In re Equity Funding Corporation of America, 73-3070.

Citation492 F.2d 793
Decision Date21 January 1974
Docket NumberNo. 73-3070.,73-3070.
PartiesIn the Matter of EQUITY FUNDING CORPORATION OF AMERICA, Debtor. FINANCIAL ASSOCIATES, a limited partnership, et al., Petitioners-Appellants, v. Robert M. LOEFFLER, Trustee, et al., Respondents-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Ronald M. Greenberg (argued), Glenn R. Watson of Richards, Watson, Dreyfuss & Gershon, Harvey A. Howard, Los Angeles, Cal., for petitioners-appellants.

Patrick Lynch, of O'Melveny & Myers (argued) Los Angeles, Cal., Lawrence D. Nerheim, Gen. Counsel, David Ferber (argued), Sol., Paul Gonson, Asst. Sol., Jerry W. Markham, of Securiies and Exchange Commn., Washington, D. C., for respondents-appellees.

Before WRIGHT, KILKENNY and WALLACE, Circuit Judges.

OPINION

PER CURIAM:

This is an expedited appeal from an order of the district court, entered in the course of a reorganization proceeding under Chapter X of the Bankruptcy Act 11 U.S.C. § 501, et seq.. The order authorized the trustee of Equity Funding Corporation of America (EFCA), as sole stockholder of Liberty Savings and Loan Association, a whollyowned subsidiary of EFCA, to consent to the sale of the assets of Liberty to Coast Federal Savings and Loan Association. The Liberty stock was in the possession of the trustee. We affirm the order of the district court and direct that the clerk issue the mandate forthwith.

Appellants, a group of former Liberty shareholders who now oppose the sale of Liberty's assets, had exchanged their stock for EFCA stock in a 1971 merger of Liberty and Crown Savings and Loan Association, another subsidiary of EFCA. Two days before the Chapter X petition was filed, appellants served a notice of rescission in which they attempted to rescind the merger on the basis of fraud. They contend that only an emergency or imminent danger of loss can warrant the court's approval of the consent to sell the assets of Liberty.

We reject the argument of appellants, based on In re Solar Mfg. Corp., 176 F.2d 493 (3d Cir. 1949), that a § 116(3) 11 U.S.C. § 516(3) sale may be authorized only in an emergency or where there is imminent danger of loss to the corporation. The rationale of Solar has been rejected by the Fifth Circuit (In re Dania Corp., 400 F.2d 833, 836 (5th Cir. 1968) and has been criticized by commentators "as reflecting an overly restrictive view of the district court's power to authorize the sale or lease of a corporate debtor's property under 11 U.S.C. § 516(3)." In re Wonderbowl, Inc., 424 F.2d 178, 180 (9th Cir. 1970). See also, Oglebay, Some Developments in Bankruptcy Law, 24 Ref.J. 63, 64 (1950), quoted in 6 Collier, Bankruptcy (14th ed. 1969) ¶ 3.27, at 626-27 n. 25.

Other circuits have recognized the power of the bankruptcy court under Chapter X to authorize a sale of the debtor's property under less than emergency conditions where such sale is necessary to avoid deterioration in the value of the assets. Frank v. Drinc-O-Matic, 136 F.2d 906 (2d Cir. 1943); In re Marathon Foundry & Machine Co., 228 F.2d 594 (7th Cir. 1955), cert. denied, 350 U.S. 1014, 76 S.Ct. 659, 100 L.Ed. 874 (1956).

In the instant case, there were findings of fact that the market value of Liberty was likely to deteriorate in the near future, that it might be a very substantial...

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13 cases
  • Huntington Ltd., In re
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • 24 août 1981
    ...Inc., 515 F.2d 18, 19-20 (9th Cir.), cert. denied, 423 U.S. 869, 96 S.Ct. 134, 46 L.Ed.2d 99 (1975); In re Equity Funding Corp. of America, 492 F.2d 793, 794 (9th Cir.), cert. denied, 419 U.S 964, 95 S.Ct. 224, 42 L.Ed.2d 178 (1974). The inflexibility of the Solar and Pure Penn Petroleum in......
  • Big Shanty Land Corp. v. Comer Properties, Inc.
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    ...exists where the value of debtor's estate will be impaired unless its assets are sold quickly. E.g., In re Equity Funding Corporation of America, 492 F.2d 793 (9th Cir.) (per curiam), cert. denied, 419 U.S. 964 (1974). Absent clear justification, however, it would seem unwise to second-gues......
  • Matter of WT Grant Co.
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    • 2 février 1988
    ...its counsel were especially well-qualified because of experience in other major bankruptcy cases including, In re Equity Funding Corporation of America, 492 F.2d 793 (9th Cir.), cert. denied, 419 U.S. 964, 95 S.Ct. 224, 43 L.Ed.2d 178 (1974) (Johnson Factors 3, 9); that Whitman & Ransom wer......
  • Coastal Cable T.V., Inc., In re, 82-1923
    • United States
    • U.S. Court of Appeals — First Circuit
    • 21 juin 1983
    ...without necessarily considering what is best for the shareholders or who the shareholders are. See, e.g., In re Equity Funding Corp. of America, 492 F.2d 793, 794 (9th Cir.), cert. denied sub nom. Herman Investment Co. v. Loeffler, 419 U.S. 964, 95 S.Ct. 224, 42 L.Ed.2d 178 (1974). And, it ......
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1 firm's commentaries
  • So You Want To Sell (Or Buy) A Company Under Section 363? Here's How
    • United States
    • Mondaq United States
    • 17 décembre 2012
    ...Gambrinus Brewery Co.), 141 F.2d 747, 748 (2d Cir. 1944)). 9 Id. (citing Fin. Assocs. v. Loeffler (In re Equity Funding Corp. of Am.), 492 F.2d 793, 794 (9th Cir. 1974); Int'l Bank of Miami v. Brock (In re Dania Corp.), 400 F.2d 833, 835-37 (5th Cir. 1968); Marathon Foundry & Mach. Co. ......

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