BANKRUPTCY - CORPORATE REORGANIZATION PLAN - FAIRNESS AND FEASIBILITY

The corporation, having assets of $295,000 and liabilities of $1,200,000, petitioned for reorganization under Section 77B of the Bankruptcy Act and presented a plan. The district court's dismissal of the debtor's petition was affirmed in the circuit court of appeals on the grounds that the plan offered was incomprehensible, that the appraisal required by the plan was unjust since the value and validity of the bonds had been found in the equity receivership, and that subsection (b)(5) of 77B was unconstitutional, the attempt to bind non-assenting creditors being a denial of due process. Certiorari was granted by the Supreme Court. Held, since the plan was found to be unfair and since a visionary and impractical scheme for rehabilitation is not feasible, it was not necessary for the court to consider the plan, and it was properly dismissed.

However, in view of such a finding, there was no occasion for the court to go further and consider the constitutionality of subsection (b)(5). Tennessee Publishing Co. v. American Nat. Bank, (U. S. 1936) 57 S. Ct. 85.