In re Chicago, M., St. P. & PR Co.

• Decision Date: 21 October 1940
• Docket Number: No. 60463.,60463.
• Citation: 36 F. Supp. 193
• Court: U.S. District Court — Northern District of Illinois
• Parties: In re CHICAGO, M., ST. P. & P. R. CO.

36 F. Supp. 193

In re CHICAGO, M., ST. P. & P. R. CO.

No. 60463.

District Court, N. D. Illinois, E. D.

October 21, 1940.

COPYRIGHT MATERIAL OMITTED

Stewart & Shearer, of New York City, and Wilson & McIlvaine, of Chicago, Ill., for United States Trust Co. of New York.

Wright, Gordon, Zachry & Parlin, of New York City, and D'Ancona, Pflaum & Kohlsaat, of Chicago, Ill., for Chemical Bank & Trust Co.

Davis, Polk, Wardwell, Gardiner & Reed, of New York City, and Tenney, Harding, Sherman & Rogers, of Chicago, Ill., for Guaranty Trust Co. of New York.

Shearman & Sterling, of New York City, and Montgomery, Hart, Pritchard & Herriott, of Chicago, Ill., for National City Bank of New York.

Mitchell, Taylor, Capron & Marsh, of New York City, and Winston, Strawn & Shaw, of Chicago, Ill., for City Bank Farmers Trust Co.

Sidley, McPherson, Austin & Burgess, of Chicago, Ill., for Institutional Investors Committee.

Guggenheimer & Untermeyer, of New York City, and Sabath, Perlman, Goodman & Rein, of Chicago, Ill., for Anglo-Continentale, Treuhand, A. G.

Jack E. Bagon, of New York City, and McDonald & Richmond, of Chicago, Ill., for Imperial Trust Co., Limited, and others.

Shulman, Shulman & Abrams, of Chicago, Ill., for Israel Abrams and others.

Poppenhusen, Johnston, Thompson & Raymond, of Chicago, Ill., for preferred stockholders protective committee.

Oliver & Donnally, of New York City, and Charles W. Paltzer, of Chicago, Ill., for August Ihlefeld, Jr., and others.

Hodges, Reavis, Pantaleoni & Downey, of New York City, and Malcom Mecartney, of Chicago, Ill., for E. Stanley Glines and others.

Hunt, Hill & Betts, of New York City, and Bell, Boyd & Marshall, of Chicago, Ill., for Chas. B. Roberts, III, and others.

Barnes, Myers & Price, of Philadelphia, Pa., and Bell, Boyd & Marshall, of Chicago, Ill., for Girard Trust Co.

C. M. Clay, Asst. Gen. Counsel, of Washington, D. C., and Lee Walker, of Chicago, Ill., for Reconstruction Finance Corporation.

Ernest S. Ballard and Minier Sargent, both of Chicago, Ill., for Massachusetts Mut. Life Ins. Co. and another.

Frederick J. Moses, of New York City, and Wilson & McIlvaine, of Chicago, Ill., for Princeton University and others.

West & Eckhart and William A. McSwain, all of Chicago, Ill., for Chicago, T. H. & S. E. Ry. Co.

Julius Weiss, of New York City, and Jesse L. Cook, of Chicago, Ill., for Independent Committee for Protection of Chicago, M., St. P. & P. R. Co.

Gardner, Carton & Douglas, of Chicago, Ill., and Pierce & Greer and F. C. Nicodemus, Jr., all of New York City, for Chicago, M., St. P. & P. R. R.

A. N. Whitlock and C. S. Jefferson, both of Chicago, Ill., for Henry A. Scandrett and others.

IGOE, District Judge.

History of the Proceeding.

The Chicago, Milwaukee, St. Paul and Pacific Railroad Company, the debtor in this proceeding, is a railroad corporation organized under the laws of the State of Wisconsin and is the successor in interest of Chicago, Milwaukee & St. Paul Railway Company, reorganization of which, pursuant to receivership proceedings, was concluded in 1928. The debtor filed its petition with this court on June 29, 1935, stating that it was unable to meet its debts as they matured and that it desired to effect a plan of reorganization under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205. The court approved the petition as properly filed and authorized the debtor to continue in the possession and control of its properties and assets. Thereafter, the court by order of October 17, 1935, appointed Henry A. Scandrett, Walter J. Cummings and George I. Haight trustees of the property of the debtor. Following the ratification of their appointment by the Interstate Commerce Commission and their qualification, the trustees so appointed took possession of the property and assets of the debtor on January 1, 1936, and since said time have continued in the possession and control of the same and the operation thereof.

The debtor filed with its petition a plan of reorganization dated July 1, 1935. Said plan was also filed with the Interstate Commerce Commission and, after due notice, hearings thereon were held by the Commission on August 5-7, 1935, June 16, and September 20, 1937. At the hearings in August, 1935, the debtor presented certain amendments to its plan. The Interstate Commerce Commission, on September 24, 1937, entered its order reopening the proceedings for further hearings, which order provided that any plan to be considered at said hearings should be filed on or before January 10, 1938. On said date a plan was filed by a group of institutional investors, holders of securities of the debtor and other corporations involved in these proceedings, in an aggregate amount of $81,731,200. That plan was amended on January 24, 1938, by a modified plan filed by the same group. Certain modifications to that plan were proposed by the debtor on February 1, 1938. Pursuant to notice, further hearings began before the Commission, upon that plan and other plans theretofore filed, on the first day of February, 1938, the hearing continuing until February 4, 1938. Hearing was resumed on March 21, 1938, and continued through March 22, 1938, on which date hearings were finally closed. In addition to the debtor and the institutional investors, various parties and intervenors participated in the hearings had before the Commission, including mortgage trustees, committees, groups and individuals. The names and interests of those participating are shown in the report of the Commission to which reference is hereinafter made.

Briefs were filed by various parties and intervenors. On November 5, 1938, the Commission's Examiner issued a proposed report as to a plan of reorganization for the debtor's property. Thereafter, exceptions to the proposed report and briefs in support thereof, and later, briefs in reply thereto, were filed by various parties and intervenors. Oral arguments were held before the entire Commission on April 12, 1939.

Subsequent to the hearings and the issuance of the Examiner's report, a protective committee for the holders of preferred stock filed a petition requesting that the proceeding be reopened for the filing of a plan based upon a proposed consolidation of the debtor's properties with those of the Chicago and North Western Railway Company. A similar petition was filed in the North Western proceedings by a protective committee for the holders of common stock of that company. After hearing oral arguments on the questions involved, Division 4 of the Commission denied both petitions on January 19, 1939.

The Commission filed and issued its report and order on February 12, 1940, approving a plan of reorganization for the debtor. Thereafter various petitions for modification of the plan so approved were filed on behalf of numerous parties and intervenors and on June 4, 1940, the Commission filed and issued a supplemental report and order wherein, after consideration of the matters presented in the various petitions for modification of the plan initially approved, the Commission modified the plan in certain respects and in its supplemental order of June 4, 1940, revoked and superseded the prior order of February 12, 1940, and set out and approved a modified plan of reorganization of the debtor. Said reports and orders were duly certified to this court.

On April 26, 1940, the court made an order requiring all claims against the debtor's estate for the allowance of expenses or compensation for services incurred or rendered up to May 15, 1940, in connection with the reorganization proceedings or plan to be filed on or before May 31, 1940, and directing that notice be given. Notice was given as required in said order and thereafter various claims were filed and a hearing was had thereon before the Commission's Examiner at Brooklyn, New York, on July 15-19, 1940, and the Commission, on October 2, 1940, made its report fixing maximum limits for allowances to be made with reference to the claims filed, which report was duly certified to this court.

On June 21, 1940, the court made an order fixing September 4, 1940, as the date for hearing all objections to the modified plan of reorganization as set out in the Commission's supplemental order of June 4, 1940, and all claims for equitable treatment as well as all claims for allowances of expenses or fees incident to the reorganization proceedings and the plan and requiring all objections to said plan and claims for equitable treatment to be filed on or before the first day of August, 1940, and briefs in support thereof to be filed on or before the 20th day of August, 1940, and directing notice to be given. Notice was given as required by the order and various objections and claims for equitable treatment, all of which will be hereinafter dealt with, were filed. The hearing upon the plan was begun on September 4, 1940, and was concluded on September 13, 1940, on which date the matter was continued until October 21, 1940, for consideration of allowances for fees and expenses, the maximum allowances not having been fixed by the Commission. It was agreed by all parties in interest that the matter of said allowances should be submitted to the court upon the record made before the Commission's Examiner, without the taking of further testimony.

The Commission having filed its report fixing maximum limits for allowances as above recited, the said modified plan as well as allowances to be made for the period covered by the respective claims thus come before the court for consideration.

Description of Property.

The debtor's property embraces a system of railroad extending from Chicago to Seattle, Tacoma and other Puget Sound points with lines extending to Kansas City, Missouri, Omaha, Nebraska, Rapid City, South Dakota, Fargo, North Dakota, Champion and Ontonagon, Michigan, Oglesby, Illinois, Westport, Indiana, and other points. As shown by the 1939 Annual Report to Stockholders, the system...