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Scolnick v. Connecticut Telephone & Electric Corp.

decided: March 25, 1959.

H. MARSHALL SCOLNICK, APPELLANT,
v.
CONNECTICUT TELEPHONE & ELECTRIC CORPORATION, DEBTOR, UNITED STATES OF AMERICA, EDWARD M. ROSENTHAL, TRUSTEE OF DEBTOR, CONNECTICUT TELEPHONE & ELECTRIC CORPORATION OF MERIDEN, C. A. AUFFMORDT & CO., NATIONAL PNEUMATIC CO., INC., APPELLEES.



Author: Gibson

Before CLARK, Chief Judge, MOORE, Circuit Judge, and GIBSON, District Judge.

GIBSON, District Judge.

This is an appeal by H. Marshall Scolnick from an order entered by Judge Ryan, then sitting in the District of Connecticut, denying a Petition for Review sought by said Scolnick from the Referee in Bankruptcy's order confirming Debtor's Amended Plan of Arrangement.

Debtor, a Connecticut corporation, is engaged in the manufacture of electric and electronic equipment. On August 9, 1957, the Debtor filed a petition in the District Court for an arrangement with creditors pursuant to Chapter XI of the Bankruptcy Act, 11 U.S.C.A. ยง 701 et seq. This petition was referred to the Referee in Bankruptcy.

In addition to tax and workmen liabilities, prior lien and general creditors liabilities exceed two million dollars. In addition to these liabilities, the Debtor in 1956 issued $168,000 worth of subordinated debentures. These debentures were completely subordinated to the claims of all other creditors.

There were sundry proceedings before the Referee. But those pertinent to this decision were (1) the failure of the Debtor's first Plan of Arrangement to be approved; (2) the disapproval of a plan offered by the present appellant in his alleged capacity as an agent; (3) the offering by the Debtor of an Amended Plan of Arrangement.

On January 30, 1958, appellant, purporting to act as agent with a full power of attorney for one Wilbur Smith, verified an objection to Confirmation of the Arrangement. This objection was amended by appellant on February 4, 1958.

On February 11, 1958, a hearing was held on Debtor's application to confirm and appellant's objections thereto. At this hearing, appellant raised no question as to the insolvency of the Debtor. He did not question the fairness of paying but 15% to the general creditors as provided by the Debtor's amended plan.

On February 18, 1958, the Referee entered an order confirming the Debtor's amended plan, finding therein that the Debtor was insolvent and that the aggregate of the Debtor's property was insufficient to pay the general creditors - without including the claims upon the debentures. He further held that the objector is not a creditor adversely affected by the amended plan.

No stay of the order of confirmation was asked for by the objector, and the amended plan was promptly consummated.

On February 26, 1958, appellant verified a Petition for Review - in effect describing himself as an agent for said Wilbur Smith.

This Petition for Review was heard by the District Court on April 28, 1958, who, on May 12, 1958, denied the petition.

On May 30, 1958, appellant filed this appeal. The appeal was filed on behalf of "H. Marshall Scolnick, an objecting creditor."

At no time, until May 30th, did Scolnick personally appear or attempt to appear as a party in this action. He has not moved to be substituted for Smith either in the District or Appellate Court. We have serious doubt as to whether he, ...


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