Appellant filed a petition for reorganization under section 77B of the Bankruptcy Act (11 U.S.C.A. § 207), alleging that it owned a thirteen-story building at the corner of Eighth and Francisco streets in Los Angeles, Cal., but that the property is subject to a trust deed and chattel mortgage to secure $615,000 6 per cent, first mortgage bonds, of which there are outstanding and unpaid $524,500; that by reason of default in payment of interest the trustee under the trust deed had taken possession of the property; that in addition to the principal about $90,000 interest was then due. The petition showed that during the period the trustee had occupied the premises from September 26, 1933, to December 31, 1934, the gross income from the property had been $80,967. The operating expenses and taxes left a net income of $19,121.23 to be applied to the interest due upon the bond issue which amounted to over $30,000 per annum. The petitioner proposed a plan for reorganization April 17, 1935, providing for the surrender of all the outstanding bonds secured by the first trust deed and the cancellation thereof, and the issuance in lieu thereof of new bonds aggregating $340,925 bearing interest at 5 per cent, per annum payable only from the earnings of the building and making certain elaborate provisions for the maintenance of the property.
The petitioner contended in the trial court that it was unnecessary to secure the consent of the bondholders and creditors because it alleged that its proposal came under section 77B of the Bankruptcy Act, subd. (b), cl. (5), subcl. (d), 11 U.S.C.A. § 207 (b), (5) (d), as follows: “By such method [of reorganization] as will in the opinion of the judge, under and consistent with the circumstances of the particular case, equitably and fairly provide such protection [for creditors].” This subsection of section 77B has been construed by the Circuit Court of Appeals for the Second Circuit, In re Murel Holding Corporation,
An appeal is taken from that order.
It is too obvious to require discussion that there is no abuse of discretion in refusing to approve the proposed plan of re
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organization. In re Murel Holding Corporation, supra; In re Coney Island Hotel Corporation, supra. We therefore content ourselves with citing a number of additional authorities bearing on the question. In re Central Funding Corporation (C.C.A.)
The motion to dismiss the appeal on the ground that the question has become moot because there has been a sale under the trust deed and a purchase by the bondholders is denied.
Order affirmed.