296 Mass. 519 | Mass. | 1937
This is a bill to reach and apply assets formerly of Hopkins, Inc., assigned by that corporation to the other defendants as trustees by a general assignment for the benefit of the corporation’s creditors made on May 21, 1934. The plaintiff was a then existing creditor of Hopkins, Inc. The assignment provided for the ultimate distribution of the assets among assenting creditors and that such creditors released their claims against the debtor.
The assets consisted of fixtures, equipment and food supplies in a restaurant operated by the assignor. By the terms of the assignment one of the purposes of the trust was stated to be "To continue and carry on the business
No debtor has a right to present to his creditor such an alternative as this. It is unnecessary to delimit here the extent to which an assignor may provide for temporary continuance of a business as a part of the process of gradual and orderly liquidation. See Woodward v. Marshall, 22 Pick. 468. It is enough for the purposes of this case to say that the only justification for an assignment for the benefit of creditors is found in its provisions for reasonably prompt and convenient liquidation and distribution of the debtor’s assets. This assignment definitely contemplates that liquidation may not even begin for a period of time which is plainly unreasonable. However honest a debtor may be in his belief that in three years or five years conditions will be such that he can save his business and pay his debts, he cannot act as if his creditors also shared that belief and preferred to wait. The assignment was fraudulent in law.
The final decree is to be modified by providing that the payment by the defendants Mintz and Baldwin to the plaintiff shall be made within ten days from the entering of the decree after rescript and by changes in the interest figures made necessary by lapse of time, and as so modified is affirmed with costs.
Ordered accordingly.