Evening star., 1932-11-05
TO UPHOLD
| WARDMAN SALE
FOR S2,8lO,0)D
BondhoIderS' Protective
Committee Argues $780,
600 Is Adequate.
FOUR MAIN OBJECTIONS
TO DEAL DISPUTED
Counsel Comedies Sum Is Below Ac-
tual Value, but Points to
Foreclosure Precedents.

SOUIlSeI IOr IIle WaTOlIldn BOnChOIQ-
ers' Protective Committee yesterday
endeavored to convince the District
Supreme Court that S2,s00,0OO now is
| an adequate price for 10 local properties
I which were appraised at $4,000 600
| Tor bond-sell1ng purposes in 1928
The argument for the committee was
made before Justice F. Dickinson Let's
by Edward K. Hanlon of New York He
| was seeking confirmation Of the recent
| public sale of the Wardman properties
following the failure of the properties
| to pay interest on 100000 Of first
and refunding mortgage bonds. These
DondS were sold through Halsey, Stuart
| & Co. in 1923 on the basis of the
S28,000,000 valuation by Ford, Bacon &
Davis, engineering concern
1t was brought out incidentally at the
nearing tnat title to the buildings,
which were bid in by a representative
OF the committee, has been placed in
the Washington Properties, Inc, a
newly formed corporation. Frank B.
StetSon, vice president of the National
Savings d Trust Co.; Arthur HELEN,
washington attorney and George c.
Shrlver OF Baltimore, have been named
voting trustees of the corporation.
Four Main Objectives.
The attorneys opposing the sale
grouped their objections under four
principal headings:
l. That the mortgage itself was in
valid
3 That there was fraud in the sale
OF the bonds and in the formation of
the protective committee.
3. That the decree of sale and the
manner in which the sale was held
were unfair
4. That the purchase price was in
adequate
Although denying the truth of the
allegations. Hanlon dismissed the first
two contentious after brief argument
on the theory that. even if true. they
antedated the decree of sale end had
no proper place in hearing on con-
flrnation Of the sale.
Hanlon denied assertions that the
plan OF reorganization, to be put in eff
feet If the sale is consummated, had been
withheld from the court when the
decree of sale was being sought. He
read ar excerpt from the record Of that
hearing which disclosed that Justice
Jesse Adkins, the presiding jurist. asked
for copy of the plan and that one was
submitted to him. He also pointed out
that the sale had been postponed four
times In unsuccessful effort TO secure
IAAO VI UIuOSIS OlIlpT INdn
the Protective Committee When the
sale was finally held last month. he
said, the provisions Of the decree signed
by Justice Adkins were strictly followed.
William B. O'ConneH. Washington at
torney, said he had purchased certifi-
Gates OF deposit for $4,000 Cf bonds
from an original holder but had been
unable to secure the return Of the
bonds from the Protective Committee.
According to Hanlon, the deposit agree
ment. which he said was available to
all deposltors upon request. provided
that bonds would not be returned un-
less the depositor requested such action
within Is days after submission of the
reorganization plan. He said the man
from whom OConnell purchased the
certificates had failed to make a re-
quest for the return of his bonds.
IN discussing the adequacy of the
price, Hanlon first pointed out that the
S2,000,O00 paid by the committee must
be aoded to approximately S4 ZOO 900
OF underlying mortgages to determine
the actual cost to the committee.
Figure Below Actual Value"
I'VE will concede," he said. that this
hgure is below the actual value of the
properties but in all foreclosure sales
the courts have never held that the
actual value must be realized before
the sale will be confirmed The uues-
ton Is whether the price is so low as
to shock the conscience of the court"
Hanlon declared that only about Z
per cent of the bondholders have re-
fused TO deposit their holdings with
the committee. If the sale is confirmed,
he said, these individuals will receive
about S26.95 for each S100 bond they
hold. This figure, he said, is more than
the highest market price since the
default in interest.
AS an argument against postpone
ment of the sale in the hope Of better
market conditions developing in the
future, Eanlon pointed out that the
Justice Department Building, now rent
ing for $4,000 year will be vacated
as soon as the new building on Pennsyl-
vania avenue is completed. He said it
would be difficult to rent this building
after it is vacated by the department
Arguing in favor of the substitution
of income bonds for those bearing fixed
interest rates, as provided in the plan
OF reorganization, Hanlon pointed out
that the 10 properties will earn about
S750,000 this year, which, he said, is
not enough to pay the interest on the
first and retunding bonds. The substi-
tuition OF income bonds, which pay in
terest when and if earned, would greatly
minimize the danger of another fore
closure, he said.
The 10 properties are now assessed
for taxation purposes at little more
than S8000000. On this basis, he said,
the committees bid is more than one
third of the value, which. he argued. is
higher relative price than has been
paid for other hotel properties recently
foreclosed here.
After Hanlon had completed his argu-
ment the hearing was adjourned until
Wednesday.