The trustee under a mortgage bond issue which was in default with foreclosure pending, sought to vote to the exclusion of the bondholders on a proposed plan for reorganization in a voluntary proceeding by the corporation debtor pursuant to Section 77B of the Bankruptcy Act. The trust indenture authorized the trustee on default to enforce the security by appropriate proceedings, and the individual bondholders were specifically forbidden to sue. The indenture also gave a majority in interest of the bondholders power by an instrument in writing to direct the procedure of the trustee or to remove him. There was no express provision as to the power claimed. Held, the trustee cannot exercise such power; it is unnecessary to decide whether the trustee should be permitted to vote for bondholders not joining a committee or individually voting, since more than two-thirds in amount have in fact joined a committee and thus the trustee could not affect the result of the voting under Section 77B. In re Allied Owners Corp., (C. C. A. 2d, 1934) 74 F. (2d) 201.
CORPORATIONS - REORGANIZATION UNDER SECTION 77 B - RIGHT OF MORTGAGE TRUSTEE TO VOTE TO EXCLUSION OF BONDHOLDERS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol33/iss7/12