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IN RE NEW LOTS SASH & DOOR CORP.

May 29, 1933

In re NEW LOTS SASH & DOOR CORP.


The opinion of the court was delivered by: BYERS

BYERS, District Judge.

This is a contested bankruptcy proceeding and, in connection with the trial of the issues, a motion was heard upon which decision was reserved to permit Isidor Prussack, one of the petitioning creditors, to withdraw as such.

It will be convenient to dispose of that motion first.

 Prussack asserts that he was induced to sign the petition by attorneys representing at that time one of the other petitioning creditors, who informed him that a certain assignment of the bankrupt's interests in claims against five fire insurance companies had been made to an individual who would distribute the amounts to be received on a preferential basis so that all of the creditors of the alleged bankrupt would not share pro rata therein; believing this representation, he was induced to sign the petition after the attorney in question had paid him about 50% of his claim, namely, $25.00 on account of the claim of $46.99.

 The attorney testified that he purchased a share in Prussack's claim for the sum named.

 The latter deposed that subsequent investigation disclosed that the terms of distribution under the assignment of the insurance policy claims were not as they had been represented to him and, although he had not returned the $25.00 so paid, he desired to withdraw as a petitioning creditor. It is found that his evidence fails to establish misrepresentation.

 He testified that his claim was bona fide, and had been owing for upwards of a year at the time that the petition in bankruptcy was filed.

 At most, there was disclosed a change of mind on the part of this petitioner, and no good reason has been shown why he should play fast and loose with legal proceedings in this court; if there had been any infirmity in his claim so that his status as a petitioning creditor could fairly be open to question, a different problem would be presented, but the record is otherwise. It is quite apparent that he wishes to withdraw in response to pressure which has been brought to bear by those who are concerned in avoiding the bankruptcy proceedings, in order that the assignment above referred to may not be subject to attack by a trustee as constituting a preference.

 So far as Prussack is concerned, the court should leave him where it finds him, and consequently his motion is denied.

 The acts of bankruptcy alleged in the printed form petition are as follows:

 (1) That, while insolvent, the bankrupt, with intent to hinder, etc., its creditors and for the purpose of giving a preference contrary to the law, transferred $13,000.00.

 (2) That, while insolvent, the bankrupt transferred $8,000.00 to various of its creditors, with intent to prefer them.

 (3) That, while insolvent, the alleged bankrupt permitted a creditor to obtain a preference through legal proceedings, which has not been vacated within five days before a sale ...


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