15 F.Supp. 770 (D.Del. 1936), 1067, In re Central West Public Service Co.

Docket Nº:1067.
Citation:15 F.Supp. 770
Case Date:July 24, 1936
Court:United States District Courts, 3th Circuit, District of Delaware

Page 770

15 F.Supp. 770 (D.Del. 1936)


No. 1067.

United States District Court, D. Delaware.

July 24, 1936

Page 771

Marvel, Morford, Ward & Logan, of Wilmington, Del., for debtor.

Ross & Watts, of Chicago, Ill., and Harold B. Howard, of Wilmington, Del., for reorganization committee.

E. Ennalls Berl (of Ward & Gray) of Wilmington, Del., for trustees.

Howard Duane, of Wilmington, Del., for Albert E. Pierce.

Wilson & McIlvaine, of Chicago, Ill., and Hugh M. Morris, of Wilmington, Del., for First Nat. Bank of Chicago and for John C. Mechem.

NIELDS, District Judge.

March 12, 1934, equity receivers were appointed for Central West Public Service Company by the chancellor of Delaware. Ancillary receivers were appointed by federal courts in various jurisdictions in which the directly owned properties of the company were located. At this time the company had outstanding first lien collateral gold bonds, series, A, B, and C, amounting to $10,265,000. Debentures, notes, and unsecured claims consisting of 10-year convertible 6 per cent. debentures, three year 7 per cent. gold notes, and a small amount of other unsecured claims aggregated in all $2,538,650.59. Preferred stock, series A and B, aggregated in par value $2,157,400, with fractional warrants for $38,747.50 in principal amount of series B preferred stock. There was outstanding 88,896 shares class A common stock and 200,000 shares of class B common stock. Interest on bonds, debentures, and notes was in default. The debtor was in arrears on its preferred stock. About $10,000 persons held securities of the debtor.

The properties of the debtor were telephone, electric, and a small number of gas, water, and ice companies. Some were owned directly, and others through subsidiaries. The properties were located in ten states. All properties directly owned were subject to the lien of the indenture securing the first lien collateral bonds. All capital stocks and first mortgage bonds of subsidiary companies were pledged as security for the bonds of the debtor with the exception of the stock of Iowa-Illinois Telephone Company, whose bonds were held by the public. The properties of the debtor were carried on its book at approximately $22,000,000. The Stone & Webster Engineering Company report gives the approximate reproduction cost at $15,000,000, without including any organization expense or cost of financing.

In April, 1934, a reorganization committee was formed consisting of Messrs. Ward, Stark, Freeman, Gallagher, and McGraw. McGraw had been chairman of the board of directors. The other members had been requested to serve by holders of substantial amounts of securities. Ward was chosen chairman of the committee. Rose and Watts of Chicago were selected as counsel. An office was opened by the committee in Chicago. Meetings of the committee were held in April and May, 1934, and the committee instructed its counsel, Ross and Watts, to prepare a petition and file the same in Delaware immediately upon the passage of section 77B of the Bankruptcy Act (11 U.S.C.A. § 207). June 8, 1934, the petition was filed, and this court appointed Darling and Berl as trustees. Theretofore they had served as equity receivers.

After a thorough study of the company's situation, the committee obtained leave of this court to employ Stone & Webster Engineering Corporation to make an engineering survey of the company's properties and to employ Arthur Anderson & Co. to make an audit of its financial affairs. Ward, chairman of the committee, made a trip of inspection of the principal properties and reported to other members on the properties the management and its position in the...

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