BANKRUPTCY - SUFFERANCE OF TURNOVER ORDER AS AN ACT OF BANKRUPTCY

A parent corporation formed a subsidiary corporation in 1932, and transferred to the subsidiary certain of its assets. In 1938 the parent filed a voluntary petition in bankruptcy and was adjudicated a bankrupt. Over a year later the referee entered a turnover order requiring the subsidiary to transfer to the parent's trustee all of its assets on the ground that the original transfer was void as being in fraud of creditors, and on the further ground that the subsidiary was in fact the "alter ego" of the parent corporation. Three days after this order was issued, creditors of the subsidiary filed a petition in involuntary bankruptcy against it, alleging that the issuance of the turnover order amounted to an act of bankruptcy.

Held, that the subsidiary corporation committed the fifth act of bankruptcy by having, while insolvent, suffered the appointment of a receiver or trustee to take charge of its property. Fish v. East, (C. C. A. 10th, 1940) 114 F. (2d) 177.