STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE The managers on the part of the House at the conference on the disagreeing votes of the two Houses on the bill (H.R. 5950) 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 supplementary thereto, submit the following statement in explanation of the effect of the action agreed upon by the conferees and recommended in the accompanying conference report. Under the House provisions, 30 percent in amount of the creditors of the taxing district can file a petition seeking the benefits of the act and stating either (a) that they are willing to have a plan of readjustment prepared and submitted to the court for confirmation, or (b) that a plan of readjustment has been prepared and is filed with the petition. The consent of 66% percent in amount of the creditors is required for confirmation of the plan. The Senate bill requires the consent of 51 percent in amount of the creditors to the filing of the petition, and that the plan of readjustment be submitted with the petition. The consent of 75 percent in amount of the creditors is required for confirmation of the plan. The House accepted the provisions of the Senate bill, with the exception that the House provisions requiring the consent of 30 percent of the creditors to file a petition and the consent of 663 percent of the creditors for confirmation of the plan are retained in the case of drainage, irrigation, reclamation, and levee districts. The other amendments of the Senate are chiefly formal to which the House agreed. HATTON W. SUMNERS, A. J. MONTAGUE, Managers on the part of the House. 734 CONGRESS. SESS. II. CHIS. 408, 409, 424. JUNE 6,7, 1934. [CHAPTER 424.] AN ACT 911 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 Tub, Na 28, thereof and supplementary thereto. Be it enacted by the Senate and Пlouse of Representatives of the United States of America in l'ongress assembled, That the Art of July 1, 1898, entitled "An Act to establish a uniform system of bankruptcy throughout the United States", as amended by the Acts pav. of February 5, 1903, June 15, 1906, June 25, 1910, March 2, 1917. January 7, 1922, May 27, 1926, February 11, 1932, and March 3, 1933, Va e be, and it is hereby, amended by adding to chapter VIII, entitled suppi vit "Provisions for the relief of debtors", two new sections to read as follows: 912 Provisions for the re hef of debtors. 73d CONGRESS. SESS. II. CH. 424. JUNE 7, 1934. "SEC. 77A. ADDITIONAL JURISDICTION.-In addition to the jurisdicCourts of bank- tion exercised in voluntary and involuntary proceedings to adjudge persons bankrupt, courts of bankruptcy shall exercise original jurisdiction in proceedings for the relief of debtors, as provided in section 77B of this Act. ruptey, additional jurisdiction. Corporate reorganizations ruptcy, insolvent cor- Vol. 47, p. 1474. "SEC. 77B. CORPORATE REORGANIZATIONS.-(a) Any corporation Prition in bank which could become a bankrupt under section 4 of this Act, and any railroad or other transportation corporation, except a railroad corporation authorized to file a petition or answer under the provisions of section 77 of this Act, and except as hereinafter provided, may file an original petition, or, before adjudication in an involuntary proceeding, an answer, or in any proceeding pending in bankruptcy, whether filed before or after this section becomes effective, provided the present operations of such corporation do not exclude it hereunder, and whether or not the corporation has been adjudicated a Facts to be furnished. bankrupt, a petition stating the requisite jurisdictional facts under this section; the nature of the business of the debtor; in brief description, the assets, liabilities, capital stock, and financial condition of the debtor; if a prior proceeding is pending, the name of the court in which it is pending and the nature of such proceeding; facts showing the need for relief under this section; and that the corporation is insolvent or unable to meet its debts as they mature and that it desires to effect a plan of reorganization. The petition shall be filed with the court in whose territorial jurisdiction the corporation, during the preceding six months or the greater portion thereof, has had its principal place of business or its principal assets, or in any territorial jurisdiction in the State in which it was incorporated. Transfer of proceed- The court shall upon petition transfer such proceedings to the territorial jurisdiction where the interests of all the parties will be best subserved. The petition or answer shall be accompanied by payment to the clerk of a filing fee of $100, which shall be in addition to the fees required to be collected by the clerk under other sections of this Act. Upon the filing of such a petition or answer the judge shall enter an order either approving it as properly filed under this section if satisfied that such petition or answer complies with this section and has been filed in good Debtor and property, faith, or dismissing it. If the petition or answer is so approved, pendency of proceed an order of adjudication in bankruptcy shall not be entered and the court in which such order approving the petition or answer is entered snall, during the pendency of the proceedings under this section, have exclusive jurisdiction of the debtor and its property wherever located for the purposes of this section, and shall have and may exercise all the powers, not inconsistent with this section, which a Federal court would have had it appointed a receiver in equity of the property of the debtor by reason of its inability to pay its debts as Corporation referred they mature. The corporation shall be referred to in the proceedings Susidiary may file as a debtor.' Any corporation the majority of the capital stock of pina for reorganization. which having power to vote for the election of directors is owned, ings. Filing fee. Court order. Jurisdiction over during to as "debtor." Jurisdiction. either directly or indirectly through an intervening medium, by any debtor, or substantially all of whose properties are operated by such debtor under lease or operating agreement, may file, with the court in which such debtor had filed its petition or answer, and in the same proceeding, a petition stating that it is insolvent or unable to meet its debts as they mature and that it desires to effect a plan of reorganization in connection with, or as a part of, the plan of reorganization of such other debtor; and thereupon such court, if it approves such petition, shall have the same jurisdiction with respect to such corporation, its property, and its creditors and stockholders 73d CONGRESS. SESS. II. CH. 424. JUNE 7, 1934. 913 Petition by creditors; involuntary bank Answer of corpora tion. Order of court if alle gations are admitted. If answer denies. Determination of ruptcy. as the court has with respect to such other debtor. Three or more creditors who have provable claims against any corporation which ruptcy. amount in the aggregate, in excess of the value of securities held by them, if any, to $1,000 or over may, if such corporation has not filed a petition or answer under this section, file with the court in which such corporation might file a petition under this section, a petition stating that such corporation is insolvent or unable to meet its debts as they mature and, if a prior proceeding in bankruptcy or equity receivership is not pending, that it has committed an act of bankruptcy within four months, that such creditors propose that it shall effect a reorganization; and such corporation shall, within ten days after the service of a copy of such petition upon it, answer such petition. If such answer shall admit (a) the jurisdiction of the court, and (b) the material allegations of the petition, the court shall enter an order approving the petition as properly filed under this section if satisfied that it complies with this section and has been filed in good faith, or dismiss it if not so satisfied. If such answer shall deny any material allegation of the petition, the judge shall determine summarily the issues presented by the pleadings, without issues. the intervention of a jury, and if the material allegations of the petition are sustained by the proofs and the court is satisfied that the petition complies with this section and has been filed in good faith it shall approve the petition; otherwise the court shall dismiss the petition; and if any such petition shall be so approved, the proceedings thereon shall continue with like effect as if the corporation Dismissal not to conhad itself filed a petition or answer under this section. In case any stitute act of banksuch petition or answer or proceedings shall be dismissed in the manner provided in this subdivision (a) or in subdivision (c), clause (8), of this section, the same shall not constitute an act of bankruptcy or an admission of insolvency or be admissible in evidence, without the consent of the debtor, in any proceedings then or thereafter pending or commenced under this Act or in any Federal or State court. If three or more creditors who have provable claims which amount in the aggregate in excess of the value of securities held by them, if any, to $1,000 or over, or if stockholders holding 5 per centum in number of all shares of stock of any class of the debtor outstanding shall, prior to the hearing provided for in subdivision (c), clause (1), of this section appear and controvert the facts alleged in the petition or answer, the judge shall determine as soon as may be the issues presented by the pleadings, without the intervention of a jury, and unless the material allegations of the petition or answer are sustained by the proofs, the proceedings shall be dismissed. "(b) A plan of reorganization within the meaning of this section tion. (1) shall include provisions modifying or altering the rights of creditors generally, or of any class of them, secured or unsecured, either through the issuance of new securities of any character or otherwise; (2) may include provisions modifying or altering the rights of stockholders generally, or of any class of them, either through the issuance of new securities of any character or otherwise; (3) shall provide for the payment in cash of all costs of administration and other allowances made by the court except that compen- ances. sation or reimbursement provided for in subdivision (c), clause (9), of this section, may be paid in securities provided for in the plan if those entitled thereto will accept such payment and the court finds such compensation reasonable; (4) shall provide in respect of each class of stockholders, of which less than a majority shall accept such plan (unless the judge shall determine either that the debtor is insolvent, or that the interest of such class of stockholders will not Proceedings by cre tors controverting statements in petition or answer. Plan of reorganize Scope of. Of stockholders, Payments; adminis tration costs, allow Stockholders equity, protection of. 914 elims, etc., protection of. Erectory contracts leases; rejection. 73d CONGRESS. SESS. II. CH. 424. JUNE 7, 1934. be affected adversely by the plan), adequate protection for the realization by them of the value of their equity, if any, in the property of the debtor dealt with by the plan, either, as provided in the plan, (a) by a sale of the property at not less than a fair upset price, or (b) by appraisal and payment in cash of the value either of their stock, or at the objecting stockholders' election, of the securities allotted to such stockholders under the plan, if any shall be so allotted, or (c) by such methods as will do substantial justice to such stockholders under and consistent with the circumstances of the parCreditors interest, ticular case; (5) shall provide in respect of each class of creditors of which less than two thirds in amount shall accept such plan (unless the claims of such class of creditors will not be affected by the plan, or the plan makes provision for the payment of their claims in cash in full), provide adequate protection for the realization by them of the value of their interests, claims, or liens, if the property affected by such interests, claims, or liens is dealt with by the plan, either as provided in the plan (a) by the transfer or sale of such property subject to such interests, claims, or liens, or by the retention of such property by the debtor subject to such interests, claims, or liens, or (b) by a sale free of such interests, claims, or liens at not less than a fair upset price and the transfer of such interests, claims, or liens to the proceeds of such sale; or (c) by appraisal and payment either in cash of the value either of such interests, claims, or liens, or, at the objecting creditors' election, of the securities allotted to such interests, claims, or liens under the plan, if any shall be so allotted; or (d) by such method as will in the opinion of the judge, under and consistent with the circumstances of the particular case, equitably and fairly provide such protection; of debur, unexpired (6) may reject contracts of the debtor which are executory in whole or in part, including unexpired leases except contracts in the public authority; (7) shall, in case any creditor or stockholder or class If creditor or stock- thereof shall not be affected by the plan, specify the creditor or stockholder or class or classes thereof not affected and contain such provisions with respect thereto as may be appropriate, and in case any controversy shall arise as to whether any creditor or stockholder or class thereof shall or shall not be affected, the issue shall be determined by the judge after hearing upon notice to the parties interSpecify claims to be ested; (8) shall specify what claims, if any, are to be paid in cash in Means for execution full; (9) shall provide adequate means for the execution of the plan, which may include the transfer of all or any part of the property of the debtor to another corporation or to other corporations, or the consolidation of the properties of the debtor with those of another corporation, or the merger or consolidation of the debtor into or with another corporation or corporations, or the retention of the property by the debtor, the distribution of assets among creditors or any class thereof, the satisfaction or modification of liens, indentures, or other similar instruments, the curing or waiver of defaults, extension of maturity dates of outstanding securities, the change in interest rates and other terms of such securities, the amendment of the charter of the debtor, and the issuance of securities of either the debtor or any such corporation or corporations, for cash, or in exchange for existing securities, or in satisfaction of claims or rights, or for other appropriate purposes; (10) may deal with all or any part of the property of the debtor and may include any other approCrior deemed af priate provisions not inconsistent with this section. No creditor or stockholder shall, for the purposes of this section be deemed to be affected by any plan of reorganization unless the same shall affect Ters defined; "Se his interests materially and adversely. The term 'securities' shall include evidences of indebtedness, either secured or unsecured, stock, holler not affected by plan. paat in cish. of plan. General power. ted by reorganiza curity." |