42 AMEND THE BANKRUPTCY ACT (i) (1) The Conservator shall either approve or disapprove the provisions or limito tions of any such committee agreement and the membership of any such commun In case of an approval by the Conservator, he shall file a statement of approval in the proceeding. In case of a disapproval by the Conservator, he shall file a statement of disapproval in the proceeding, together with his reasons therefor. (2) The Conservator shall approve the provisions or limitations of a committee agreement (including any changes therein) unless he finds that such provistona or limitations (A) deny, or place undue restrictions upon, the right of depositors to withdraw their securities from such committee; (B) deny to depositors the right la withdraw their acceptances to a proposal or plan in accordance with the prom of subdivision (g) of this section; (C) give to such committee power to hypothecue such securities for any purpose other than that of paying actual and reasonable expenses of the commitice (as such expenses may be defined by rules and regulations of the Com servator); (D) give to such committee the right to dispose of such securities withou notice and affirmative consent subsequent to such notice; (E) entitle such commulee to an unreasonable amount for the purpose of paying fees, expenses, or other remunerotion to members of such commillee, attorneys for the committee, or any person per. forming services for such committee; (F) otherwise prejudice the formulation or accept ance of a fair and equitable proposal or plan. (3) The Conservator shall approve the membership of a committee (including any change therein) unless he finds (A) that any member of such committee is or has been directly or indirectly connected with the debtor, issuer, underwriter, or guarantor of the securities deposited with the committee and that such connection prejudices the formulation or acceptance of a fair and equitable proposal or plan; (B) that the membership of such committee otherwise gives rise to a conflict of interest prejudicial to the formulation or acceptance of a fair and equitable proposal or plan; (C) any member of such committee has previously violated any of the provisions of subdivision (h) of this section; or (D) that any advertisements, letters of solicitation, or other communications addressed to depositors are or have been misleading. (4) Any committee or member thereof aggrieved by the action of the Conservator disapproving the provisions or limitations of a committee agreement, or membership of such committee (including any changes in such agreement or membership), may obtain a review of such action in the court in which the proceeding is pending by filing in such court, within thirty days after the filing by the Conservator of his statement of disapproval, a written petition praying that the action of the Conservator be modifet or set aside in whole or in part. A copy of such petition shall be forthwith served upon the Conservator and thereupon the Conservator shall certify and file in the court a tran script of the record upon which the action complained of was taken. Upon the filing of such transcript such court shall have exclusive jurisdiction to affirm, modify, or aside such action, in whole or in part. No objection to the action of the Conserva shall be considered by the court unless such objection shall have been urged before the Conservator or unless there were reasonable grounds for failure so to do. If applic tion is made to the court for leave to adduce additional evidence, and it is shown to the satisfaction of the court that such additional evidence is material and that there wo reasonable grounds for failure to adduce such evidence before the Conservator, the cour may order such additional evidence to be taken before the Conservator and to be adduced in such manner and upon such terms and conditions as to the court may seem proper The Conservator may modify his findings as to the facts, by reasons of the additiona evidence so taken, and he shall file such modified or new findings, and his recommendi tion, if any, for the modification or selling aside of his original action. The judgmen and decree of the court affirming, modifying, or setting aside, in whole or in part, 587 such action of the Conservator, shall be final, subject to review by the circuit court appeals and by the Supreme Court of the United States as provided by law in the cases. (1) Prior to the allowance or payment of any compensation or reimbursemes (except fees and commissions allowed as compensation for services pursuant to section 40, 48, and 52 of this Act, as amended, and except amounts provided for in subdiriries (1) of this section), to whomsoever paid or to be paid, whether or not by the debtor any corporation acquiring any debtor's assets, the Conservator, in accordance with t rules of procedure as the court may prescribe, shall have been allowed a reasonable time for the investigation and cxamination in respect of the proposed allowance or paynen provided for in paragraph (2) of this subdivision. (2) The Conservator shall before the expiration of such time either approve r disapprove the proposed allowance or payment, either in whole or in part Dar such time the Conservator shall conduct an investigation and examination in respect each item of the proposed allowance or payment, and if he finds as a result of investigation and examination that any such item (A) in case it is to be paid by 1 AMEND THE BANKRUPTCY ACT 43 debtor or any corporation acquiring the debtor's assets, should not be charged against the debtor or such corporation, or (B) whether or not it is to be so paid (i) exceeds the ralue of the services rendered, or is otherwise unreasonable, or (ii) constitutes reimbursement for expenses not actually incurred, or compensation for services not actually rendered, or (iii) is to be or has been paid to any person or committee which has purchased or sold securities of the debtor (including certificates of deposit therefor) during the pendency or in contemplation of the proceeding, he shall disapprove such item. In case of an approval by the Conservator he shall file a statement of approval in the proceeding. In case of a disapproval by the Conservator he shall file a statement of disapproval together with his objections to the item disapproved, and his recommendations with respect thereto which in his opinion may be necessary. (k) In any proceeding involving an individual debtor or a debtor corporation, wherein a trustee, custodian, or receiver (other than the Conservator) has been appointed, and where, under the provisions of section 48, as amended, of this Act, such trustee, custodian, or receiver would be entitled to receive for his services in such proceeding an amount which by itself or when added to other amounts received by him during the same calendar year for services performed by him as a trustee, custodian, or receiver in any such proceeding, will exceed $10,000, the court shall not allow to such trustee, custodian, or receiver compensation in any amount which by itself or when added to such other amount will exceed $10,000. The (The Conservator shall be entitled to the costs of administration, supervision, and services in the performance or exercise by him of his powers, functions, and duties under the provisions of this Act, as amended; such costs shall be equitably allocated to, assessed against, and payable out of the property of the debtors in such amount or amounts as shall be determined by the Conservator and approved by the judge and shall be in lieu of all fecs to which the Conservator would otherwise be entitled by law. funds derived from such costs, as well as all funds coming into the possession of the Conservator in any capacity in which he is authorized to act under the provisions of this section, shall be deposited with the Treasurer of the United States, subject to the order of the Conservator, or in any regular Government depositary or in any national banking association, or in any State bank, the deposits of which are insured under the provisions of section 12B of the Federal Reserve Act, as amended: Provided, however, That any deposits in any national banking association or in any State bank in excess of the amount insured under the provisions of section 12B of the Federal Reserve Act, as amended, shall be secured by bond satisfactory to the Conservator or by the deposit of United States bonds or other securities satisfactory to the Conservator with the Treasurer of the United States for the safekeeping and prompt payment of the funds so deposited and such funds shall not be construed to be Government funds or appropriated moneys. (m) There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $2,000,000, which shall be available for expenditure by the Conservator in connection with the carrying out of the powers, functions, and duties authorized to be exercised and performed by him under the provisions of this section. NOTE. Sections 78 and 79 of chapter VIII of the Bankruptcy Act, relating to municipal-debt readjustment, were held unconstitutional by the Supreme Court in Ashton v. Cameron County Water Improvement District ((1936) 298 U. S. 513.) 79-956-77 - pt. 1-74 75TII CONGRESS HOUSE OF REPRESENTATIVES 3d Session REPORT No. 2633 AMENDING THE MUNICIPAL BANKRUPTCY ACT JUNE 10, 1938.-Referred to the House Calendar and ordered to be printed Mr. CHANDLER, from the Committee on the Judiciary, submitted the following REPORT [To accompany H. R. 10753] The Committee on the Judiciary, to whom was referred the hill (II. R. 10753) to amend an act entitled "An act to establish a uniform system of bankruptcy throughout the United States," approved July 1, 1898, and acts amendatory thereof and supplemental thereto, after consideration, report the same favorably to the House with the recom mendation that the bill do pass. The bill would amend the Municipal Bankruptcy Act (ch. 10 of the act of 1898 as amended, Public Law 302, 75th Cong.), to permit compositions by cities, etc., in accordance with the purposes of the original act (ch. 10). The necessity for the amendment arises by virtue of the decision of the Circuit Court of Appeals, Fifth Circuit, on April 14, 1938, in the West Palm Beach, Florida, case, where it was held that the act permits only plans of composition which are wholly executory, and that evidences of indebtedness already exchanged under the plan, prior to the filing of the petition, could not be included in computing the necessary percentage of securities held by consenting creditors to declare the plan operative. H. R. 10753 would permit the court to include new refunding bonds already exchanged under the plan of composition when figuring the percentage of consenting creditors, regardless of whether such exchange was completed before or after the fling of the petition. In the West Palm Beach case about $5 percent of new bonds had bee exchanged prior to filing the petition. The plan cannot be enforced under the circuit court of appeals case unless 66 percent of the remaining 15 percent give their approval, thus effectively preventing the operation of the act of 1937. In compliance with clause 2a of rule XIII of the Rules of the House of Representatives, new matter proposed to be added to the Municipal 2 AMENDING THE MUNICIPAL BANKRUPTCY ACT Bankruptcy Act is printed below (nothing in the present act is to be stricken out): SEC. 83. (j) The partial completion or execution of any plan of composition as outlined in any petition filed under the terms of this Act by the exchange of new evidences of indebtedness under the plan for evidences of indebtedness covered by the plan, whether such partial completion or execution of such plan of composition occurred before or after the filing of said petition, shall not be construed as limiting or prohibiting the effect of this Act, and the written consent of the holders of any securities outstanding as the result of any such partial completion or execution of any plan of composition shall be included as consenting creditors to such plan of composition in determining the percentage of securities affected by such plan of composition. 1134 PUBLIC LAWS-CHS. 390, 393-JULY 27, 28, 1939 [CHAPTER 393] [53 STAT July 28, 1939 [H. R. 5107) (Public, No. 242) Bankruptcy Act of 1898, amendinents. 30 Stat. 544. US. C11 U. s. C., Supp. IV. Jurisdiction. Definitions. "Petitioner." 41 Stat. 494. 49 U. S. C. f 200. AN ACT To amend an Act entitled "An Act to establish a uniform system of bankruptcy Be it enacted by the Senate and House of Representatives of the "CHAPTER XV-RAILROAD ADJUSTMENTS "ARTICLE I-JURISDICTION "SEC. 700. In addition to the jurisdiction otherwise exercised, courts of bankruptcy shall exercise original jurisdiction, as provided in this chapter, for postponements or modifications of debt, interest, rent, and maturities or for modifications of the securities or capital struc tures of railroads. 'ARTICLE II-DEFINITIONS "SEC. 705. The following terms, as used in this chapter, unless different meaning is plainly required by the context, shall be construed as follows: "(1) 'Petitioner' means any carrier as defined in section 20a of the Interstate Commerce Act, excluding any corporation in equity USC § 20s, receivership or in proceedings for reorganization under section of this Act, petitioning for a plan of adjustment, as hereinafter defined. 47 Stat. 1474. Supp. IV, 205. "Claims." "Debt." "(2) Claims' includes debts whether liquidated or unliquidated, certificates of deposits of securities (other than stock and option warrants to subscribe to stock), including demands and obligaties of whatever character made, assumed or guaranteed by the petitioner "(3) 'Debt' shall be considered to include all claims held or owned by 'creditors' as hereinafter defined. |