In re Blinrig Realty Corporation, 394.
| Decision Date | 16 August 1940 |
| Docket Number | No. 394.,394. |
| Citation | 114 F.2d 100 |
| Parties | In re BLINRIG REALTY CORPORATION. |
| Court | U.S. Court of Appeals — Second Circuit |
Chester T. Lane, Gen. Counsel, Securities and Exchange Commission, of Washington, D. C., and George Zolotar, and Charles Rembar, both of New York City, for Securities and Exchange Commission.
Dreyer & Traub, of Brooklyn, N. Y. (Abraham Traub and Henry Heymann, both of Brooklyn, N. Y., of counsel), for appellant.
Herman G. Robbins, of Brooklyn, N. Y., for debtor-appellee.
Before CHASE, CLARK, and PATTERSON, Circuit Judges.
This appeal presents a situation where a debtor, after trying since 1936 to reorganize in proceedings under the New York State law in the state court without success, filed its petition for reorganization under Chap. X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., in the District Court for the Eastern District of New York. The prior state court proceedings were not themselves an absolute bar to its so doing. Brooklyn Trust Co. v. Rembaugh, 2 Cir., 110 F.2d 838. But good faith in the sense of a fair likelihood of success despite the vain efforts to reorganize already made needed to be shown prima facie at least in order to entitle the petition to approval. In re Castle Beach Apartments, 2 Cir., 113 F.2d 762, decided July 19.
The debtor's assets are an apartment building in Brooklyn, N. Y., known as No. 500 Ocean Avenue. It is covered by a first mortgage which is in default and on which there is due the sum of $398,500 and accrued interest. There is also a second mortgage on the property and the debtor owes unsecured debts of $4,477. The present value of the real estate does not clearly appear but there is no reason to believe there is any equity. The mortgagee is the Title Guarantee and Trust Company holding as trustee for the benefit of one hundred and seventy owners of participating certificates. Under the trust agreement, the trustee was "vested with all the rights and powers of an absolute owner of the property." It insists that it alone may, therefore, represent the first mortgage indebtedness in voting on any plan to be proposed and, as its consent cannot be obtained, it was error to approve the petition. It has, however, no such certain power to block the acceptance of a plan in its capacity as trustee. In re Castle Beach Apartments, supra. Yet good intentions are not enough. Tennessee Publishing Co. v. American National Bank, 299 U.S. 18, 57 S.Ct. 85, 81 L.Ed. 13; Manati Sugar Company v. Mock, 2 Cir., 75 F.2d 284. There must be fair assurance that the attempt to reorganize will be followed by success. Provident Mutual Life Ins. Co. v. University Ev. L. Church, 9 Cir., 90 F.2d 992.
We did not think the history of the debtor's efforts to reorganize in the state court warranted the belief...
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In re Southern Land Title Corporation, 67-135.
...In Re Paloma Estates, 126 F.2d 72 (2d Cir. 1942), cert. den. 317 U.S. 684, 63 S. Ct. 255, 87 L.Ed. 548 (1942); In Re Blinrig Realty Corp., 114 F.2d 100 (2d Cir. 1940); In Re Champ Brewing Co., 72 F.Supp. 764 (M.D.Pa.1947); In Re Unity Life Ins. Co., 47 F.Supp. 355 (E.D. S.C.1942), aff'd sub......
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In re Paloma Estates, 152.
...the general good faith requirement of our decisions in Brooklyn Trust Company v. Rembaugh, 2 Cir., 110 F.2d 838, and In re Blinrig Realty Corp., 2 Cir., 114 F.2d 100, dismissed the petition. The debtor has appealed and is supported by the Securities and Exchange Commission which, at the req......