Evening star., 1933-01-20
BANKRUPTCY BILL
EFFORTS CONTINUE
House Committee to Meet
Second Time Today in Tor
tuous Undertaking.
BY the Associated Press.


House Judiciary Committee members.
wrestling with the tortuous provisions
of emergency bankruptcy bills, con-
cluded a morning session without action,
but planned another gathering later to-
day in an effort to report the proposals
as one measure.
Chairman Summers said there was vir-
tual agreement on all major contro-
versial points, but that the technical
character of the proposed legislation
necessitated careful study in order that
it might not be held unconstitutional.
The individual debtor and corpora
tions would be affected. 1t would en-
able scaling down Of debts or an ex-
tension OF time to pay IN the case OF
the farmer.
Corporate reorganization to scale
down indebte dness. if necessary, and to
provide for recapltalization is also pro-
vided.
A determined effort is being made to
get the reform bill through at this
session. as it is depended upon to give
relief to hard pressed debtors without
the delay and expense that accompany
many bankruptcy proceedings under
present laws.
Endorsed by Roosevelt.
Roosevelt in earlier conferences with
House leaders had given his indorse-
ment to the plan already asked bv
President Hoover in a special message
to Congress and promised speedy con-
Sideration by Speaker Garner.
Summers predicted two pending bills,
one affecting individuals and corpora
tions in general. the other dealing with
railroads. would be combined by the
committee and reported shortly for
House action.
The relation of the Interstate Com
merce Commission and the Federal
Courts in an allied bill for railroad re-
organization prepared by Representative
La Guardia, Republican, of New York,
has been the cause of sharply WOrded
cont overSy.
Bu. La Guardia and Chairman Sum-
ners of the committee got together
yesterday and drafted a compromise
which they believe will be accepted by
the majority CT the committee members.
Senator Hastings. Republican. of Della
ware. who has been wrestling with the
intricacies of bankruptcy legislation for
months, is expected to give his support
to the measure, since he has a bill of
his own along the same general lines.
He may though. differ with the House
proposals in some respects.
Broadly speaking. the legislation as
it now stands would enable the indi-
vidual or the corporation to get an
extension OF time to pay debts. or to
scale them down to ther capacity to
pay. Other features of the proposal,
sponsored by Representative McKeoWn,
Democrat. Of Oklahoma. affect both
individuals and the ordinary corpora
tion, including levee. sewer. paving,
drainage and irrigation districts. The
individual might apply to the courts for
relief and an arrangement worked out
to give him more time to take care OF
his bills and mortgages. provided
majority of his creditors agree.
Corporate Reorganization.
Corporate reorganization. whether
railroad or otherwise. could be set in
motion voluntarily or involuntary.
Twenty-Five per cent of the creditors.
holding 10 per cent of the gross amount
of the indebtedness. could ask for
reorganization. If tWo-thirdS of the
creditors and the courts approve, the
company might find itself on an en-
tirely new basis both as to the amount
it owes and as to Its capital structure
In the case of railroads, the plan
would be worked out by the Interstate
Commerce Commission for the approval
of the Federal Court.
THE relation" Summers said, 'is,
roughly speaking. this: The I. C. c. is
the master in chancery. The court. of
course. is the court If the first plan
is rejected by the judge, the way is left
clear for another plan to be worked
cut
Everybody concerned with the leg'sla-
tion believes it will eliminate much of
the delay and the waste which has
characterized many bankruptcy cases in
the past. For one thing. provisions are
made to prevent a stubborn group of
minority creditors from blocking agree
ment. For another, the assets would be
carefully preserved during the reorgan-
iZation.
McKeown said that if funds for re-
financing farm mortgage Indebtedness
were given the Reconstruction Corpora
ton, or some other agency, the bill
might provide the vehicle for a vast
and necessary scaling down OF the bill
lions owned by insolvent farmers.