IN RE UTILITIES POWER & LIGHT CORPORATION

• Decision Date: 24 May 1940
• Docket Number: No. 64605.,64605.
• Citation: 33 F. Supp. 347
• Court: U.S. District Court — Northern District of Illinois
• Parties: In re UTILITIES POWER & LIGHT CORPORATION.

33 F. Supp. 347

In re UTILITIES POWER & LIGHT CORPORATION.

No. 64605.

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

May 24, 1940.

Brown, Fox & Blumberg, of Chicago, Ill., for Atlas Corporation.

Willard L. King, of Chicago, Ill., for Common Stockholders.

Poppenhusen, Johnston, Thompson & Raymond, of Chicago, Ill., for Class A stockholders.

Frederick Z. Marx, of Chicago, Ill., trustee for Webster Securities.

James G. Culbertson, of Chicago, Ill., for Utilities Elkhorn Coal Co.

Adams, Nelson & Williamson, of Chicago, Ill., for Public Securities Co.

HOLLY, District Judge.

A motion has been entered by the Committee for Class A Stockholders of the Debtor, the Committee for the Class B Stockholders of the Debtor, the Trustees of Public Utilities Securities Corporation, the Trustee of Webster Securities Corporation, joined in by the attorney for Utilities Elkhorn Coal Company, a wholly owned subsidiary of the Debtor now in process of reorganization in this court under the provisions of Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, that an order may be entered that Article XIII of Chapter X of the Chandler Act, 11 U.S.C.A. § 641 et seq., be applied to all applications for compensation for services rendered and reimbursement for expenses and costs incurred in these proceedings. Atlas Corporation, a creditor and also a holder of preferred stock of the Debtor, opposes the motion, contending (a) that Chapter X should not be applied retroactively to the pending proceedings since the right of creditors and preferred stockholders became fixed at the time of the filing of the petition for reorganization or when the time for filing claims in the pending proceedings expired, (b) that to now apply Article XIII of Chapter X to these proceedings would be to disturb the vested rights of creditors of the Debtor and deprive them of their property without due process of law, (c) that Class A, Class B and Common stockholders of the Debtor and Utilities Elkhorn Coal Company have already been found by the court to have no equity in the assets of the Debtor and no right to participate in the plan of reorganization (creditors and preferred stockholders only being permitted to participate in the reorganization) and for that reason are in no position to move for the application of the Chandler Act to these proceedings, and that it would be grossly unfair and certainly not feasible, in the present state of the proceedings for the reorganization of the Utilities Elkhorn Coal Company, to apply article XIII of the Chandler Act.

Section 276, sub. c (2) of the Chandler Act provides as follows:

"c. the provisions of sections 77A and 77B of chapter VIII, as amended, of the Act entitled `An Act to establish a uniform system of bankruptcy throughout the United States', approved July 1, 1898, shall continue in full force and effect with respect to proceedings pending under those sections upon the effective date of this amendatory Act, except that —

* * * * * * * * * *

"(2) if the petition in such proceedings was approved more than three months before the effective date of this amendatory Act, the provisions of this chapter shall apply to such proceedings to the extent that the judge shall deem their application practicable." (Italics mine.)

In construing these provisions the Circuit Court of Appeals for the Second Circuit in Re Old Algiers, Inc., 100 F.2d 374, 375, said that "Congress plainly declared its purpose to have the provisions of Chapter 10, Article 13, apply to reorganization proceedings then pending" and further: "The discretion conferred upon the district judge to determine whether it is `practicable' to apply the new provisions to pending proceedings begun prior to June 22, 1938, should not lightly be overridden; but the adoption of an erroneous test of practicability constitutes an abuse of discretion which is within the province of an appellate court to correct. In the case at bar the district judge expressed the view that section 276 (c) (2), 11 U.S.C.A. § 676, (c) (2), means that the new provisions are to be applied only in so far as their application `may benefit the estate.' We are unable to agree that benefit to the estate can be the test of practicability. Under such a test the amendatory provisions permitting the judge to allow compensation out of the estate although reorganization has been determined to be impossible, could never be applied to cases begun before June 22, 1938. Yet it is clear that Congress contemplated that it might sometimes be `practicable' to apply them in such cases. In our opinion the test of practicability should be whether the new provisions, for aught that has happened in the pending proceedings, can be applied as fairly and conveniently as they could be had the proceeding been started within three months of the effective date of the Act — in which event the new provisions would indubitably control by reason of section 276(c) (1), 11 U.S.C.A. § 676 (c) (1). If, for example, administration had progressed so far that the assets of the estate had been distributed by way of dividends to creditors, it would be neither fair nor convenient to require creditors to return the dividends in order that fees might be paid pursuant to section 246; it would not be `practicable' to apply the new provision. But where, as in the present case, the trustee still has funds in hand and the time for proving claims of creditors has not expired, fees to which the appellants may be entitled can apparently be as conveniently and as justly paid out of the estate as if the proceeding had been...