BANKRUPTCY - CORPORATE REORGANIZATION - APPROVAL OF PLAN OF BONDHOLDERS' COMMITTEE IN FORECLOSURE PROCEEDING IN A STATE COURT

Authors

Malcolm L. Denise, University of Michigan Law SchoolFollow

Abstract

The question of a state court's jurisdiction to pass on the fairness of a reorganization plan in connection with proceedings to foreclose a trust mortgage and sell the corporate property has been considered in but a surprisingly small number of cases. It would seem that this is a possibility the existence of which reorganization committees and dissenting bondholders have only begun to realize. In the recent case of First National Bank of Chicago v. Bryn Mawr, Beach Bldg. Corp., the trustee under a trust mortgage instituted foreclosure proceedings, and a committee representing a majority of the bondholders purchased at the foreclosure sale. Before confirmation, the committee filed an intervening petition alleging that it represented $5,183,400 of the $6,000,000 of bonds outstanding, that the purchaser at the foreclosure sale was its nominee, and that it had previously promulgated a reorganization plan. It prayed that the court consider this plan in connection with its bid, approve such plan, and supervise the carrying out thereof. The lower court complied with this request, with certain modifications of the plan. Intervening minority bondholders appealed upon the ground that the court was without jurisdiction to grant the relief prayed for. The Supreme Court upheld the decision of the court below.

Recommended Citation

Malcolm L. Denise, BANKRUPTCY - CORPORATE REORGANIZATION - APPROVAL OF PLAN OF BONDHOLDERS' COMMITTEE IN FORECLOSURE PROCEEDING IN A STATE COURT, 36 Mich. L. Rev. 434 (1938).
Available at: https://repository.law.umich.edu/mlr/vol36/iss3/5