BANKRUPTCY - CORPORATE REORGANIZATION - "GOOD FAITH" IN PRESENTING PETITIONS FOR REORGANIZATION PROCEEDINGS

Reorganization proceedings for corporations are now provided for in chapter ten of the recently enacted Chandler Act, which supersedes the provisions of 77B. This legislation, designed to aid corporations which are insolvent or unable to meet their debts as they mature, is available to all commercial corporations except municipal, insurance, and banking corporations and railroad corporations authorized to file a petition under section 77 upon the proper showing. Sections 130 and 131 enumerate the necessary requirements of any petition filed for the purpose of obtaining reorganization. However, the most important prerequisite to this relief, from the standpoint of difficulty in compliance, is found in sections 141 to 144 of the act, requiring the court to find that the petition was filed in "good faith" or dismiss it.

This question lies at the threshold of the case and must be clearly shown before the court will interfere with the affairs of the corporation.