In re Missouri Pac. R. Co.

• Decision Date: 21 December 1945
• Docket Number: No. 6935.,6935.
• Parties: In re MISSOURI PAC. R. CO.
• Court: U.S. District Court — Eastern District of Missouri

64 F. Supp. 64

In re MISSOURI PAC. R. CO.

No. 6935.

District Court, E. D. Missouri, E. D.

December 21, 1945.

COPYRIGHT MATERIAL OMITTED

Russell L. Dearmont and Thos. T. Railey, both of St. Louis, Mo., for Guy A. Thompson, trustee, Missouri Pac. R. Co.

Marion B. Pierce, of New York City, and Allen L. Oliver, of Cape Girardeau, Mo., for Missouri Pac. R. Co., debtor.

Luther M. Walter, of Chicago, Ill. (Walter, Burchmore & Belnap, of Chicago, Ill., of counsel), for Protective Committee for Holders of Common Stock of Missouri Pac. R. Co.

Richard I. Gottlieb, of Boston, Mass., for Protective Committee for Holders of Preferred Stock of Missouri Pac. R. Co.

Cadwalader, Wickhersham & Taft, of New York City, and Lowenhaupt, Waite, Chasnoff & Stolar, of St. Louis, Mo. (W. Lloyd Kitchel and Charles W. McConaughy, both of New York City, and Jacob Chasnoff, of St. Louis, Mo., of counsel), for Group of Institutional Holders of First and Refunding Mortgage 5% Gold Bonds of Missouri Pac. R. Co.

Cahill, Gordon, Zachry & Reindel, of New York City, and Carter, Bull & Garstang, of St. Louis, Mo., for Chemical Bank & Trust Company, trustee under Missouri Pac. R. Co. 5¼% Secured Serial Mortgage.

Shearman & Sterling, of New York City (Sanford H. E. Freund, of New York City, of counsel), for Bondholders Protective Committee, Missouri Pac. R. Co. General Mortgage.

Chadbourne, Wallace, Parke & Whiteside, of New York City, for Manufacturers Trust Co., corporate trustee, Missouri Pac. R. Co. First and Refunding Mortgage.

Martin, Peper & Martin, of St. Louis, Mo., for Presley W. Edwards, individual trustee, Missouri Pac. R. Co. First and Refunding Mortgage.

Kadel & Hoffmann, of New York City, for Continental Bank & Trust Co. of New York, corporate trustee, Missouri Pac. R. Co. General Mortgage.

Root, Clark, Buckner & Ballantine, of New York City (William P. Palmer, of New York City, of counsel), for Commercial National Bank & Trust Co. of New York, successor trustee, Missouri Pac. R. Co. 20-yr. 5½% Convertible Gold Bond Indenture.

Edwin J. Bean, of St. Louis, Mo., and Harry Kirshbaum, of New York City, for Missouri Pac. R. Co. Convertible Mortgage Bondholders Group.

Irving Rand, of Portland, Or., and Blayney, Barrett, Bedal, Cook & Fairfield, of St. Louis, Mo., for John M. Balliet, Appleton, Wis., as Holder of Missouri Pac. 5½% Convertible Bonds and other securities.

Donovan, Leisure, Newton & Lumbard, of New York City (George S. Leisure and David Teitelbaum, both of New York City, of counsel), for Alleghany Corporation.

William H. Biggs, of St. Louis, Mo. and Maxwell Brandwen, of New York City, for Andrew W. Comstock, for himself and others as owners and holders of Missouri Pac. Secured Serial 5¼% Gold Bonds.

James L. Homire, Emmet McCaffery, and W. Meade Fletcher, Jr., all of Washington, D. C., and Hennings, Green, Henry & Evans, of St. Louis, Mo., for Reconstruction Finance Corporation.

B. M. Anderson, of Hartford, Conn., for Connecticut General Life Ins. Co.

Wm. J. Kane, of Baltimore, Md., for Railroad Credit Corporation.

W. A. Northcutt, of Louisville, Ky., for Louisville & Nashville R. Co., holder of Cairo & Thebes Mortgage Bonds.

A. L. Rittenberg, of Chicago, Ill., for M. Ernest Greenebaum, Jr., co-trustee, Plaza-Olive Building Mortgage, and for Protective Committee for Holders of Plaza-Olive Building Mortgage Bonds.

Oliver & Donnally, of Washington, D. C., for Savings Bank Trust Company.

Cravath, Swaine & Moore, of New York City, and S. Mayner Wallace, of St. Louis, Mo., for Bondholders Protective Committee for Holders of First Mortgage and Income Bonds of New Orleans, Texas & Mexico Ry. Co.

Fordyce, White, Mayne, Williams & Hartman, of St. Louis, Mo., and Davies, Auerbach, Cornell & Hardy, of New York City, for Irving Trust Co., trustee under First Mortgage of New Orleans, Texas & Mexico Ry. Co.

Davis, Polk, Wardwell, Sunderland & Kiendl, of New York City, for Guaranty Trust Co. of New York, trustee under (a) New Orleans, Texas & Mexico Ry. Co. Income Bond Indenture, and (b) Missouri Pac. R. Corporation in Nebraska Mortgage.

Alexander & Green, of New York City, for Bankers Trust Co., corporate trustee, St. Louis, Iron Mountain & Southern Ry. Co., River & Gulf Divisions, First Mortgage, and for Bondholders Protective Committee for Holders of said Bonds.

Rathbone, Perry, Kelley & Drye, of New York City, for Central Hanover Bank & Trust Co., trustee under Central Branch, Union Pacific Mortgage.

Bryan, Cave, McPheeters & McRoberts, of St. Louis, Mo., for St. Louis Union Trust Co., trustee for Bondholders Protective Committee for Holders of Little Rock & Hot Springs Western R. Co. First Mortgage 4% Gold Bonds.

Milbank, Tweed & Hope and Hugh L. M. Cole, all of New York City, for City Bank Farmers Trust Co., trustee, International-Great Northern R. Co. First Mortgage.

Nagel, Kirby, Orrick & Shepley, of St. Louis, Mo., for J. P. Morgan & Co., Inc., City Bank Farmers Trust Co., trustee, International-Great Northern R. Co. First Mortgage, and Manufacturers Trust Co., Corporate trustee, Missouri Pac. R. Co. First and Refunding Mortgage.

Willkie, Owen, Otis, Farr & Gallagher, of New York City, for New York Trust Co., trustee: (a) International-Great Northern R. Co. Adjustment Mortgage, (b) Beaumont, Sour Lake & Western Ry. Co. First Mortgage, and (c) Orange & Northwestern R. Co. First Mortgage.

Everett Paul Griffin, of St. Louis, Mo., Edward F. Colladay, of Washington, D. C., and Kenneth McEwen, of New York City, for Protective Committee for Holders of International-Great Northern R. Co. First Mortgage Bonds.

Mulholland, Robie & McEwen, of Toledo, Ohio, for Railway Labor Executives' Association.

MOORE, District Judge.

The matter of the approval of a plan of reorganization for the principal debtors, the Missouri Pacific Railroad Company, the New Orleans, Texas & Mexico Railway Company and the International-Great Northern Railroad Company, and their various subsidiary companies (except the Missouri-Illinois Railroad Company) has been the subject of two prior opinions of this Court. See In re Missouri Pacific Railroad Company, 39 F.Supp. 436 and Id., 50 F.Supp. 936. Since the date of the last opinion by this Court in July of 1943 this matter has been back to the Interstate Commerce Commission for further consideration, and after hearings the Commission has forwarded its Supplemental Report and Order of July 4, 1944, and its Third Supplemental Report and Order of October 9, 1944, containing a revised plan of reorganization. Subsequently, pursuant to direction of this Court, all parties in interest have been given the opportunity to file objections, and the following have availed themselves thereof:

(1) Missouri Pacific Railroad Company, Debtor;

(2) Protective Committee for holders of Common Stock of Missouri Pacific Railroad Company;

(3) Protective Committee for Missouri Pacific Preferred Stockholders;

(4) Group of individual owners and holders of 5½%, twenty-year Convertible Bonds, Class "A," of Missouri Pacific Railroad Company;

(5) John M. Balliet, as holder of Missouri Pacific 5½% Convertible Bonds and other securities;

(6) St. Louis Union Trust Company, Trustee for, and Roland C. Behrens, et al., as Committee for holders of Little Rock & Hot Springs Western Railroad Company First Mortgage 4% Gold Bonds;

(7) Irving Trust Company, Trustee under the N. O. T. & M. Mortgage;

(8) Protective Committee for the holders of First Mortgage Bonds of International-Great Northern Railroad Company, a debtor herein (9) Missouri Pacific Railroad Company 5¼% Serial Bondholders' Committee; and

(10) Andrew W. Comstock, holder of 5¼% Secured Serial Gold Bonds of Missouri Pacific Railroad Company.

By the first of the above mentioned opinions (39 F.Supp. 436) a plan of reorganization certified in the Commission's Report and Order of January 10, 1940, and its Supplemental Report and Order of April 9, 1940, was approved by this Court. Appeals were thereafter taken to the 8th Circuit Court of Appeals, but pending appeal the 1940 Plan was submitted to vote of creditors, which resulted in its rejection by five junior and senior classes of creditors. No appellate ruling was thereafter had on the merits, but, due to certain Supreme Court decisions, the appeals were remanded May 8, 1943. Further objections were filed and heard, and this Court then referred the matter to the Commission (50 F.Supp. 936) to allow its further consideration of the questions whether the Plan gave senior creditors complete compensation for their loss of seniority and whether, in view of changed conditions since that Plan's formulation, any alterations should be made. The Commission held hearings and ultimately approved, with slight modifications, a plan known as "the compromise plan". This compromise plan was jointly proposed to the Commission by the Protective Committee for the First and Refunding Mortgage 5% Bonds of the Missouri Pacific; the Committee for the N. O. T. & M. First Mortgage and Income Bonds; the Protective Committee for the Missouri Pacific General Mortgage 4% Bonds; the Missouri Pacific Railroad Company, Debtor; and the Alleghany Corporation, owning approximately one-fourth of the Missouri Pacific Convertible Bonds, some preferred stock and a large portion of the common stock. The Commission's Report further recites that the Plan also had the agreement of a bank syndicate holding a collateral security claim against the Missouri Pacific, and was generally supported by various other interests.

The plan approved by the Commission in its Order of October 9, 1944, is essentially the "compromise plan", with certain alterations, and is still substantially the plan previously approved by this Court in 1941. The Commission has summarized its major modifications of the "compromise plan" as follows:

"(a) The effective date is changed from January 1, 1940, to January 1, 1943, with provisions for change to a later date or dates under...