During the operation of the debtor's business since September 28, 1943, when the petition was filed, the Trustees have come into possession of large sums of cash and had on hand on April 29, 1944, the sum of $844,239.99. In addition, they held securities which are legal investments for savings banks in the amount of $3,020,595.25. This amount of liquid assets is considerably in excess of the sum which is necessary as a working capital fund, and there is no reason why a distribution should not be made at this time to bondholders, who have as yet received nothing on the principal of their claims, even though a plan of reorganization has not yet been proposed.
The fundamental purpose of a proceeding under Chapter X, 11 U.S.C.A. § 501 et seq., as contrasted to a straight bankruptcy, is the preservation of the going-concern value of the business of the debtor. If the interests of all those concerned in the proceeding are best served by the retention of all the assets in the hands of the Trustees until a plan has been offered, that should be done, but where, as here, the Trustees possess assets in an amount more than sufficient to permit the continuance of the debtor's regular business, it is entirely consistent with the purposes of Chapter X that such excess should be distributed to bondholders, whether or not a plan has been proposed, and the Court clearly has the authority to do so.
The power of the court to order distributions prior to a plan of reorganization has been recognized frequently in proceedings under Section 77, 11 U.S.C.A. § 205. In re Central of Georgia Ry. Co., D.C.S.D.Ga., 1942, 42 F.Supp. 940; In re Central of Georgia Ry. Co., D.C.S.D. Ga., 1942, 48 F.Supp. 445, affirmed Central Hanover Bank & Trust Co. v. Callaway, 5 Cir., 1943, 135 F.2d 592; In re Chicago & N. W. Ry. Co., 7 Cir., 1940, 114 F.2d 963, and in equity receivership proceedings, Todd v. Lippincott, 3 Cir., 1919, 258 F. 205. It has also been brought to the attention of the Court by counsel for the Securities and Exchange Commission that distributions have been made or are about to be made in the following Chapter X proceedings:
Cenwest Corp., SD NY Index No. 80504
Childs Co., SD NY Index No. 82868
Equitable Office Building Corp., SD NY Index No. 78476
Foundation Properties, Inc. SD NY Index No. 82995
Isham Garden Apartments, Inc., SD NY Index No. 82354
Philadelphia & Reading Coal & Iron Co., ED Pa. Index No. 19711
Philadelphia & Western Railway Co., ED Pa. Index No. 18014
Philadelphia & Western Railway Co., ED Pa. Index No. 21935
Reynolds Investing Co., Inc., D NJ Index No. 27683
Warner Sugar Corp., SD NY Index No. 76523
Washington Gas & Electric Co., SD NY Index No. 79529
After due consideration of the working capital and reasonable reserve requirements of this debtor, the Court has determined that a distribution of 20% of the unpaid principal amount of the outstanding bonds may be made at this time without in any manner impairing the interest of the debtor, and the Trustees are instructed to make such distribution as a part payment on the principal.