In re Julius Roehrs Co., 7453.
| Decision Date | 14 November 1940 |
| Docket Number | No. 7453.,7453. |
| Citation | 115 F.2d 723 |
| Parties | In re JULIUS ROEHRS CO. |
| Court | U.S. Court of Appeals — Third Circuit |
Isadore Glauberman, of Jersey City, N. J., for appellant.
William H. J. Ely, of Rutherford, N. J. (Ernest C. Lum, of Newark, N. J., of counsel), for Charles Hasselhuhn and another, receivers.
Chester T. Lane, Gen. Counsel, Securities and Exchange Commission, of Washington, D. C., and Morton E. Yohalem, of New York City, for Securities and Exchange Commission.
Before BIGGS, MARIS, and CLARK, Circuit Judges.
The affairs of the appellant Julius Roehrs Company have been administered through an equity receivership for a number of years. Upon April 17, 1940, the appellant filed a petition for reorganization pursuant to Section 128 of the Bankruptcy Act, as added June 22, 1938, 11 U.S.C.A. § 528, and prayed that the court enter an order approving its petition as being filed in good faith and complying with the requirements of Chapter X pursuant to the provisions of Section 141 of the Bankruptcy Act, as added June 22, 1938, 11 U.S.C.A. § 541. The learned trial judge entered an order to show cause which provided "* * * for a hearing on the question of whether or not said petition should be filed and approved as being filed in good faith under Chapter X * * * and whether or not the debtor has the ability to carry out a reorganization, and the debtor shall * * * produce witnesses and offer proof for the purpose of supporting the element of good faith, and its ability to carry out its plan of reorganization; * * *". The debtor then filed a tentative plan of reorganization and a hearing was held. At this hearing Kurt Roehrs, a vice president and a director of the appellant, testified in general terms why he believed reorganization of the debtor would be possible and advantageous. The court reached the conclusion that the petition did not meet the requirements of Chapter X and, stating that he was not satisfied that the petition had been filed in good faith, dismissed it. The appeal at bar followed.
An examination of the order to show cause, the testimony and the conclusions expressed by the court show that the learned trial judge applied an erroneous test. Section 146, as added June 22, 1938, 11 U.S.C.A. § 546, provides four specific negative tests which may be applied to determine whether a petition is filed in good faith. The District Court applied none of them. Instead the appellant was required to file a plan. Since the appellant has indebtedness in excess of $250,000, if a plan of reorganization is submitted, this must be by an independent trustee who, among other things, must first investigate the facts essential to an informed judgment and report the result of his investigations. See Section 167 (1), (5), as added June 22, 1938, 11 U.S.C.A. § 567 (1) (5) and Sec. 169, as added June 22, 1938...
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