In re Associated Gas & Electric Co., 21209

• Decision Date: 11 February 1936
• Docket Number: 21240.,No. 21209,21209
• Citation: 14 F. Supp. 582
• Parties: In re ASSOCIATED GAS & ELECTRIC CO.
• Court: U.S. District Court — Northern District of New York

14 F. Supp. 582

In re ASSOCIATED GAS & ELECTRIC CO.

Nos. 21209, 21240.

District Court, N. D. New York.

February 11, 1936.

Holmes, Rogers & Carpenter, of New York City (Oliver C. Carpenter, of New York City, of counsel), for petitioner Lindsey E. Bird.

George J. Hatt, 2d, of Albany, N. Y., and Martin C. Ansorge, of New York City, for petitioners in No. 21,209.

McCloy & Bravman, of New York City, for petitioners Robert W. and Ada J. Pommerer.

Jacob A. Freedman, of Brooklyn, N. Y., for petitioner Lily Koster.

J. Joyce Klinger, of St. George, S. I. (Jack Lewis Kraus, 2d, of New York City, of counsel), for petitioner Margaret Johnson.

Morris, Plante & Saxe, of New York City (Robert C. Beatty, of New York City, of counsel), for General Protective Committee for Security Holders, as amici curiæ.

Travis, Brownback & Paxson, of New York City (George M. Le Pine, of New York City, of counsel), for debtor.

Roscoe Irwin, of Albany, N. Y., and Maurice E. Serling, of New York City (Herman H. Oppenheimer, of New York City, of counsel), for petitioning creditors in No. 21240.

MACK, Circuit Judge.

Two separate applications were presented for leave to intervene in two involuntary proceedings for the reorganization of the debtor corporation brought pursuant to section 77B of the Bankruptcy Act (11 U.S.C.A. § 207). Both proceedings were instituted some time in June, 1934, by the filing of involuntary petitions to each of which the defendant filed an answer. In October, 1934, I held that the petition in No. 21209 had been filed in good faith, and thereafter in June, 1935, granted the petitioners therein injunctive relief against the transfer of assets by the debtor out of the regular course of business without notice to petitioners' counsel. A trial of the issue of the debtor's insolvency raised by the petition and answer was adjourned on consent from time to time in order to enable the debtor so to revamp its corporate structure as to comply with the Public Utility Holding Company Act (15 U.S.C.A. § 79 et seq.). Ultimately, some time in November, 1935, the debtor decided not to file thereunder, allegedly because of doubts as to its constitutionality. Now, after some delay to enable counsel to prepare themselves, the insolvency trial is in early prospect.

A motion to consolidate No. 21240 with No. 21209 has been continued indefinitely by consent.

One of the applications by Rex R. Thompson, on behalf of an alleged committee, has been withdrawn. The other is made by Lindsey E. Bird personally and individually, as an alleged holder of ten debenture bonds or notes of the debtor in the sum of $1,000 each. In support thereof, it is urged that there is an absolute right to intervene in such proceedings prior to the approval of the petition. This contention is based on the claim that section 77B (11 U.S.C.A. § 207) is silent on the subject, that section 59f of the Bankruptcy Act (11 U.S.C.A. § 95(f) and Equity Rule 37 (28 U.S.C.A. following section 723) are therefore controlling, and that they establish this absolute right.

The only reference to intervention in section 77B appears in subdivision (c), 11 U.S.C.A. § 207(c). After listing certain powers that reside in the court after the petition shall have been approved and providing that the debtor shall have the right to be heard on all questions, the subdivision continues: "Any creditor or stockholder shall have the right to be heard on the question of the permanent appointment of any trustee or trustees, and on the proposed confirmation of any reorganization plan, and upon filing a petition for leave to intervene, on such other questions arising in the proceeding as the judge shall determine." The context of the intervention clause indicates clearly that it is applicable only after approval of the petition. In re 1030 North Dearborn Bldg. Corporation, 7 F.Supp. 896 (D.C.E.D.Ill.1934). And then it has been held to rest in the sound discretion of the court. In re General Theatres Equipment, Inc., 12 F.Supp. 785 (D.C.Del. Nov. 29, 1935); In re Garment Center Capitol, Inc., 13 F.Supp. 908 (D.C.S.D.N.Y. May 6, 1935). I concur in this conclusion reached by Judges Nields and Caffey and in the reasons stated by them. Rule 77B-5 of the Bankruptcy Rules adopted by the judges of this district is manifestly framed on the assumption that leave to intervene is discretionary and that, too,...