New-York tribune., 1920-01-01
$3,300,000
Averts I.R.T.
Receiyersl1ip
Continued from page 1

the lnterborough. which resulted il
Judge Mayors order on Receiver Shef
field for $10000OO, was brought to tn,
courts attention through a request TO,
| instructions from Mr. Sheffield, wht
reported he had received a petition
from Grayson M. p Murphy, John Nc
Hugh, Charles A. Peabody, Charles
Sargent ir. and Frederick Strauss
members Of the committee represent.
ing holders of the Interborough- Met.
ropolitan Company collateral trust AZ
per cent gold bonds, aggregating more
than $32,900,000, out of total issue
of $63 ,776,000, outstanding and in the
hands of the public.
Heavy Deficit Threatened
The petition stated that because of
the increase in operating expenses, due
to conditions growing out of the war
the Interborough Rapid Transit Com
pany failed during the fiscal year ended
June 80, 1919, to earn all OF it's fixed
charges, and Stone e. Webster, expert
caounctants, estimated that unless
some relief was obtained the deficit in
fixed charges during the current fiscal
year would be large.
stated that on January /, 1920, the In
terborough Rapid Transit Company was
obligated to pay fixed charges then ac-
cruing as follows:
Semi-annual interest and sinking
fund charges on $3.50, 1913, 900 of first
and refunding mortgage per cent
bonds, amounting to S4,829,790.
Semi-annual per cent interest on
S4O,684,O00 consolidated mortgage per
cent bonds of the Manhattan Railways
Company, payable as rental under the
terms of the lease from the Manhattan
Railways Company to the Interborough
Rapid Transit Company, dated January
/, 1903, amounting to $813,6S0.
Quarterly dividends at the rate of
per cent year on $4,000, 900, par
amount of stock of the Manhattan Rail
ways Company, payable as rental under
the lease amounting to $1,050,o00
Total Fixed Charges $6,e93,47o
The total fixed charges, according to
the committee, due and payable, were
S6,693,47O.
The committee further stated that it
had been advised that the Interborough
Rapid Transit Company was short So
10000 in cash to enable it to pay these
''|tNu ehoi RSo anu dNOlu Il uelault under
the mortgage securing the first and re-
funding bonds and under the lease from
the Manhattan Railways Company.
Inc petition states that unless a
loan OF at least that amount is OBJ
tanned on or before January 1. 1920.
the lnterborough Rapid Transit Com
pany Will be compelled to default in
all or substantial part of the interest
charges and rentals A receivcrship
Of ho Tvto rbOr
Company, the foreclosure of the first
and refunding mortgage and the ter
mlnatlon of the lease probably would
result.
"The consequences of such re-
ceivership and foreclosure and the
termination of the lease would be dis
astrous to the Interborough Rapid
Transit Company and the value of it's
stock held by the bankrupt Inter Con-
sohdated corporation would be very
seriously impaired, if not entirely de
stroyed" the petition continues, "and
little, if anything. would ultimately be
realized for the creditors of the bank
rupt beyond the comparatively small
sums OF money which the trustee now
holds or which could be realized upon
the other assets in his hands.
Funds Needed in Crisis
Con the other hand the committee
is advised that if such defaults can
be prevented and the business of the
Intcrborough Rapid Trarsit Company
continued for the present, relief may
be secured from the public authorities
in the form of a compensatory rate Of
fare. which would render the business
of the company again profitable and re-
store value to the stock held by the
bankrupt. The committee is also in
formed that efforts arc being made
TO secure such relief either in the
form of a modification OF the CON
tracts under which the Interborough
Rapid Transit Company operates the
subway and elevated lines or other
wise
The only way in which it appears
possible to prevent defaults in the
lefunding mortgage bonds Of the In
terborough Rapid Transit Company
and under the lease of that company
from the Manhattan Railways Com
pany is for those interested in the Sc
curlties dependent upon the earnings
Of the Interborough Rapid Transit
Company to advance to it sufficient
funds to tide it over this crisis. To
that end efforts are being made to ar
range loan of $3,300000 to be Sc
cured by the pledge under a collatera
OF the marlborough, the advance to be
issued solely for the purpose of meet
ing the January /, 1920, fixed charges
and paying off $500, 900 obligations of
the lnterborough held by the trustee
IN bankruptcy of the Inter Consoli-
dated Corporation. The form Of this
loan and collateral which it is pro
posed. shall be pledged to secure are
descrlped IN memorandum annexed.
1t appears impossible to effect such
loan unless the trustee of the bankrupt
"iil participate therein to the amount
of at least $1,000, 600"
Judge Mayer Issues Order
The committee called Mr.. Shefield's
attention TO the fact that an important
asset OF the Inter Cons olidated Corno
ration IS the stock of the Inerbororch
Rapld Transit Company, amounting TO
S95 $500 out OF total of S35 600 O00
ISSUED and outstanding.
AFTER considering the petition of the
stocknolders' committee, Judge Mayer
issued his order, in which he directed
that 100000 of the 81 900 600 ad
vanced should be used to paw the
rapid transit company's indebtedness
TO the trustees o. the Consolidated and
lac otner 100000 on condition that the
bondhold lders would accept the notes for
them as dividends or other payments
The trustee was ordered to accept such
notes from the Interborough Ranid
Transit Company
In the preamble to his order JUDGE
Mayer gave as his reason for its issu-
ance the fact that the InterborouUh.