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IN RE AMERICAN ANTHRACITE & BITUMINOUS COAL CORP.

March 12, 1959

In the Matter of AMERICAN ANTHRACITE & BITUMINOUS COAL CORP., Debtor


The opinion of the court was delivered by: DAWSON

This is a petition to review an order, dated January 12, 1959, by the Referee in Bankruptcy, which denied priority status to certain claims of creditors. This petition is filed on behalf of the following creditors:

1. Tramp Tankers Corporation of Liberia (Claim No. 32).

 2. The late Hector C. Dracoulis (and the Dracoulis estate) (Claim No. 27).

 3. Leonardo Arrivabene, S.A. (Claim No. 34).

 The total amounts of their claims are not in controversy. The only question here is whether these claimants may assert a right to priority status.

 An agreed statement of the facts necessary to a decision on the issues was placed on the record at a hearing held before the Referee in Bankruptcy on December 17, 1958. A brief summary of these facts follows:

 The debtor, American Anthracite & Bituminous Coal Corp., was engaged in the business of exporting coal from the United States to various foreign countries. On October 21, 1957 the debtor filed a petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq., and on the following day, October 22nd, this court authorized the debtor to continue to operate its business.

 Although the relevant facts for all three claims are similar, the claims of Tramp Tankers and Dracoulis are basically the same, and these will be treated first and the claim of Arrivabene will be treated separately.

 Claims of Tramp Tankers and Dracoulis

 The debtor had entered into a charter party with claimant Tramp Tankers, dated May 10, 1956, covering approximately twelve trips of the vessel Archanax to last through January 31, 1959. Another charter party was entered into with claimant Dracoulis, dated January 9, 1957, covering approximately twenty trips of the vessel Calliope to last through April 30, 1959.

 These executory contracts were in operation at the time of the filing of the Chapter XI petition by the debtor. Both vessels had been tendered to debtor at United States loading ports shortly prior to the institution of the Chapter XI proceedings on October 21, 1957. However, the debtor was unable to provide cargoes for these ships and demurrage charges started to accrue.

 The vessels remained at the loading ports until the middle of November, 1957, when, pursuant to stipulation (dated November 8 and approved by the court November 14, 1957) between claimants and debtor in possession, both vessels were released to make a charter party with third parties for a limited number of voyages, during which time it was agreed that the debtor would apply to the court for authority to assume or reject the executory contracts.

 On January 2, 1958, upon debtor's petition dated November 29, 1957, an order was made authorizing debtor to reject both charter parties.

 On or about January 20, 1958 claims were filed for damages for rejection of the contracts and seeking priority as to the following:

 1. Tramp Tankers' Claim No. 32 for stevedore damages of $ 1,037.54, as per invoice dated June 27, 1957; demurrage of $ 4,403 accrued from October 15, 1957 to October 21, 1957 (pre-petition); and demurrage of $ 23,037, accrued from October 21, 1957 to November 16, 1957 (post-petition).

 2. Dracoulis' Claim No. 27 for demurrage from October 23, 1957 to November 19, 1957 (post-petition). (Dracoulis also seeks to amend his claim to include pre-petition demurrage of $ 11,000 earned from October 11, 1957 to the date of the petition.)

 As previously indicated, there was no question as to the amount of the claims; the only question being whether the claimants are entitled to priority of payment.

 By order dated September 10, 1958 this court confirmed a plan of arrangement under Chapter XI of the Bankruptcy Act in this proceeding. On September 22nd the debtor by notice of motion objected to the priority claims of the petitioners and scheduled a hearing thereon to be held October 16, 1958. By order dated January 12, 1959 the Referee disallowed priority claims No. 27, No. 32 and No. 34 of petitioners Dracoulis, Tramp Tankers and Arrivabene, respectively.

 The petitioners argue that the Referee was in error in disallowing priority to the above-mentioned claims. This argument, urged in a very lengthy brief, may be summarized as follows:

 1. The debtor has no standing to object to the priority of the claims.

 2. The claims are entitled to priority under the ...


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