The opinion of the court was delivered by: MCGOHEY
The Securities and Exchange Commission, pursuant to §§ 11(e) and 18(f) of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. § 79k(e), 79r(f), applies for approval and enforcement of a plan.
Upon consideration of the oral arguments and the helpful briefs submitted by counsel I am of the opinion that the Commission's findings and conclusions upholding the plan as fair and equitable are based on substantial evidence and were reached by application of the proper legal standards. Accordingly, the plan is approved.
The prior history of this holding company simplification is set forth in Judge Leibell's opinion
relating to Plan II-A. The following constitutes a sufficient setting for the present proceeding.
The Commission, in connection with its approval of Bond and Share's Plan I on October 10, 1945, found that the elimination of the corporation's preferred stocks was necessary to effectuate the provisions of §§ 11(b)(1) and 11(b) (2) of the Act. At that time Bond and Share had outstanding, in addition to 5,250,357 shares of common stock, 840,268 shares of $ 6 preferred stock and 203,012 shares of $ 5 preferred stock.
The preferred stocks ranked pari passu and were entitled to cumulative annual dividends of $ 6 and $ 5 per share respectively. Upon 'any liquidation, dissolution or winding up of the affairs of the corporation or any distribution of its capital, whether voluntary or involuntary' each class of preferred was entitled to $ 100 per share plus accrued dividends.
Each class, 'upon the affirmative vote of the holders of record of a majority of the shares of the issued and outstanding common stock,' could be called at the redemption price of $ 110 plus accrued dividends.
Pursuant to Plan I, Bond and Share, on November 23, 1945, paid $ 30 per share as a first step in the retirement of the preferred. Retirement was completed on March 6, 1947, under Plan II-A, pursuant to which Bond and Share paid an additional $ 70 per share and accrued dividends. It also issued certificates evidencing the right of the holders to receive whatever additional amounts, if any, to which they might thereafter be held to be entitled. Plan II-A provided that within four months Bond and Share was to file another plan specifying what further payments, if any, it proposed to make.
In accordance with that provision, Bond and Share, on April 7, 1947, filed Plan II-B which proposed that no further payments be made to the certificate holders. The Commission held public hearings on the plan, heard argument and reargument and received briefs. Bond and Share, the Commission, two committees of certificate holders and another certificate holder were all represented at these hearings.
On June 19, 1950, the Commission issued its order
which provided, inter alia:
'(1) The terms and provisions of Plan II-B in so far as said Plan proposes to pay no further amount of cash or other assets of Bond and Share to the holders of the certificates issued with respect to the $ 6 Preferred Stock be and hereby are disapproved as unfair and inequitable;
'(2) Bond and Share be and hereby is authorized and directed to pay and distribute to the holders of the certificates issued with respect to its $ 6 Preferred Stock the amount of $ 10.00 for each share of said $ 6 Preferred Stock represented by said certificates, together with compensation for the delay in the payment of said amount at the rate of 5.45% per annum from March 6, 1947, the effective date of Plan II-A, to the date of payment.
'(4) The terms and provisions of Plan II-B in so far as said Plan proposes to pay no further amount of cash or other assets of Bond and Share to the holders of the certificates issued with respect to the $ 5 Preferred Stock be and hereby are approved as fair and equitable, and said certificates be and hereby are deemed null and void.'
The Commission issued its findings and opinion on July 28, 1950, and thereafter denied petitions for rehearing by Bond and Share and by certain $ 5 certificate holders.
On August 4, 1950, Bond and Share filed its amendment conforming Plan II-B to the Commission's determination and, while reserving the right to contest the decisions directing the $ 10 payment to the $ 6 certificate holders and awarding compensation for delay in payment, requested the Commission to make this application for enforcement of Plan II-B as so amended.
The Commission is required by Sec. 11(e) of the Act, in order to approve a plan, to 'find such plan, as submitted or as modified, necessary to effectuate the provisions of subsection (b) and fair and equitable to the persons affected by such plan.' There is no question here with regard to the Commission's determination that retirement of the preferred stocks is necessary ...