Evening star., 1940-01-11
Associated Gas Co.
Files Petition for
Reorganization
Big Utilities Firm Acts
After S. E. c. Ruling
Ties Up Revenue
~ the Associated Press.


~ the Associated Press.
UTICA, N. Y, Jan 1.-THE As
sociated Gas & Electric Co.. serving
100000 customers in 5000 commun-
tiles, principally in Eastern States
and the Philippine Islands, is seek
ing reorganization under the Federal
Bankruptcy Law.
The company, top holding concern
Of the billion dollar Associated Gas
& Electric System, filed In Federal
District Court yesterday a petition
which said the firm was without
funds to carry on its business, meet
taxes, or pay interest due on its out
standing debt January IS.
The company's action followed by
4 few hours ruling of the Securities
and Exchange Commission that the
Associated Gas & Electric Corp, sub
holding company in the Associated
Gas system directly underlying the
top company, no longer could declare
dividends on it's capital stock, or pay
interest to the parent company on
its $70,0O0,000 note.
Owns All Capital Stock.
The Associated Gas & Electric Co.
owns all of the capital stock, totaling
67l,OOO common share, of the As
sociated Gas & Electric Corp, and
the note.
The S. E. c., in a unanimous de-
cision, said its action was necessary
ITO protect the financial integrity"
of companies in the Associated Gas
System; to protect the companies
working capital, and to prevent pay
ment of dividends out of capital, or
1nearned surplus.
For a number of years Associated
Gas, guided by Howard c. Hopson,
who obtained control in 1921 and
expanded it spectacularly, has been
in frequent conflict with the S. E. G.
and other Government agencies.
Hopson Colorful Figure.
Mr.. Hopson became a colorful
figure in the electric power industry,
particularly during the New Deal
investigations. He actively opposed
the public utility holding company
legislation. Mr.. Hopson made it a
practice to keep in the background.
however, and kept for himself the
comparatively minor Office of vice
president. In 1885, after a period
of i'll health, Mr.. Hopson resigned
as a director and officer, but retained
his interest.
Associated Gas is the largest
power organization to seek reorgan-
ization in the courts since the insult
companies went into receivership
in 1882.
Roger j. Whiteford, Washington
attorney, who replaced j. I. Mango
as president of the Associated
Gas g. Electric Co., less than
q month ago, said in a statement,
"the Associated system has in it to-
day more cash than at any time for
several years, and the operating
properties have shown tremendous
increase in earnings within the past
few months"
"Only Course Left Open"
He pointed out the reorganization
petition was the "only course left
open" after the S. E. c. handed
down 1t decision.
IT believe" he said, that the
prompt appointment of competent
trustees who will exercise rigid con-
troll of the management and bring
about continued reductions in ex-
penses will conserve the interests Of
security holders and insure the un-
interrupted and efficient operation
of the system"
The petition said an increase in
taxes on the system from $4,000, 900
in 1928 to $18,0O0,000 last year had
wiped out economies the manage
ment had effected in recent years.
Rates were reduced approximately
$19,000,000 during the same period,
the petition stated. The system S
gross revenues aggregated s135 062,-
600 in the IL months ended No.
vember 80, 1899.