607 F.2d 1020 | 2d Cir. | 1979
Appellant Guardian Mortgage Investors (Guardian) is an unincorporated voluntary association which is debtor in possession in a proceeding under Chapter XI of the Bankruptcy Act in the District Court for the Middle District of Florida. On December 15, 1978, it filed a plan which the bankruptcy court has preliminarily determined to be feasible and in the best interests of Guardian’s creditors.
Announcement of the plan led to the formation of defendant Unofficial Note-holder — Debentureholders Creditors Committee (the Committee). In February, 1979, it began soliciting proofs of claim and powers of attorney. In connection with this solicitation, it circulated a number of “Briefing Memorandums”, none of which were prefiled with the SEC. The general tenor of these memorandums was that the plan was too generous to senior bank creditors and was less favorable to the Noteholders and Debentureholders than Guardian’s financial condition warranted, and that Noteholders and Debentureholders should therefore refrain from accepting it when it was formally proposed. After Guardian began the solicitation of acceptances of the plan in late July, the Committee countered with a one page memorandum, dated August 4, 1979, recounting the history of the proposed plan and referring debtholders back to the Committee’s earlier memorandums; advising that blanket proofs of claim on behalf of the Noteholders and Debentureholders had been filed by the respective indenture trustees; saying that in consequence it was unnecessary for Noteholders or Debentureholders to file individual proofs of claim in order to participate in the plan if it were approved; stating that holders of over 45% of Notes and Debentures had submitted proofs of claims and powers to attorney to the Committee, which the Committee had filed with the bankruptcy court but did not intend to vote; adding that the Committee was preparing detailed comments on Guardian’s solicitation materials and a further exposition of the Committee’s view that the plan was unfair to the Noteholders and Debentureholders; and concluding that the Committee recommended that Note and Debentureholders do nothing until these new materials were received.
At the hearing the judge raised the question of subject matter jurisdiction of his own motion. After affording the parties an opportunity to be heard, he entered an order dismissing Guardian’s action on the ground that, despite the generality of the grants of jurisdiction and the breadth of the venue provisions of § 27 of the Securities Exchange Act,
Guardian appealed and sought a “stay”, in reality a temporary injunction against solicitation by the Committee, pending an expedited appeal. Judge Gurfein entered an order preventing both parties from engaging in such solicitations pending the hearing of the appeal. At the argument the Committee agreed to prefile further soliciting material with the SEC without prejudice to its position that § 14(a) of the Securities Exchange Act does not apply to solicitations of securities made in the course of a Chapter XI proceeding. We later entered an order lifting the stay as to Guardian and also as to the Committee on condition that it complied with that agreement. We now affirm Judge Cannella’s order dismissing the action.
Section 311 of the Bankruptcy Act, quoted in note 4 supra, is similar to a provision which Congress placed in § 77(a) in 1933, 47 Stat. 1467,1474, and in § 77B(a) in 1934, 48 Stat. 911,912. It is also paralleled by § 111 in Chapter X, § 411 in Chapter XII, and § 611 in Chapter XIII, all of which were
The essential purpose remains: to render the authority and control of the reorganization tribunal paramount and all-embracing to the extent required to achieve the ends contemplated by Chapter X; and to exclude any interference by the acts of others or by proceedings in other courts where such activities or proceedings tend to hinder the progress of reorganization.
These remarks apply equally to § 311.
It would seem clear that a suit in a state court or in a federal court based on diversity of citizenship, which sought to enjoin soliciting the acceptance or non-acceptance of a Chapter XI arrangement on grounds other than a violation of § 14(a) of the Securities Exchange Act, would “tend to embarrass the court in the equitable distribution of the estate,” even though a confirmed arrangement is not technically a distribution, see 8 Collier, Bankruptcy 11.02 at 5. The need for maintaining the exclusive jurisdiction of the bankruptcy court would be patent if a suit in another court sought to enjoin the soiicitation of acceptances,
The question is whether assuming arguendo that the solicitation here is subject to § 14(a) of the Securities Exchange Act,
The Supreme Court recently dealt with another situation where the letter of § 27 of the Securities Exchange Act collided with a special conflicting principle embodied in an older statute. In Radzanower v. Touche Ross & Co., 426 U.S. 148, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976), the Court held that the broad venue provisions of § 27 had not impliedly repealed the limited one of the National Bank Act, 12 U.S.C. § 94, when a defendant was a national bank. In some respects our case is a fortiori since, while the result there reached caused inconvenience for parties bringing actions against many defendants one of which was a national bank, a holding that issues concerning the application of § 14(a) of the Securities Exchange Act to the voting of securities of a debtor in a Chapter XI proceeding on a plan of arrangement can be heard only in the bankruptcy court in which the Chapter XI proceeding is pending serves the interests of all parties in speedy and accurate adjudication. It ensures that § 14(a) claims will be heard — and heard only — by a court that has unique familiarity with the debtor’s finances and the course of proceedings. Moreover, by containing the adjudication of disclosure disputes within the bankruptcy court, this result is consistent with the objective of § 1125 of the Bankruptcy Reform Act, see note 6 supra. Since the Committee has clearly subjected itself to the jurisdiction of the bankruptcy court, there can be no doubt of that court’s ability to afford Guardian whatever relief it deserves.
The order dismissing the complaint for want of jurisdiction is affirmed.
. The extent of such approval should not be exaggerated. The court said: “If we were at a confirmation hearing, I’m not really sure that I would find just in and of itself that this [plan] is in the best interest . . .
. The contents of the August 4 memorandum were communicated orally to the SEC prior to distribution, despite the belief of Committee counsel that this was not required. The Committee also prefíled a lengthier memorandum on July 31, 1979, which elicited a number of comments from the SEC, but it did not distribute this. Guardian argues that the August 4 memorandum did not comply with the SEC comments on the July 31 memorandum. The
. The district courts of the United States, and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have exclusive jurisdiction of violations of this chapter or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this chapter or the rules and regulations thereunder. . Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business
15 U.S.C. § 78aa (1976).
. Where not inconsistent with the provisions of this chapter, the court in which the petition is filed shall, for the purposes of this chapter, have exclusive jurisdiction of the debtor and his property, wherever located.
. Indeed, if the suit were against solicitation by the debtor, it would be subject to the automatic stay provision of Bankruptcy Rule ll-44(a).
. Guardian’s Notes and Debentures admittedly were securities registered pursuant to section 12 of the Securities Exchange Act. The Committee’s principal basis for contending that § 14(a) nevertheless does not apply is that Bankruptcy Rule 208, entitled “Solicitation and Voting of Proxies”, which the Advisory Committee has described as “a comprehensive regulation of solicitation and voting or proxies in bankruptcy cases,” ousts § 14(a). Guardian answers that any such preemption is precluded by Rule 11-28, which in pertinent part reads “Bankruptcy Rule 208 applies in Chapter XI cases, except that the rule does not apply to the solicitation of the acceptance of a plan, or to the related proof of claim that does not contain a proxy . . and also that Rule 208 is addressed only to “bankruptcy” matters and not to fraudulent or misleading statements or the filing requirements of the SEC’s Rule 14a-6 when these would apply if the issuer were not in Chapter XI. We find it unnecessary to and do not pass on this substantive issue.
Section 1125(d) of the Bankruptcy Reform Act of 1978 clearly establishes substantive preemption for the bankruptcy court as against the Securities Exchange Act in a case like this but also requires that court to approve the “disclosure statement” “as containing adequate