(Download) "Prudence-Bonds Corp. v. City Bank Farmers Trust Co." by United States Court Of Appeals Second Circuit # Book PDF Kindle ePub Free

July 31, 2021

eBook details

Title: Prudence-Bonds Corp. v. City Bank Farmers Trust Co.
Author : United States Court Of Appeals Second Circuit
Release Date : January 01, 1951
Genre: Law,Books,Professional & Technical,
Pages : * pages
Size : 70 KB

Description

This is an appeal from the order of a court of bankruptcy, extending for two years the due date of eighteen series of bonds, "reorganized" under Â§ 77B of the Bankruptcy Act in the "plan of reorganization" of the Prudence-Bonds Corporation, confirmed on January 18, 1938. The debtor had issued the bonds in separate series, each series being secured by mortgages on real estate, which had been assigned to and were held by eleven separate corporate trustees for the bondholders. Under the "plan of reorganization" all these bonds were modified in obligation, the debtor was discharged of liability upon them and a newly organized corporation - the "New Corporation" - was to assume their payment as modified. What remained of the securities of each series was to continue to secure the same bonds, although a single new trustee for all the series was substituted for the former eleven trustees. After the order of confirmation was entered the securities have been continually in process of liquidation, and the proceeds have been applied in reduction of the bonds. The "plan" provided that the due date of all the bonds should be extended to May 1, 1945, and, if they had not been paid in full by that time, that it might be further extended to May 1, 1950. Both extensions were made, but the liquidation was delayed beyond the period anticipated, particularly because of the accountings of the original trustees of some of the series.Some time after confirmation the trustees of the reorganization discovered that some of the trustees of the series had permitted the security of their series to be depleted in violation of the trust deeds; their accounts were surcharged with resulting losses, and large amounts have been recovered from them after much litigation, some of which came to this court. When it became apparent that for this and other reasons the liquidation and distribution would not be completed before May 1, 1950, the "New Corporation" in April of that year applied to the court for an order extending still further the due date of the bonds to May 1, 1952. The substituted trustee of all the series opposed this motion on the ground that the court had lost jurisdiction over the proceeding, and that the bondholders must be left free to enforce their bonds at law. The judge caused notices of the motion to be served upon all the bondholders, and upon the return day over 97 per cent of the two-thirds, who answered at all, assented to the proposed extension; but the substituted trustee still pressed its objection, not because it thought the extension undesirable on the merits; but because it feared that the extension might be beyond the courts jurisdiction, and that an order would not protect it. The court held that its jurisdiction had not ended and entered an order extending the due date as prayed. It is from this order that the substituted trustee has appealed; and after the appeal was taken several bondholders have filed a separate brief also seeking reversal.