Evening star., 1940-08-30
Congressional Club
BondhoIders Fight
Reorganization
Court Petitioned to
Holt Procedure and
Sale Of Holdings

Charging that the pending plan
for reorganizing the Congressional
Country Club is unfair, inequitable
and discriminatory" group of
second-trust bondholders today had
on file in Federal District Court in
Baltimore petition seeking to have
the club adjudged bankrupt and halt
the reorganization which would en-
tail foreclosure sale of the principal
holdings of the club to satisfy the
first trust and certain other in
debtedness and furnish working
capital for new corporation. Ac-
ton on the temporary injunction to
delay the sale was expected today.
"The debtor corporation is, and
for long time prior to the filing
of this petition, has been solvent"
said the petitioners, who are repre-
sented by the law firm of Colladay,
McGarraghy. Colladay & Wallace.
The action instituted yesterday
afternoon climaxed difficulties of
long standing in which the club has
been involved. 1t was stated in the
petition, which was filed in behalf
of eight bondholders whose claims
aggregate $4,000. The group wants
a reorganization worked out in a
different form, which would furnish
more adequate protection to the
owners of second-trust bonds, of
4 - inl>
ing, in total issue of $150000.
Financial Situation.
The plaintiffs say that the liabili-
ties of the club are s444, ,63423, ex-
elusive of certain interest and tax
accruals and other obligations, and
place the assets at s406 ,496, repre-
sented principally by real estate
valued at S381,630 and furniture
and fixtures worth $4,000. The LA
bilities, it is explained, include
1921 ,20809 unpaid principal on a
s400 900 first trust held by the
Acacia Mutual Life Association
three defaulted quarterly payments
and interest: taxes of 81 1924, paid
by the trust holder; current trade
obligations of s21 1863 04, and, gnally,
the second-trust notes, which like
wise are in default. The two trusts
were made II years ago when the
club was forced to reorganize be-
cause of its financial troubles. Since
then, however, according to the Pc
tition, the difficulties have increased
income from dues, the principa.
source of revenue. having dropped
from 500, 900 in 1928 to $4,000 last
year.
The petition says that g special
committee worked out the proposed
plan of reorganization which has
been approved by the Board of
Governors, club members and first
trust holder, but not by the owners
of the second trust notes.
Object to Getting Land Only.
The way it would operate, accord
ing to the petition, the first trust
holder, which also is to furnish new
capital approximating 0,000, would
be paid in full-about $270, ,000-
through the foreclosure proceedings
while the second trust holders would
lose all interest in the principal
/ properties of the club and receive
in exchange for their notes only an
80-acre tract of land owned by the
club which is declared to be of
grossly inadequate value
The petition also sets out that
while the sale is set for September
4. the second mortgage bondholders
were not notified of the impending
move until August 81. The club is
situated on River road, partly in the
District, but mostly in adjacent
Montgomery County.
Joining in the petition are Len
nard H. Mitchell, 2657 Woodley road
NV: Amasa M. Holcombe, Munsey
Building; Charles A. Robinson, 725
Thirteenth street NV; G. w. Fors-
berg, Eighth and Water streets SW.;;
L. C. Crawford, Washington Build
ing; A. H. Ryan, Ellicott City, Md;
E. F. Colladay, 1881 G street NV,
and Mabelle L. Potter, 1925 Shep-
| herd street NV.