, we would have to find
    reason to exclude such compensation elsewhere.
    1. Tension with S 1103(a) of the Bankruptcy Code
    Both the Debtor and Trustee find reason to preclude
    recovery for the entire category of attorney's fees for
    committee members in the sharp conflict such an
    interpretation would create with S 1103(a) of the
    Bankruptcy Code. Section 1103(a) sets forth the process by
    which the committee as a whole may employ professionals.
    It provides that the committee, at a scheduled meeting in
    which a majority of the members are present and with the
    court's approval, may "select and authorize the employment
    . . . of one or more attorneys, accountants, or other agents,
    to represent or perform services for [the] committee." 11
    U.S.C. S 1103(a).
    We have previously emphasized the importance of the
    requirement of prior court approval for the hiring of
    committee counsel. In Matter of Arkansas Co., Inc., 
    798 F.2d 645
    , 649 (3d Cir. 1986), we held that a court may
    authorize employment of counsel nunc pro tunc only under
    extraordinary circumstances, explaining that the
    requirement of prior court approval "was designed to
    eliminate the abuses and detrimental practices that had
    been found to prevail," such as "cronyism" and "attorney
    control of bankruptcy cases." We stressed that the prior
    approval requirement ensures "that the court may know the
    type of individual who is engaged in the proceeding, their
    integrity, their experience in connection with work of this
    type, as well as their competency concerning the same." Id.
    at 648 (quoting In re Hydrocarbon Chemicals, Inc., 
    411 F.2d 203
     (3d Cir. 1969) (en banc)).
    Bradford's plain language interpretation of the statute
    would allow committee members to retain counsel privately,
    without prior review by the court and without notice to the
    committee or other creditors. The only review would come
    after the fact, when the court is called upon to determine:
    (1) whether the fees are "reasonable . . . based on the time,
    the nature, the extent, and the value of such services, and
    the cost of comparable services other than in a case under
    this title," S 503(b)(4); and (2) if such fees were "incurred in
    the performance of the duties of such committee,"
    S 503(b)(3)(F). Consequently, the potential for the abuses
    that S 1103 was designed to eliminate is a real concern. In
    addition, if every member of a committee were to claim
    attorney's and accountant's fees, there would be a
    proliferation of administrative expenses which could
    unnecessarily drain estate assets.
    Accordingly, we cannot lightly dismiss the argument that
    the plain language reading of S 503(b)(4) leads inescapably
    to tension with the statutory scheme for retention of
    professionals by the committee established by S 1103.
    2. Legislative History
    The Debtor and the Trustee also urge that we examine
    the legislative history of the 1994 Amendment toS 503 of
    the Bankruptcy Code, which they contend supports their
    interpretation that S 503(b)(4) does not authorize committee
    members to recover attorney's fees as administrative
    expenses. Assuming arguendo that we are free to resort to
    that legislative history in the absence of an ambiguity in the
    statutory language, we conclude that the legislative history
    does not resolve the issue before us.
    In 1993, the Senate passed S.B. 540 which contained a
    number of substantial changes in the Bankruptcy Code.
    Included in the bill was a proposal to add S 503(b)(7) as a
    new provision that would have allowed reimbursement of:
           the actual, necessary expenses incurred by a member
           of a committee appointed under section 1102 in the
           performance of duties of the committee (including fees
           of an attorney or accountant for professional services
           rendered for the member to the extent allowable under
           paragraph (4)) other than claims for compensation for
           services rendered as a member of the committee.
    S. Rep. No. 103-168, at 6 (1993) (emphasis added). When
    the amendments to the Bankruptcy Code finally passed
    Congress in 1994,2 it was the House Bill that was passed in
    lieu of the Senate Bill, and the House Bill did not contain
    the language emphasized above in proposed S 503(b)(7).
    There was no explanation from the Senate when it
    concurred in the House version.
    The House Report on the 1994 Amendments suggests
    that the addition of subsection (F), adding members of
    creditor and equity holder committees to the list of entities
    entitled to recover "actual and necessary expenses," was
    intended only to allow those members reimbursement for
    their incidental out-of-pocket expenses and was not
    intended to include compensation for professional services.
    The House Report states:
           The current Bankruptcy Code is silent regarding
           whether members of official committees appointed in
    2. The Bankruptcy Reform Act of 1994 was the culmination of several
    years of hearings and testimony on bankruptcy reform before
    Congressional committees. The amendment at issue,S 110 of H.R. 5116,
    was one of fifty-three sections intended to effectuate some degree of
    reform. Other changes of varying significance included provisions to
    expedite the filing of plans under chapter 11, a limitation on the ability
    of small investment companies to file for bankruptcy protection, and
    amendments to provide greater protection for alimony and child support
    owed by a debtor in bankruptcy.
           chapter 11 cases are entitled to reimbursement of their
           out-of-pocket expenses (such as travel and lodging),
           and the courts have split on the question of allowing
           This section of the bill amends section 503(b) of the
           Bankruptcy Code to specifically permit members of
           chapter 11 committees to receive court-approved
           reimbursement of their actual and necessary out-of-
           pocket expenses. The new provision would not allow the
           payment of compensation for services rendered by or to
           committee members.
    H.R. Rep. No. 103-835, at 39 (1994), reprinted in 1994
    U.S.C.C.A.N. 3340, 3348 (footnote omitted) (emphasis
    added). It is the underlined language that the Debtor and
    Trustee emphasize.
    As this case demonstrates, attempting to divine legislative
    intent on the basis of "Congress's unexplained modification
    of language in earlier drafts of legislation" can be
    problematic. Appalachian Power Co. v. E.P.A., 
    135 F.3d 791
    , 810 (D.C. Cir. 1998). It may be, as the Debtor argues,
    that the adoption by Congress of the House version was a
    deliberate policy decision to reject the language in the
    earlier Senate version that expressly provided for the
    recovery of professional fees for committee members. Cf.
    NLRB v. Robbins Tire & Rubber Co., 
    437 U.S. 214
    , 248
    (1978) (Powell, J., concurring in part and dissenting in part)
    ("One must assume that a deliberate policy decision
    informed Congress' rejection of [earlier considered]
    alternatives in favor of the language presently contained in
    [the statute in question]."). However, it is difficult to draw
    that conclusion in light of our reading of the plain language
    of the Act, which adopted the House version, to authorize
    reimbursement for professional fees. We have no conclusive
    evidence that the Senate adopted the statement in the
    House Report that the revised Act bars reimbursement of
    lawyer fees, as neither the Bankruptcy Court nor the
    parties have any basis to assume the Senate was aware of
    the one sentence in the House Report upon which the
    parties rely.
    The Debtor urges us to bear in mind that every year
    following the adoption of the 1994 Bankruptcy Reform Act,
    there has been an effort in Congress to amend S 503(b)(3)(F)
    to clarify that "[e]xpenses for attorneys or accountants
    incurred by individual members of creditors `and equity
    security holders' committees would not be recoverable, but
    expenses incurred for such professional services by the
    committees themselves would be." S. Rep. No. 105-253 at
    52 (1998); see also Bankruptcy Technical Corrections Act of
    1996, S. 1559, 104th Cong. S 7 (1996), reprinted in 142
    Cong. Rec. 21787 (1996); Bankruptcy Amendments of 1997
    Act, H.R. 764, 105th Cong. S 13 (1997), reprinted in H.R.
    Rep. No. 105-324 (1997); Consumer Bankruptcy Reform
    Act of 1998, S. 1301, 105th Cong. S 411, reprinted in S.
    Rep. No. 105-253 (1998); Bankruptcy Reform Act of 1999,
    H.R. 833, 106th Cong. S 1110 (1999); Bankruptcy Reform
    Act of 1999, S. 625, 106th Cong. S 1109 (1999) (currently
    pending before the Senate).
    But, as the Trustee conceded at oral argument,
    subsequent legislative history, particularly when the
    proposals do not become law, "is a `hazardous basis for
    inferring the intent of an earlier' Congress." Pension Benefit
    Guaranty Corp. v. LTV Corp., 
    496 U.S. 633
    , 650 (1990)
    (citing United States v. Price, 
    361 U.S. 304
    , 313 (1960)); see
    also United States v. United Mine Workers of America, 
    330 U.S. 258
    , 282 (1947) ("We fail to see how the remarks of
    these Senators in 1943 can serve to change the legislative
    intent of the Congress expressed in 1932 . . . ."). These
    subsequent failed attempts by Congress lack "persuasive
    significance" because we can draw numerous equally
    reasonable inferences therefrom. See LTV, 496 U.S. at 650.
    While the immediate and continuous attempts in Congress
    to specify that there may be no reimbursement of attorney's
    fees for committee members may show that the 1994
    Congress failed to realize the effect of its addition of
    S 503(b)(3)(F), it is equally plausible that the unsuccessful
    attempts in subsequent Congresses reflect satisfaction with
    the plain language of the provision. Accordingly, we can
    give no conclusive weight to the subsequent legislative
    history as evidence of the intent of Congress in 1994.
    As the foregoing makes clear, the plain language of the
    statute arguably is in conflict with the intent of Congress as
    reflected in the House Report but definitely conflicts with
    the requirement of S 1103 that the bankruptcy courts must
    approve the selection of lawyers to represent the committee.
    This, the appellees contend, is adequate reason for us to
    disregard the plain language and instead effectuate
    Congress's intent.
    However, Supreme Court cases declaring that clear
    language cannot be overcome by contrary legislative history
    are legion. See, e.g., United States v. Gonzales, 
    520 U.S. 1
    8 (1997) ("We . . . follow the text, rather than the legislative
    history [of the statute]."); Toibb v. Radloff, 
    501 U.S. 157
    162 (1991) ("[T]his Court has repeated with some
    frequency: `Where, as here, the resolution of a question of
    federal law turns on a statute and the intention of
    Congress, we look first to the statutory language and then
    to the legislative history if the statutory language is
    unclear.' ") (citing Blum v. Stenson, 
    465 U.S. 886
    , 896
    (1984)); Garcia v. United States, 
    469 U.S. 70
    , 76 n.3 (1984)
    ("Resort to legislative history is only justified where the face
    of the [statute] is inescapably ambiguous. . ..") (quoting
    Schwegmann Brothers v. Calvert Distillers Corp., 
    341 U.S. 384
    , 395 (1951) (Jackson, J., concurring)); United States v.
    Ron Pair Enterprises, Inc., 
    489 U.S. 235
    , 241 (1989)
    ("[W]here, as here, the statute's language is plain, `the sole
    function of the courts is to enforce it according to its
    terms'.") (quoting Caminetti v. United States, 
    242 U.S. 470
    485 (1917)).
    Admittedly, the Court has made an exception for "rare
    cases" in which "the literal application of a statute will
    produce a result demonstrably at odds with the intentions
    of its drafters." Griffin v. Oceanic Contractors, Inc., 
    458 U.S. 564
    , 571 (1982). In such situations, "those intentions must
    be controlling." Id.; see also Public Citizen v. U.S. Dep't of
    491 U.S. 440
    , 455 (1989) ("Looking beyond the
    naked text for guidance is perfectly proper when the result
    it apparently decrees is difficult to fathom or where it seems
    inconsistent with Congress' intention, since the plain-
    meaning rule is `rather an axiom of experience than a rule
    of law, and does not preclude consideration of persuasive
    evidence if it exists.' ") (quoting Boston Sand & Gravel Co. v.
    United States, 
    278 U.S. 41
    , 48 (1928)). Moreover, we are
    enjoined to interpret statutes in light of the context of the
    statutory scheme. See, e.g., Richards v. United States, 
    369 U.S. 1
    , 10 (1962) ("[A] section of a statute should not be
    read in isolation from the context of the whole Act.").
    Statutory interpretations "which would produce absurd
    results are to be avoided if alternative interpretations
    consistent with the legislative purpose are available."
    Griffin, 458 U.S. at 575 (1982).
    But only absurd results and "the most extraordinary
    showing of contrary intentions" justify a limitation on the
    "plain meaning" of the statutory language. Garcia, 469 U.S.
    at 75. As we discussed earlier, the legislative history is far
    from clear.
    In addition, although the Debtor and Trustee adduce
    many reasons why it might be incongruous or unwise to
    allow claims for reimbursement for services of professionals
    retained by members of a committee, there has been no
    showing that the result apparently commanded by the plain
    language of the statute is truly "absurd." In Chapter 11
    proceedings, a creditors committee has an active role in the
    reorganization, as it helps develop a plan of reorganization
    and ultimately decides whether to accept or reject a
    Chapter 11 plan. The creditors committee also monitors the
    conduct of the debtor to ensure its compliance with the
    Bankruptcy Code and advises the creditors of their rights.
    See 11 U.S.C. S 1103(c); Pension Benefit Guaranty Corp. v.
    Pincus, Verlin, Hahn, Reich & Goldstein Prof. Corp., 
    42 B.R. 960
    , 963 (Bankr. D.C. 1984). Responsible fulfillment of
    these duties may entail a substantial amount of work by
    committee members which is of value to the committee as
    a whole and may require services by a creditor's counsel.
    Further, it is not at all clear that the allowance of
    professional fees to committee members is necessarily an
    invitation to chaos in the functioning of committees or will
    cause the wholesale depletion of bankruptcy estates. The
    bankruptcy court retains the power to ensure that only
    those fees that are demonstrably incurred in the
    performance of the duties of the committee, the statutory
    standard, are reimbursed. Moreover, in its review of each
    application to determine whether the fee requested is
    reasonable, as required by the statute, the bankruptcy
    court must necessarily determine whether the services were
    necessary. This review is committed to the sound discretion
    of the bankruptcy courts. See Matter of DP Partners Ltd.
    106 F.3d 667
    , 674 (5th Cir. 1997). Thus, many
    of the concerns expressed by the Trustee can be
    accommodated within the plain language interpretation of
    the statute, and the ruling of the Bankruptcy Court on
    remand will set the tone for future applications, even if
    Congress fails to amend the statute once more to make
    clear its intent, the result we believe would be preferable.3
    Although we acknowledge that the plain language of
    S 503(b)(4) presents serious tension with the scheme for
    retention of professionals by the committee as a whole
    created by S 1103, it is insufficient reason to justify failure
    to follow the unambiguous directive contained in the
    language of S 503. Accordingly, we leave any redrafting of
    the statute in Congress' hands.
    For the foregoing reasons, we will reverse the Bankruptcy
    Court's decision and remand for proceedings consistent
    with this opinion.
    A True Copy:
           Clerk of the United States Court of Appeals
           for the Third Circuit
    3. As of this writing, Congress has not yet passed a pending bill that
    would resolve the issue before us.