The opinion of the court was delivered by: CAMPBELL
CAMPBELL, District Judge.
This is a motion to approve of the proposed plan of reorganization offered by the debtor as amended and for allowances.
No one appeared in opposition to the motion to approve plan except on behalf of the certificate holders of the first mortgage, and the only brief submitted on their behalf being that submitted by the attorneys for the Brooklyn mortgage creditors.
Their objection was to paragraph XI of the amended plan of reorganization, in which it is provided that the Brooklyn plant of the debtor shall be transferred to a corporation "subject to the lien of the mortgage" and that "the vaiue of the property covered by said mortgage shall be determined in the manner provided in section 57h of the Acts of Congress Relating to Bankruptcy (11 U.S.C.A. § 93 (h), and if the amount of such value shall be less than the amount of the claim for the mortgage indebtedness, the excess, shall be classified as an unsecured claim, and to the extent of such excess the Brooklyn Mortgage creditors shall be classified as current creditors."
This is a proceeding under section 77B of the Bankruptcy Law (11 U.S.C.A. § 207), so much of which as is necessary for consideration at this time is found at section 77B (b) (5), 11 U.S.C.A. § 207 (b) (5), which reads as follows: "(b) A plan of reorganization within the meaning of this section * * * (5) shall provide in respect of each class of creditors of which less than two thirds in amount shall accept such plan * * * provide adequate protection for the realization by them of the value of their interests, claims, or liens, if the property affected by such interests, claims, or liens is dealt with by the plan, either as provided in the plan (a) by the transfer or sale of such property subject to such interests, claims, or liens. * * * In the case of secured claims entitled to the provisions of clause (5) of this subdivision (b), the value of the security shall be determined in the manner provided in section 57, clause (h) of this Act [section 93, clause (h) of this title], and if the amount of such value shall be less than the amount of the claim, the excess may be classified as an unsecured claim."
At the outset we must remember that the debtor does not seek to reduce the principal amount of the mortgage lien, but simply seeks to transfer the property subject to the lien of the mortgage.
The objecting creditors insist that the corporation to which the assets of the debtor other than the real estate is to be transferred shall assume the obligation of the debtor on its bond.
This the creditor are not entitled to demand, as the debtor could at any time have sold the property to any one subject to the mortgage without requiring the purchaser to assume payment; the debtor alone remaining obligated on its bond to pay any deficiency.
As to the rate of interest, manner of payment, and extension of the time of payment they are substantially as agreed upon when consent was given to the reorganization of the mortgage approximately a year ago.
Two-thirds of the mortgage creditors in amount have not accepted the proposed amended plan or reorganization, and thus the duty is imposed upon this court to provide adequate protection for the realization by the mortgage creditors of the value of their interests, claims, or liens if their assent to the plan is to be rendered unnecessary.
This mortgage was not foreclosed before the petition under section 77B was filed herein, but a reorganization of the mortgage was agreed to which extended the time of payment substantially to the same date as the proposed plan and no motion has been made during the pendency of these proceedings for leave to foreclose.
Of course, the simplest way to determine the value of the security would be by foreclosure and sale, but the time that would be required to accomplish that would render it extremely doubtful if not impossible that a plan of reorganization could be carried out.
It seems to me that this is a situation which the Congress intended to meet when it referred to section 57h in section 77B (b) (5), supra.
Section 57h of the Bankruptcy Act (title 11 § 93 (h), U.S.Code [11 U.S.C.A. § 93 (h)]) provides as follows: "(h) The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise, or litigation, as the Court may direct, and the ...