The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-12-31

District Court (Which alone has
original Jurisdiction of bankruptcy
matters), stating that it "is insol-
vent or unable to meet its debts as
they mature and that it desires to
effect a plan of reorganization"
Rules Laid Down
The petition must set forth the
nature Of the business Of the COR
poration and a brief description of
its assets, liabilities, capital stock
and financial condition. After a
hearing at which the good faith of
the petitioner is determined, the
court fixes a time within which
creditors, secured and unsecured,
must file their claims and also the
period within which a plan Of re-
organization must be submitted.
Such plan usually includes a gen.
eral scaling down Of indebtedness of
the corporation in accordance with
priorities and equities of the differ
ent classes of creditors, a rearrange-
ment Of its capital structure, and
sometimes new issues of stock. The
purpose, of course, is to relieve the
corporation of the immediate pres
sure Of current debts, to ease the
overhead from fixed charges on out
standing notes and bonds, to pro-
vide it with new working capital,
and to give it a breathing period in
which to get on its feet and reach
again the road to prosperity.
In short, the act provides way
by which corporations worthy of
continuing in business, instead of
going bankrupt and being wound up,
may now be financially re-estab-
liShed.
In the few months since the act
was passed, it has been recognized
as probably the most constructive
piece of legislation enacted by Con-
greSs in recent years. Many cor
porations already have sought to
take advantage of it. Information
as to the total number of corpora
lions located in Indiana that have
done so is not at the moment avail
able. In the u. S. District Court
for the Southern District of Indi-
ana some fifteen petitions for reor-
ganization have been filed and are
proceeding in due course.
Wide Variety Indicated
The wide variety of business that
may be benefited by Section. 77-B
is well illustrated by those petitions.
OF such petitioning corporations one
is engaged in manufacturing furni-
ture, two in operating department
stores, one is manufacturing coke
and gas, one in transporting and
wholeSaling natural and artificial
gas, one in the sale of securities,
two in manufacturing and selling
food products, four in operating
office or apartment buildings, one in
the purchase and sale of dairy prod
uctS, one in operating local tele-
phone system, one in dealing in oil
and petroleum products.
Ultimately, the court will be called
upon to approve or reject a plan
of reorganization fcr each of these
concerns. If in any case no plan
can be worked out that is approved
by at least two thirds of each class
of creditors and that is considered
by the court as fair and equitable
to ali parties concerned, the reor-
ganization will fail. Where an ac-
ceptable plan is submitted, the re-
organization will be perfected and
the corporation will have another
opportunity to continue in business,
pay out its creditors on the new
basis, keep it's workmen employed,
pay dividends to its stockholders,
and add to the general welfare and
prosperity of the community in
which it is located.
Whatever may be the record of
other years, 1884 at least has done
we'll by corporations in providing
this highly beneficial law.