Evening star., 1933-09-24
depositors. other creditors and stock.

depositors, other creditors and stock
holders and is in the public interest.
I'VE do not consider that depositOr
or creditor should be required. against
his will. to contribute either by waiver
or otherwise to a fund to restore the
capital structure of the bank and at
the same time permit the shareholders
to be relieved entirely from contempo-
raneouS payment or contribution OIL
actual funds to restore value to the
capital stock. The capital structure OF
a bank. as in any other enterprise, rep
resentS investment. and the investment
is primarily matter of concern to the
stockholder and not to the depositor or
creditor 1t would not be expected in
the case of private individual or firm,
that the creditors of that individual or
firm would donate new capital to enable
the enterprise to continue although
the creditors might agree to waive a
portion of their claims, to facilitate a
composition or compromise so as tC
obtain the payment of the balance of
their claims
We consider the foregoing applies
to the present situation. Accordingly,
the plan as submitted has not been
approved in its entirety for the follow
ing reasons:
First: The burden of restoring the
bank to solvency. and also of recapital-
izlng 1t. is placed entirely upon the de-
positors and creditors of the bank
Second No assessment against the
stockholders of the bank is contem-
plated under the plan. and 10 contribu-
ton in lieu of said assessment is pro-
vided
Third: Although the depositors
would. by their waivers, be in effect pay
ing for the stock in the reorganzed
bank, they would have no voice in its
management during the life of the trust.
III that the stock would stand in the
names OF the present stockholders and
could be voted by them at stockholders
meetings.
Privilege of Waiver.
I'VE do consider it proper. under the
circumstances. for depoSitors and cred
itors to waive, III accordance with the
provisions of section 2O7 of the bank
conservation act. such portions of their
claims as may be necessary to remove
Objectionable assets to the point where
the remaining assets will be sufficient
to meet the remaining liabilities after
giving effect to the waivers. AS above
indicated however. VIC do not consider
it equitable for the depositors and
creditors to go further and waive an
additional amount to build up a capital
structure for the benefit of the stock
holders without any contribution. from
the stockholders to restore the capital.
An alternative plan has therefore
been suggested to counsel for the share
holders of the United States Savings
Bank. provided as follows:
|. That the waivers be utilized to
the point where the objectionable assets
are removed to the extent of leaving
acceptable assets sufficient to meet the
reduced liabilities to depositOrs and
creditors after giving effect to tho
waivers. and that the Objectionable as
sets eliminated by the application of
the waivers and by the application of
the present capital structure, be truS-
teed as provided by the plan.
20 The plan would further contem-
plate that under section 207 of the
bank conservation act, all outstanding
stock would be surrendered and can
Ctied and such stock would be resold
at all amount sufficient to re-establish
actual value in the capital and provide
an adequate surplus account. 1t would
be expected that the present share
holders repurchaSe the stock under the
re reorganization plan to the extent of
at least the amount which could be
realized if the 4ock assessment we're
enforced The amount of stock which
could not be disposed of to the old share
holders would of course. have to be
offered to the public and to the de
positors and creditors. If the deposi-
tors and creditors so desire. they could
purchase such stock paying for same
from their respective net credit bal
ances remaining in their claims after
giving effect to the waivers referred to
above. Under this plan. neither the
stock nor dividends on same. would be
trusteed inasmuct as such stock would
represent new capital funds paid into
the bank