The opinion of the court was delivered by: BYERS
Motion by a corporate debtor to enjoin the New York State Superintendent of Insurance from taking steps looking towards a reorganization of the debtor except as prayed in its petition in this court, and requiring the filing of a list in this court of the names and addresses of the holders of certificates issued under the first mortgage covering debtor's property.
The debtor owns but building and premises 2981 Ripple street, formerly Sea Air avenue, Brooklyn; the petition asserts that the property is worth $201,800.44.
There is a first mortgage which became
due on January 1, 1935, of $105,000.00
Accrued interest thereon 11,727.00
The second mortgage is 26,600.00
The accrued interest thereon 3,192.00
Taxes due (1934) and water charges 5,281.13
The president of the debtor has advanced to it $35,300.00 but whether as a loan or contribution to capital does not clearly appear; the capital stock is $5,000.00 and is owned entirely by the president of the company; the latter has no assets or property except as above stated.
The entire first mortgage is held for the benefit of 69 certificate holders who purchased certificates from Title Guarantee & Trust Company. The form of the certificate and the joint guarantee by that company and Bond & Mortgage Guarantee Company are substantially as recited in Jacoby v. Bond & Mortgage Guarantee Co. (C.C.A.) 72 F.2d 420.
In December, 1934, a committee of certificate holders representing an investment of $16,600.00 promulgated a plan of reorganization which was the subject of a notice under the so-called Schackno Act (Laws N.Y. 1933, Ex. Sess., c. 745), given by the Superintendent of Insurance under date of February 11, 1935, returnable before the Supreme Court of New York on March 7, 1935. That plan contemplates foreclosure of the first mortgage, title to be taken by a new corporation in which the certificate holders will own all the stock and debentures; these will be issued to the total of the amount represented by the existing certificates, and a new first mortgage is to be placed which will be a senior lien, in an amount sufficient to cover arrears of taxes, etc.
That proceeding came on for hearing on due notice at the appointed time, which was the same day on which the debtor filed its petition under section 77B Bankr. Act (11 USCA § 207), in this court.
At the close of that hearing, Mr. Justice Brower approved the plan and directed the foreclosure to proceed.
There was an alternative plan presented by the second mortgagee which seems to have been reserved for consideration. The minutes recite that consents of $31,050.00, namely 29 1/2 per cent. of the certificate holders, were given to the corporate plan.
The questions for present determination are whether this court has jurisdiction to stay the progress of the Superintendent in carrying forward the plan pursuant to the proceeding in the state court; and, if it has, and the jurisdiction is assumed, whether the names and addresses of the certificate holders shall be required to be filed.
It will be readily apparent that this court is not confronted by any mere question of convenience.
If notions of expedience were to govern, the debtor would be relegated to the jurisdiction invoked by the Superintendent in the pursuit of duties placed upon him by the Legislature of the State of New York, and this court could thus relieve itself of a perplexing task.
Congress, however, has enacted section 77B of the Bankruptcy Act (11 USCA § 207), with a view to accelerating corporate reorganizations and, as this debtor seems to be comprehended in that purpose, jurisdiction cannot be disclaimed as a matter of convenience.
The arguments in opposition to the motion will be considered in the order in which they are stated:
A. That the court has no power to interfere with the performance of statutory duty ...