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IN RE CRAWFORD CLOTHES

January 12, 1970

In the Matter of CRAWFORD CLOTHES, INC., Debtor

Motley, District Judge.


The opinion of the court was delivered by: MOTLEY

MOTLEY, District Judge.

These are petitions to review an order of the Referee in Bankruptcy, Asa S. Herzog, of May 13, 1969 allowing the claim of Aaron and Harvey L. Levine (claimants) against the bankrupt estate of Crawford Clothes, Inc., in the reduced amount of $10,300.27, as a general claim, and directing the trustee, New York Credit Men's Adjustment Bureau, Inc., to pay a 30% interim dividend. The claimants and the trustee both seek review of the May 13, 1969 order.

 The underlying facts are not in dispute. The following facts were stipulated by the claimants and the trustee:

 1. On April 15, 1953, claimants' predecessor leased certain premises in Huntington, Long Island to the bankrupt for 25 years (May 1, 1953 to April 30, 1978) at a net rental of $25,000 per year, with certain charges (taxes, water, etc.) added.

 2. Prior to June 9, 1961, when bankrupt filed a petition for an arrangement pursuant to Chapter XI of the Bankruptcy Act and was allowed to continue operation of the business on the premises as debtor-in-possession, claimants had become the owners of the premises.

 3. Also, prior to June 9, 1961, the debtor-in-possession had sublet a part of the premises to two subtenants, Franklyn Hess, a furniture store, and Seaholm Wines and Liquors, Inc.

 4. On June 12, 1961, the debtor-in-possession moved to disaffirm the lease, but on June 27, 1961, prior to the return date of the motion, the parties entered into a stipulation in regard to the lease.

 5. The stipulation provided, inter alia, that claimants accept surrender of the lease, that the parties exchange releases, that the parties enter into a short-term lease of the premises until December 31, 1961 at a rental of 6% of gross sales, that debtor-in-possession vacate the premises on or before December 31, 1961, and that the landlord have "the right to file a claim as a general creditor for a sum not exceeding $14,000."

 6. On July 12, 1961, an order was entered by the referee approving the stipulation.

 7. In accordance with the stipulation, the debtor-in-possession occupied the premises until December 31, 1961 and paid a rental of $2,955.23. (However, testimony of claimants indicated that the amount paid was $3,511.32 and this was the figure used by the referee).

 8. The Chapter XI proceeding terminated on January 31, 1962, when an order was entered adjudicating the debtor-in-possession a bankrupt.

 9. The two sublessees, whose leases were disaffirmed by order of the referee dated July 31, 1961, continued to remain on the premises for varying periods, during which periods sublessee Hess paid to claimants the sum of $7,812.45, and sublessee Seaholm paid to claimants the sum of $4,666.70, making a total of $12,479.15.

 10. On April 6, 1962, claimants entered into a lease with Bohack, the food store, for a period of 25 years at the monthly rental of $3,603.25, plus certain extra charges.

 11. The lease with Bohack required claimants to demolish the premises and to construct on the land a new building for Bohack's use. The term of the lease was to commence 45 days after ...


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