Full opinion text
HEEBE, District Judge: This matter came on for hearing on August 4, 5 and 8, 1967, pursuant to Section 144 of the Bankruptcy Act, 11 U.S.C. § 544. On October 16,1967, we issued an order sustaining the involuntary petition for reorganization under § 144 and indicated that we would issue written reasons at a later date. We now issue the following opinion to serve as findings of fact and conclusions of law in this matter. In order to properly understand the various issues involved, a rather detailed statement of the factual situation is necessary. Southern Land Title Corporation (Southern Land) is a Louisiana corporation domiciled in New Orleans, Louisiana, engaging in the business of developing real property, land, hotels, apartments, etc. It has engaged in such business directly and through corporate subsidiaries. These subsidiaries, all Louisiana corporations domiciled in New Orleans, are Puritan Oil & Gas of New England, Inc. (Puritan), Place Vendóme, Inc. (Place Vendóme), Sotan, Inc. (Sotan), Bourbon Kings Hotel Corporation (Bourbon Kings), Lakeview Properties, Inc. (Lakeview), and the Five Flags Building, Inc. (Five Flags). Southern Land and its subsidiaries own a large number of properties, most of which are located in and around the City of New Orleans. The dominant force behind Southern Land and its subsidiaries, as well as several other related corporations, is Sam Recile, a dynamic and aggressive real estate promoter. These corporate holdings have been referred to by divers sources as “Recile’s Empire.” Reeile’s top assistant in the acquisition and operation of real estate is Frank Spalitta, and their legal advice is chiefly rendered by the law firm of Henican, James & Cleveland, particularly C. Ellis Henican who, along with Recile, Spalitta and others, holds stock and various offices in the corporations. Encountering difficulties with its creditors and being confronted with a number of foreclosure and other suits by some of its creditors, Southern Land filed a voluntary petition for its own corporate reorganization pursuant to Chapter X of the Bankruptcy Act on December 7, 1966, in this district. That petition, entitled “In the Matter of Southern Land Title Corporation, Debtor Corporation” and numbered Bankruptcy No. 66-1015, was allotted to Section F, Honorable Lansing L. Mitchell. Judge Mitchell never approved the petition but entered various stay orders, pursuant to his powers under § 113 of the Bankruptcy Act, 11 U.S.C. § 513, and appointed a temporary trustee for the debtor’s property. A hearing on the approval of the petition was set for January 12, 1967. Prior to the hearing, counsel for the debtor corporation and the major secured and unsecured creditors entered into a stipulation which was dictated into the record and which generally provided for a twenty-day period in which the status quo of the debtor would be maintained with the understanding that if, during the twenty-day period, the debtor was unable to produce a commitment for financing, the proceeding would be dismissed with prejudice. In accordance with the stipulation, the hearing before Judge Mitchell was continued until February 3, 1967. No commitment for financing was obtained, and at the hearing on February 3, 1967, counsel for the debtor corporation and counsel for the creditors who filed the present petition for reorganization attempted to repudiate the stipulation. Considerable discussion ensued at the hearing concerning the validity of the stipulation. Without ruling on the validity of the stipulation, Judge Mitchell dismissed the voluntary petition for lack of good faith at the conclusion of the hearing on February 3, 1967. Approximately an hour later, a group of ten creditors of Southern Land and its subsidiaries filed an involuntary petition for the reorganization of Southern Land and its six subsidiaries. That petition was allotted to us and was the initiation of the instant proceeding. Subsequent to the filing of that petition, on Sunday, February 5, 1967, counsel for Southern Land applied to the United States Court of Appeals for the Fifth Circuit for a Writ of Mandamus directed to Judge Mitchell, and the Honorable David W. Dyer of that court directed that Judge Mitchell vacate the order dismissing the proceedings and maintain in full force and effect all prior orders, including stay orders. The next day, in compliance with Judge Dyer’s order, Judge Mitchell stayed the minute entry of dismissal, and ordered that all his previous orders remain in full force and effect. Upon the filing of the instant petition, we contacted all counsel and arranged for an informal conference on Monday, February 6, 1967, intending to discuss the steps to be taken by this Court. At that conference, however, the chief topic of conversation was, of course, Judge Dyer’s order, and it was generally agreed that, pending the outcome of Judge Mitchell’s proceeding, this Court should take no action. However, on that same day, counsel for the petitioning creditors herein filed a Notice of Voluntary Dismissal Without Prejudice pursuant to F.R.Civ. P. 41(a) (1) (i) on the ground that Judge Dyer’s order reinstated the proceedings in Judge Mitchell’s court. The instant proceeding remained in limbo while the Fifth Circuit conducted the mandamus proceeding. On February 20, 1967, Judge Mitchell filed his findings of fact and conclusions of law. The Fifth Circuit heard oral argument on the petition for a mandamus on April 3, 1967, and on April 6, 1967, denied the application for the Writ of Mandamus and vacated and set aside Judge Dyer’s order. Thereupon, Judge Mitchell proceeded to wind up the proceedings before him, and on April 26, 1967, entered a judgment of dismissal of the voluntary petition of Southern Land and dissolved all restraining orders and injunctions rendered in that proceeding. Immediately upon the denial of the mandamus on April 6, 1967, counsel for the petitioning creditors in the instant proceeding moved to withdraw his Notice of Voluntary Dismissal Without Prejudice and his alternative Motion for Entry of Order of Voluntary Dismissal Without Prejudice on the ground that neither the Clerk of Court nor the Court had acted on either of the above motions and that there was no longer any impediment to the involuntary petition and the persistence of the present proceeding. We met with all counsel and decided to take no action as Judge Mitchell’s stay orders were still in effect and thus no immediate action was necessary. Later, when Judge Mitchell entered judgment in his proceeding on April 26, 1’967, and dissolved all stay orders, we met with all interested counsel that same evening to discuss the issues and problems raised in our proceeding. On that day Southern Land and its six subsidiaries filed an answer to the creditors’ petition, admitting each allegation in the petition, except the exact amount of the creditors’ claims, although admitting that they aggregated over $5,000, and joined in the prayer for reorganization. Early the next morning we entered an order permitting the withdrawal of the Notice of Voluntary Dismissal Without Prejudice and the Alternative Motion for Entry of Order of Voluntary Dismissal Without Prejudice. We then entered a so-called preliminary approval of the petition under § 141 of the Bankruptcy Act, 11 U.S. C. § 541, appointed a trustee for the debtor, and stayed all suits against the debtor and any of its six subsidiaries. A deluge of motions was then filed by some fifteen creditors opposing reorganization. In essence, the various motions seeking dismissal of the entire proceed-, ing urged that the petition herein was improperly filed under § 126 of the Bankruptcy Act for the reason that at the time it was filed the petition before Judge Mitchell was still pending and that principles of res judicata and estoppel should bar the petitioning creditors herein from relitigating the matters which were decided by Judge Mitchell. A few of the same fifteen opposing creditors also filed a motion to dismiss this proceeding insofar as it purports to relate to the subsidiaries of Southern Land. Counsel for Southern Land filed a motion to strike the various motions to dismiss. All of these various motions were heard on May 17, 1967, at which time we denied Southern Land’s motion to strike, as well as the creditors’ motions to dismiss based on § 126. We took under advisement the motions to dismiss insofar as they were based on res judicata and estoppel, as well as the motion to dismiss the proceedings as to the subsidiaries. By minute entry of June 16, 1967, we granted the motion to dismiss as to the subsidiaries and denied the motions to dismiss based on res judicata and estoppel and indicated that we would later assign written reasons for denial of the motions to dismiss both on the “pending petition” and the res judicata arguments. On June 19, 1967, each of Southern Land’s six subsidiaries filed a voluntary petition for reorganization under this docket number pursuant to a minute entry of this Court on that date authorizing those voluntary petitions to be filed in this proceeding. Although the proceedings were not consolidated, expediency deemed it advisable to have these reorganization proceedings administered together due to the close relationship among these proceedings. The first answers to the creditors’ petition, other than the debtor’s answer, were filed on May 24, 1967, by Wilson P. Abraham and Estate, Inc., who are creditors, both of which controverted material allegations of the petition. On June 5, 1967, we set the hearing under § 161, 11 U.S.C. § 561, for July 10, 1967, and set the hearing under § 144, 11 U.S.C. § 544, for July 21, 1967, on the issues raised by answers filed on or before July 10, 1967, pursuant to § 137, 11 U.S.C. § 537. Answers were filed on behalf of fourteen additional creditors on or before July 10, 1967. The § 161 hearing was held on July 10, 1967, but on July 21, 1967, the § 144 hearing was continued over to September 18, 1967. However, on July 31, 1967, the § 144 hearing was reset for August 4, 1967, at which time it did commence as scheduled. The answers to the creditors’ petition raise a number of issues for our determination which can generally be placed into four categories: (1) whether the proceedings before Judge Mitchell bar the petition filed herein under § 126; (2) whether the matters litigated before Judge Mitchell bar by res judicata or estoppel the present petition; (3) whether the creditors who instituted the present proceedings were “creditors” within the meaning of § 126; and (4) whether the petition was filed in good faith and otherwise satisfies the requirements of Chapter X. In ruling on the various motions to dismiss we have already decided the first and second issues presented at the § 144 hearing adversely to the creditors opposing reorganization. Nothing new by way of argument or evidence on these issues was adduced at the § 144 hearing and our rulings on those matters stand. See Selected Investments Corp. v. Duncan, 260 F.2d 918, 924 (10th Cir. 1958), cert. den. 359 U.S. 914, 79 S.Ct. 584, 3 L.Ed.2d 576 (1959). However, we are taking this opportunity to issue written reasons for our rulings. (1) Pending Petition Generally, we are here concerned with a problem of successive petitions. Section 126 of the Bankruptcy Act provides in pertinent part: “A corporation, or three or more creditors * * * may, if no other petition by or against such corporation is pending under this chapter, file a petition under this chapter.” At the outset, we note that at the time the creditors’ petition was filed initiating the instant proceedings, there was no “petition” pending before Judge Mitchell. Judge Mitchell had dismissed the petition, and he retained partial jurisdiction only for the purposes of allowing the temporary trustee to render an accounting and the payment of allowances and expenses. Merely because Judge Mitchell did not dismiss the entire proceeding does not mean that the petition was not dismissed and was still pending. For it is clear that the petition may be dismissed yet the judge may, as Judge Mitchell did, retain jurisdiction and keep the proceeding open for the payment of costs and allowances. 6 Collier on Bankruptcy ¶ 6.02 (14th ed.). Smith v. Central Trust Co., 139 F.2d 733 (4th Cir. 1944), is ample illustration that the petition may be dismissed by order of the judge, which order dismissing the petition is an appealable order, e. g., Dubladenhill, Inc. v. Sharretts, 375 F.2d 558 (4th Cir. 1967), while at the same time the proceeding remains open for the payment of costs and allowances. The petition having been dismissed by Judge Mitchell, it is clear that no “petition” was pending at the time the present petition was filed. Abstractly then, the question is whether the language “no other petition * * * is pending” is intended to prohibit the filing of a petition during the pendency of a “petition” or during the pendency of a “proceeding.” More concretely, the issue is whether a second petition can be filed immediately upon the dismissal of a prior petition .from the bench or by written order or opinion, or whether the filing of the second petition must await the rendering of a judgment which finally terminates the entire proceeding or even whether it must await the running of the time to appeal from that judgment. Section 126 uses the word “petition.” Section 1(24) of the Act, made applicable to Chapter X by § 102 since § 1(24) is not inconsistent with § 106(9) which uses the word “petition” in defining a reorganization petition, defines “petition” as “a document filed in a court of bankruptcy or with a clerk thereof initiating a proceeding under this Act.” This carefully worded statute, cf. Grubbs v. Pettit, 282 F.2d 557, 561 (2d. Cir. 1960), uses the word “proceeding” or the phase “proceeding under this Chapter” many times in Chapter X, and the use in § 126 of the word “petition,” the definition of which distinguishes it from the proceeding as a whole, strongly indicates to us that Congress intended to mean “petition” rather than “proceeding” and thus to indicate that a second petition could be filed immediately upon the dismissal of the first petition and need not await the conclusion of the entire proceeding. In the face of the language of the statute, the creditors opposing reorganization argued that the word “petition” in § 126 should be read “proceeding” in order to effect the changes in the law intended to be brought about by the enactment of § 126. Under the former § 77B proceedings, a debtor could file any number of petitions either in different districts or in the same court. As pointed out by Collier, this led to a multiplicity of pending petitions which § 126 was designed to correct: “Multiplicity of petitions, with its resulting difficulties, is prevented by a provision that petition for reorganization may be filed only if no other petition by or against the corporation is pending under Chapter X.” 6 Collier on Bankruptcy, ¶ 4.02[1], p. 759 (14th ed.) The difficulties adverted to, and corrected by § 126, are further discussed: “This frequently led to an undesirable multiplicity of pending petitions for the reorganization of a corporation, and often created problems concerning which of two or more courts had the right to proceed or to order a transfer and consolidation of the various proceedings. Moreover, the situation was conducive to unwholesome ‘shopping around’ of the various petitioners for what was regarded as a jurisdiction favorable to their particular interests. “These objectionable features were eliminated by Chapter X. Section 126 provides that a petition for reorganization of a corporation, whether voluntary or involuntary, may be filed only ‘if no other petition by or against such corporation is pending under this chapter.’ Hence only one petition for reorganization is permitted to be pending at any time concerning a particular debtor corporation. If there is any contest between various groups of petitioners, it is clear from the foregoing that the first properly filed petitioner prevails. In the event a petition is dismissed, however, a new petition may then be filed involving the same debtor.” 6 Collier on Bankruptcy, ¶ 4.04, pp. 766-67 (14th ed.) Remington has similar comments to make about the purpose of § 126: “Congress did not intend to permit multiplicity of petitions. Only one petition is allowed to be pending at any one time by or against the corporation. Chapter X removes troublesome questions in respect of the priority of a debtor’s petition over one filed by creditors such as arose under former § 77B. The pendency of a prior petition is apparently a bar irrespective of the place where it is filed, provided it is filed in a court with jurisdiction.” 11 Remington on Bankruptcy, § 4446, p. 130 (Rev. ed. 1961). Thus, the creditors seeking dismissal of this petition urge that dismissal is necessary in order to effectuate the purposes of § 126. They argue that the second petition should not be filed immediately after the order of dismissal of the first petition; rather, the filing of the second petition must await not only the entry of a final judgment in the first proceeding, after the judge has done all that is necessary to wind up the proceeding, but must further await the running of any time for appeal. They argue that unless this is done, the Court of Appeals might reverse the district judge’s dismissal, reinstate the first proceeding, and then if a second petition had been filed, there will be two pending petitions, precisely the result which Congress wished to prevent. We do not believe that Congress intended to go so far, nor that it is necessary for sound administration of the Act to say that Congress must have intended to go so far. Congress was directing its attention to the particular forum-shopping problem where several active petitions were pending at the same time. In meeting that problem it was not necessary for Congress to insure that there could never be any problem of dual petitions. If Congress barred the filing of a subsequent petition until the time for appeal had run, then it would be possible that during that interim the secured creditors, in freely exercising their rights to levy on their security, would be destroying the rights of the unsecured creditors and stockholders to exercise their rights to seek reorganization, the very purpose of Chapter X. We cannot believe that Congress, in meeting the problem of multiplicity of petitions, intended to obliterate the effect of Chapter X; rather, we feel it sought to meet the major abuses found where multiplicity of petitions was permitted, without infringing on the major purpose of Chapter X. In reality, the creditors seeking dismissal herein raise two slightly different practical problems concerning possible conflicts of jurisdiction, depending on when the second petition is filed. First, if a second petition is filed after the dismissal of the first petition, but while the first judge has retained jurisdiction to wind up the proceeding, then a theoretical conflict of jurisdiction could result under § 111 which gives the reorganization court exclusive jurisdiction of the debtor’s property, wherever located, upon the filing of the petition. We are convinced, however, that this practical problem has a practical solution which prevents any unseemly conflict between different courts or different judges of the same court. The judge entertaining the second petition would merely refrain from exercising his jurisdiction over the property, as we did, until the restraining orders in the first proceeding were relaxed. The crucial point is not the exercise of jurisdiction over the property, for, by a simple practical approach, that problem is easily resolved; rather, the real problem is seeking an interpretation of § 126 which will effectuate the language of that section as well as its purpose to thwart the concurrent prosecution of multiple petitions, and, if possible, also effectuate the purpose of Chapter X as a whole by eliminating in all cases any periods of hiatus in which the secured creditors might exercise their rights to levy on their security, but the unsecured creditors and stockholders would be unable to exercise their rights to seek reorganization, which rights Congress has deemed to be paramount. If we interpreted § 126 as not permitting the filing of the second petition until judgment has been entered in the first proceeding, and if the first judge did relax his stay orders prior to the signing of a judgment, the creditors and stockholders would be powerless. Our interpretation of § 126 is, we feel, consistent with the language of the statute and the primary abuse with which Congress was concerned in enacting § 126, and in addition leaves no hiatal period under any circumstances. The second practical problem arises from the extreme contention that the second petition should not be filed until the time for appeal has expired. This position has even less merit. It is not at all arguable under the language of the statute because during the time for the running of the appeal, not only is there no petition pending, but usually no actual proceeding is pending.' Section 126 was directed at the filing of successive petitions where the prior petition was alive and active, and the purpose of § 126 is well served by merely not allowing the filing of a second petition until the first petition is dismissed. This interpretation of the statute will eliminate the problems against which Congress directed its action. Tortured construction of the statute to reach the result of not permitting the filing of a second petition until the time for appeal from the judgment in the first proceeding has run adds nothing necessary to the resolution of the problem Congress faced, and indeed adds additional problems concerning the period of hiatus within which the rehabilitative purposes of Chapter X would be completely subverted. The practical problem arises if the Court of Appeals reinstates the first petition. Again, conflict of jurisdiction may ensue between the courts or the two judges of the same court. The problem would be particularly acute when the second judge had taken substantial steps in his proceeding prior to reinstatement of the first proceeding. While it would seem that this situation would occur very infrequently, we cannot believe that, if it did occur, a practical solution similar to the one above could not easily be reached. In conclusion, we believe that Congress meant what it said when it used the word “petition” in § 126, and we believe our interpretation of that section is consonant with the purposes for which it was enacted. In the event we are wrong in our interpretation of § 126, and the petition should not have been filed until Judge Mitchell entered a judgment in his proceeding, we feel that sensible administration of the statute would require that we permit the petition to be deemed filed at such later time as might be proper. The broad general purpose of Chapter X is to effect corporate reorganizations, or failing that, to dismiss the petition or to adjudicate the debtor into ordinary bankruptcy. It is a remedial statute and it would be unseemly for us to become overtechnical and make the petitioners walk a tight rope in order to present a properly filed petition when they have made a good faith effort to abide by the requirements of § 126 and their effort is arguably in conformity with § 126. Such an approach — to deem the petition filed at the proper time — is not novel to the Bankruptcy Act as evidenced by § 147, 11 U.S.C. § 547, and would be consistent with the broad powers possessed by a reorganization court. If we were to hold here that this petition was improperly filed, the petitioners would simply file another one. It is certainly not sound administration of Chapter X to require that those seeking reorganization file petition after petition attempting to timely file one. Successive petitions and trusteeships over the debtor’s property only detract from the purposes of Chapter X and add to the expense, as well as the delay, which is the primary concern of the secured creditors. When the proponents of reorganization are serious, as these petitioners are, a dismissal on technical grounds is of no benefit to anyone for the proponents are delayed in their request for relief; the objecting creditors will have their ends served only if the proceeding is finally dismissed on the merits, and the possibility of that dismissal is only delayed when successive petitions are dismissed before the merits are reached. (2) Res Judicata and Estoppel The arguments of the opposing creditors that principles of res judicata and estoppel bar this petition are of little merit. The opposing creditors argued that because § 206 of the Bankruptcy Act, 11 U.S.C. § 606, gives all creditors the right to be heard “on all matters arising in a proceeding under this chapter” without securing a formal order of intervention, the petitioning creditors herein were actual parties to the former proceeding before Judge Mitchell and are bound by all matters decided in that proceeding and cannot now relitigate the same issues. We are in basic agreement with the principle of law urged by the opposing creditors that whoever was party to that litigation is bound by all matters decided in that litigation; however, we do not agree that it is applicable to the case at bar. Simply stated, the issues involved here are not the same as the issues presented to, and decided by, Judge Mitchell. Judge Mitchell was faced with the question of whether the petition filed by the debtor corporation was filed in good faith. We are faced with the question of whether the petition filed by the petitioning creditors was filed in good faith. Judge Mitchell’s conclusion that the petition filed by the debtor corporation was not filed in good faith is not, and cannot be, res judicata on the issue of whether the creditors’ petition was filed in good faith. This becomes clearer upon a brief examination of the concept of “good faith” and the matters decided by Judge Mitchell. “Good faith” is not affirmatively defined in the statute. Section 146 states four specific instances when a petition has not been filed in good faith. As we have stated elsewhere, however: “[T]he mere passage by a petition of the four negative tests in § 146, 11 U.S.C.A. § 546, does not assure that the petition will be found to have been filed in good faith, because that term contains unspecified general elements.” In the Matter of Plaza Towers, Inc., 294 F.Supp. 714, 722, n. 8. (E.D.La.1967) As evidenced by Judge Mitchell’s findings of fact and conclusions of law, when the petition is filed for the purpose of delay and to enable the debtor to restrain and hinder its creditors, one of the “unspecified general elements” of good faith is lacking, and the petition must be dismissed. See 6 Collier on Bankruptcy ¶ 6.07 [2] (14th ed.). We turn then to an examination of the matters decided by Judge Mitchell. Judge Mitchell did not find or conclude that any of the four negative tests of § 146 existed with respect to the petition allotted to him. Regarding these tests, it is important that we emphasize that he did not find or conclude that it is unreasonable to expect that a plan of reorganization can be effected for the debtor corporation. This is an important question facing us and one which was not resolved in the proceedings before Judge Mitchell. The crucial facts found to exist by Judge Mitchell were: “XIX. The real purposes of this reorganization proceeding are: (1) to hold the debtor in its present status; (2) for delay; and (3) for the purpose of staying proceedings against subsidiary corporations. It is, therefore, not filed in good faith.” And the crucial conclusion of law reached in that decision was: “VIII. The petition of Southern Land Title Corporation was not filed in good faith under Section 141 of the Bankruptcy Act. The question of good faith is one to be determined by the Judge. The real purpose of these proceedings was to hold the debtor in its present status for the purpose of restraining, delaying and hindering its creditors and to escape from proceedings in other courts, and therefore, the petition was not filed in good faith.” Thus, it is abundantly clear that Judge Mitchell did not determine the issues which are presented in our case as he only decided that the petition of the debtor corporation was filed solely for the purposes of delay and therefore was not filed in good faith. It is hornbook law that res judicata is not applicable when the issues are not the same. Further, the fact that evidence was presented in our case to sustain the petition and none was presented in Judge Mitchell’s case would justify our reaching a result contrary to Judge Mitchell even if the issues were the same, which they are not. In Re Peer Manor Bldg. Corp., 143 F.2d 769 (7th Cir. 1944), cert. den., 323 U.S. 757, 65 S.Ct. 90, 89 L.Ed. 606. In that ease the debtor corporation filed a petition for reorganization under § 77B and a plan of reorganization was consummated. However, the debtor defaulted on its obligations once again, and another petition for reorganization was filed but this petition was filed by certain creditors and the indenture trustee. It was held by the Court of Appeals for the Seventh Circuit that the petition could not be maintained because the debtor was not a corporation since it had been dissolved by a state court decree and, therefore, it was not amenable to Chapter X which contemplates only the reorganization of corporations. In Re Peer Manor Bldg. Corp., 134 F.2d 839 (7th Cir. 1943). Subsequently, a new petition for reorganization of the same “corporation" was filed. The district court, feeling bound by the decision of the Seventh Circuit in 1943, dismissed the petition on the ground that no corporate entity existed. On appeal, however, the Seventh Circuit reversed the district court stating: “[W]e are satisfied that our decision on the previous appeal is not res judicata, nor are we bound by it as the ‘law of the case.’ The parties were not the same; the evidence was not the same; nor was the issue the same.” 143 F.2d at 770. A close examination of the opinion, however, does not reflect that the issues were any different. Further, as far as we are able to determine from examining the opinions, the parties were the same. The only difference appearing from the opinions is in the evidence presented. In the second proceeding, the court was presented with evidence that although the corporation had been dissolved by a state court decree, it did continue to act in some capacity. This was held to justify a different result from the former proceeding which had presented only the naked legal issue. Thus, the case is strikingly similar to the case at bar. The fact that evidence was presented at the hearing in the case at bar to justify the good faith of the petition, whereas none was presented in Judge Mitchell’s case, would alone preclude the res judicata effect of Judge Mitchell’s decision, apart from the fact that res judicata is inapplicable because the issues are different. The question might be asked, however, as we have asked ourselves-: “Since Judge Mitchell held that the petition in his case was filed solely for the purposes of delay and therefore was not filed in good faith, why shouldn’t this Court hold the same even though res judicata is inapplicable?” The answer and the reasons are readily apparent from the facts. While Judge Mitchell made his finding and reached his conclusion based upon all the facts of his case, his findings of fact and conclusions of law indicate that the main factors leading to his decision were the facts: (1) that the petition failed to include full and adequate financial reports regarding the debtor corporation; (2) that the petition claimed Southern Land owned “equities” in its six subsidiaries, which claim was unsupported by the annexed documents; (3) that the petition was filed the day before certain property was to be sold at a sheriff’s sale; (4) that the debtor corporation and its subsidiaries were unable to meet their current operating expenses, taxes and insurance; (5) that all secured creditors at the hearing on February 3, 1967, opposed the petition; (6) that the debtor was unprepared to go forward with the hearing on January 12, 1967, on the question of whether the judge should approve the petition under § 141 of the Bankruptcy Act, 11 U.S.C. § 541; (7) that the debtor corporation later attempted to repudiate the stipulation entered into on January 12, 1967; and (8) that the debtor corporation offered no oral testimony at the hearing on February 3, 1967, to support its petition. The facts of Judge Mitchell’s case are simply not the facts of our case. We first note that the petition in our case was filed by creditors of Southern Land and its subsidiaries whereas Judge Mitchell’s petition was filed by Southern Land. We think it only logical to require a stronger basis for concluding that an involuntary petition for reorganization is filed solely for purposes of delay than was shown in Judge Mitchell’s case because it is more natural to suspect that a debtor’s petition was filed for the purposes of delay than a creditor’s petition. In any event, all of the facts relied upon by Judge Mitchell do not exist in our case. Unlike Judge Mitchell’s case, the petitioners in our case were prepared to go forward with the hearing on the “good faith” of the petition, and, unlike Judge Mitchell’s case, both oral testimony and documentary evidence were offered in support of the petition. In fact, the hearing in this case lasted three days as compared to the hearings on good faith before Judge Mitchell which were very brief affairs. On one day the hearing before Judge Mitchell was simply continued due to the stipulation entered into by the petitioner in that case after the stipulation was dictated into the record. The only other hearing on good faith before Judge Mitchell consisted solely of oral argument, and much of that was concerned with whether certain counsel were entitled to address the court in light of their failure to file the statement required by § 210 of the Bankruptcy Act, 11 U.S.C. § 610. No evidence was introduced at the hearings before Judge Mitchell. Moreover, in our case, unlike Judge Mitchell’s ease, the petitioners never entered a stipulation that the proceeding would be dismissed if a financial commitment were not obtained within a specified period of time, and, needless to say, there was no attempt by the petitioners to repudiate such a stipulation as there had been in Judge Mitchell’s case. Further, unlike Judge Mitchell’s case, there was not unanimous opposition to the petition as only sixteen creditors, albeit clamorously, filed answers controverting the petition. Other creditors, both secured and unsecured, who have filed proofs of claim in the record have not voiced objection to the petition. At first blush, this seems strange but the explanation readily appears. Only the secured creditors present or represented at the hearing before Judge Mitchell on February 3, 1967, expressed unanimous objection. These creditors, for the most part, appear to be the same clamorous creditors who opposed the present petition. As just indicated, however, a far larger number of creditors, both secured and unsecured, have expressed no opposition to the petition. These differences in the facts and the absence of any other facts in our case which would indicate that the present petition was also filed for the purpose of delay are simply insufficient to support the conclusion that the present petition was filed solely for the purpose of delay and therefore was not filed in good faith. The estoppel argument urged by the opposing creditors is also merit-less. In part, it is premised upon the same argument urged in support of the res judicata argument — that because of § 206 of the Bankruptcy Act, 11 U.S.C. § 606, all of the petitioning creditors were parties to Judge Mitchell’s proceeding and are therefore estopped from instituting the present proceeding — and largely falls with the res judicata argument. Additionally, the estoppel argument falls for at least two simple reasons. First, to hold that the petitioners were estopped to institute the present proceeding would completely frustrate the filing of successive petitions for corporate reorganization. This would create the intolerable situation, as illustrated by this very case, of foreclosing the right to creditors to seek reorganization when the corporation has first sought reorganization but was inept in presenting its petition. To argue that such creditors have the right to support the petition with their own evidence is to ignore practical realities for such creditors may well have placed confidence in the ability of the debtor corporation to support its own petition, and thus come unprepared to meet the issues. To preclude such creditors the opportunity to present their own petition merely because of their misplaced trust in the debtor corporation would seriously undermine the very purposes of Chapter X. Such a holding would likewise preclude the debtor corporation from filing its own petition for reorganization following an abortive petition of creditors. Additionally, such a holding would run contrary to the authorities cited above in which successive petitions were allowed. The second reason is perhaps more direct. Section 59(h) of the Bankruptcy Act, 11 U.S.C. § 95(h), provides in pertinent part: “A creditor shall not be estopped to act as a petitioning creditor because he participated in any prior matter or judicial prdceeding, having for its purpose the adjustment or settlement of the affairs of the debtor or the liquidation of his property * * The quoted portion of § 59(h) not being inconsistent with the provisions of Chapter X is applicable to reorganization proceedings by virtue of § 102 of the Bankruptcy Act, 11 U.S.C. § 502. 6 Collier on Bankruptcy ¶ 4.07 [2], p. 797 n. 36 (14th ed.). A prior reorganization proceeding clearly falls within the broad language of § 59(h). Under § 59(h) the petitioning creditors are not estopped from filing the present petition merely because they participated in the prior reorganization proceeding. The estoppel argument was also premised on the stipulation entered into in Judge Mitchell’s proceeding. Apart from the issue of whether the stipulation was valid vel non, which has never been decided, and apart from the issue presented by the fact that some of the petitioning creditors herein were not present and were not represented by anyone when that stipulation was made, this aspect of the argument is also totally without merit for it completely distorts the doctrine of estoppel. Essentially, the stipulation entered into in Judge Mitchell’s case was an agreement by the debt- or corporation that it would agree to a dismissal of that proceeding and would not renew its petition if it failed to obtain a financial commitment within twenty days. The creditors, in turn, agreed in a general fashion to go along with that proceeding for the twenty days. The creditors in no way agreed to refrain from instituting further reorganization proceedings, and we are simply unable to see how any creditors would be estopped from seeking reorganization merely because the debtor agreed not to. Agreements in derogation of the right to seek reorganization are most strictly construed if, in fact, they are not void as contrary to public policy. The- objecting bondholders in In Re Los Angeles Lumber Products Co., 24 F.Supp. 501 (S.D.Cal.1938) aff’d, 100 F.2d 963 (9th Cir. 1939), rev’d on other grds. 308 U.S. 106, 60 S.Ct. 1, 84 L.Ed. 110 (1939), argued that the debtor corporation was precluded from seeking reorganization by virtue of the terms of the trust indenture securing the payment of the bonds whereby the debtor corporation agreed to refrain from such action. Without deciding whether the language of the trust indenture constituted such an agreement, the court held that any attempted restriction on the right of the debtor to seek reorganization is void as against public policy. Further, and more pertinent to our decision, the court stated that the agreement made by the debtor would in no event prevent any of the bondholders from seeking reorganization of the debtor. Two other cases in which the language of an agreement was strictly construed in the face of the contention that the agreement precluded the creditors from instituting the reorganization proceedings were In Re Sponsor Realty Corp., 48 F.Supp. 735 (S.D. N.Y.1943) and In Re Hudson Coal Co., 22 F.Supp. 768 (M.D.Pa.1938). The certificate holders in the Sponsor Realty case agreed that all rights and powers respecting the debtor’s property would be vested in the certificate trustee, and in the Hudson Coal case the bondholders agreed not to institute "any suit” except upon certain conditions which were not met. In the Sponsor Realty case the certificate holders were allowed to file a petition for reorganization in spite of the contention that they had surrendered that right, and in Hudson Coal the bondholders were permitted to file a petition for reorganization in the face of a similar contention. In both cases stronger grounds for estoppel existed than in the present case. It is clear that the stipulation entered into in Judge Mitchell’s case in no way estops the petitioning creditors herein from seeking reorganization. (3) Petitioning Creditors The standing of the petitioning creditors to maintain the petition in the instant case was also presented as an issue for our determination at the good faith hearing. The petition was filed by ten alleged creditors of Southern Land, namely, Emile G. Coci, Davis-Southern, Inc., Frederick M. Guice, H & H Construction Corporation, J. J. Krebs & Sons, Inc., Kalman, Rogers & Smith, Inc., The Archer Agency, Inc., Herman P. Stone, Jr., Henry L. Muller, and Leonard R. Spangenberg, Jr. Three of these petitioners withdrew as petitioning creditors prior to the good faith hearing, namely, Kalman, Rogers & Smith, Inc. and The Archer Agency, Inc., both of whom withdrew by motion and order of June 5, 1967, and Frederick M. Guice who withdrew by motion and order of J uly 21, 1967. A fourth petitioner, Henry L. Muller, withdrew by oral motion which was granted at the good faith hearing on August 8, 1967. In accordance with the Court’s request in granting his oral motion, a written motion to withdraw was filed by Muller on August 9, 1967, and the written order allowing him to withdraw was signed on August 16, 1967. Consequently, for purposes of determining the issues with which we are now concerned, we must ignore the four petitioners who withdrew. We pause to note, however, that the withdrawal of these four petitioners does not in any way give rise to any inference supporting the opposing creditors’ position, discussed at length below, that the petitioning creditors were merely parties interposed by the debtor corporation and, therefore, did not file the petition in good faith. These withdrawals were not tantamount to a dismissal of the petition and thus were quite proper. Under § 59(g) of the Bankruptcy Act, 11 U.S.C. § 95(g), “withdrawal by one of several [petitioning creditors] will be permitted * * * where the interests of the co-petitioners and the other creditors will not be affected thereby.” 3 Collier ¶ 59.35, p. 633 (14th ed.). This rule is equally applicable to Chapter X cases. 6 Collier ¶¶ 4.09, 6.02[1]-6.05 (14th ed.). Inasmuch as six petitioning creditors who were able to sustain their claims remained, neither the co-petitioners nor any other interested parties were prejudiced by the withdrawal of these petitioners. While the motives underlying the withdrawals were known only to the withdrawing petitioners, several possible legitimate reasons motivating the withdrawals do come to mind which negate any inference of bad faith. In view of this fact, viz., that the withdrawals are not inconsistent with good faith, and in view of the propriety of the withdrawals under the law, in spite of the fact that our approval thereof may have been premature, these withdrawals do not in any way lend support to the position that the petition was not filed in good faith. Our conclusion in this respect can only be strengthened by the fact that each of the parties who withdrew as a petitioning creditor did file a proof of claim in the record. The issue as to whether the petitioners were actually creditors of Southern Land involves § 126 of the Bankruptcy Act, 11 U.S.C. § 526, which provides in pertinent part: “[T]hree or more creditors who have claims against a corporation or its property amounting in the aggregate to $5000 or over, liquidated as to amount and not contingent as to liability * * * may * * * file a petition under this chapter.” “Creditor” is defined in § 106(4) of the Bankruptcy Act, 11 U.S.C. § 506(4), as “the holder of any claim.” And, as defined in § 106(1) of the Bankruptcy Act, 11 U.S.C. § 506(1), “claims” “ * * * shall include all claims of whatever character against a debtor or its property, except stock, whether or not such claims are provable under section 63 of this Act and whether secured or unsecured, liquidated or unliquidated, fixed or contingent.” For purposes of § 126, the definitions in §§ 106(1) and (4) are governing rather than the definitions in ordinary bankruptcy. Price v. Gurney, 324 U.S. 100, 65 S.Ct. 513, 89 L.Ed. 776 (1945); In Re Sponsor Realty Corp., 48 F.Supp. 735 (S.D.N.Y.1943); In Re Pittsburgh Terminal Coal Corp., 30 F.Supp. 106 (W.D. Pa.1939), aff’d, 109 F.2d 1020 (3rd Cir. 1940); In Re R. A. Security Holdings, Inc., 46 F.Supp. 254 (E.D.N.Y.1942), aff’d sub nom., 134 F.2d 164 (2d Cir. 1943). The definition of “claim” is of greater importance for our purposes because a creditor is defined as the holder of a claim, and it was not seriously disputed that the petitioners were the holders of their respectively alleged claims. As Collier has stated: “The word ‘claims’ as defined in § 106(1) is sweeping in scope.” 6 Collier on Bankruptcy ¶ 2.05, p. 311 (14th ed.). Indeed, Judge Brown, now Chief Judge of the Fifth Circuit, has stated: “Unlike ordinary bankruptcy in which claims are confined to those specified in § 63, 11 U.S.C. § 103, a reorganization covers creditors claims of every conceivable kind.” Avery v. Fischer, 360 F.2d 719, 724 (5th Cir. 1966). However, a contingent claim, although within the definition of § 106(1), does not fall within the ambit of § 126. With these basic principles in mind, we turn now to an examination of the .claims held by the petitioning creditors. (1) Emile G. Coci, His testimony revealed that he has several claims against Southern Land for money which he loaned to the corporation. In 1961 he loaned $35,500 to Southern Land which is evidenced by a note for that sum which was executed by Sam Recile for Southern Land and which is dated December 8, 1961. It is a bearer note, and Coci is the bearer and owner, and he has owned it since it was executed. The note is payable in twelve monthly installments with the final installment due thirteen months after December 8, 1961. Nothing has been paid on that note, and the amount is due and owing. He also loaned $21,000 to Southern Land which is evidenced by a note for that sum which was executed by Sam Recile as president for Southern Land and which is dated March 1, 1966. It is a bearer note payable on demand, and Coci is the bearer and owner, and he has owned it since it was executed. Nothing has been paid on that note either. In addition, Coci testified that he borrowed $25,000 from the National American Bank, for which he signed a note, and loaned the funds to Southern Land. This was evidenced by a deposit slip which the bank issued on March 9, 1966, which reflects that the $25,000 deposit to the account of G. Brian Corporation were the proceeds of a check drawn by Coci. The bank possesses the original deposit slip, and failed to produce it when called upon to do so by counsel for the petitioning creditors. Hence, we admitted a photostatic copy of the deposit slip into evidence and relegated the “best evidence” objection to the weight of the evidence rather than to the admissibility of the deposit slip. We are satisfied from Coei’s testimony and from the “second best evidence” that he did make the $25,000 loan to Southern Land. We are also satisfied that Southern Land still owes him this amount even though he testified that he had a note evidencing the indebtedness, yet failed to produce the note. Normally, we would not view with favor the testimony of a witness who testified as to a debt which he claimed was owing to him and which was evidenced by a note if the note was not produced. The surrounding circumstances in this situation, however, convince us that he does have a claim against Southern Land for that amount. Coci originally testified on Friday, August 4, 1967. He testified that he had claims in excess of $50,000 against Southern Land for money loaned to that corporation and that he had notes evidencing that indebtedness. He did not have any documentary evidence of his claims with him at the hearing on Friday. He was requested to obtain such evidence overnight and produce it in Court on Saturday morning when the hearing resumed. The evidence which he did produce substantiated the testimony which he gave on the day before and thus proved his testimony to be reliable and credible. His testimony was proved correct in other respects also, as for example, his testimony that Southern Land had no bank at that time, which fact was corroborated by the stipulation regarding the testimony of Judlin Girot, the trustee’s accountant, and which the Court independently verified with the trustee. These factors lend credence to his other testimony. In view of his testimony, which we credit, his failure to produce all of the documentary evidence on but one night’s notice cannot be deemed fatal. Also, we must not lose sight of the fact that the issue facing us at this point is whether he has a claim against Southern Land. The proof of this issue is not strapped with the same stringencies as the proof ¿required to merit a judgment on a note. Two other factors in addition to Coci’s testimony support our finding that the $25,000 loan which Coci made to Southern Land is still outstanding. One is the fact that Southern Land has made no payments on the two earlier notes for $35,500 and $21,000 which it had given to Coci. It is logical to reason that if Southern Land had not paid these earlier obligations, it had not paid an obligation which it later incurred. The other factor is that the bank has sued Coci on the $25,000 note which he executed in order to make the loan to Southern Land. Again, it is logical to reason that if Southern Land had made any payments on that obligation to Coci that he would have applied them to the note rather than default on it. Finally, Coci testified that he and Louis Davis borrowed $26,000 on a note from the National American Bank and loaned it to Southern Land. This was evidenced by a credit advice which the bank issued on June 1, 1966, reflecting that the proceeds of the loan of Coci and Davis were credited to the account of G. Brian Corporation. Because the bank had possession of the original of the credit advice and failed to produce it upon demand by counsel for the petitioning creditors, a photostatic copy of the credit advice was admitted into evidence over the “best evidence” objection which was again relegated to the weight of the evidence. We are not satisfied, however, from the evidence presented that Coci has a claim on this loan against Southern Land. His testimony with respect to this loan was simply not as direct and clear as his testimony regarding the other loans. The loan was made to Southern Land from the proceeds of the note taken out by Coci and Davis, yet it may well be that Coci was only an endorser on the note which was not produced and thus, even though both he and Davis have been sued on the note, his liability on the note would be contingent as would his claim which would then not be within the purview of § 126 which excludes contingent claims. 6 Collier ¶ 4.07[4], n. 61 (14th ed.). The documentary evidence does not quiet our doubt in this respect. In fact, it only compounds our doubt because item 83 on the memorandum prepared by C. El'lis Henican, President of Southern Land at the time the voluntary petition was filed, which memorandum was attached to the schedules filed with the voluntary petition in Judge Mitchell’s case and which was introduced into evidence in this proceeding, indicates that the $26,-000 was loaned to Southern Land by Louis Davis. With respect to this item, we feel that Coci has failed to sustain his burden of proof. Based on the above specific findings, the ultimate finding and conclusion that Coci is a creditor within the purview of § 126, and thus entitled to file the petition, is inescapable. Our ultimate finding regarding Coci’s status as a creditor is further substantiated by other evidence not alluded to above. The parties entered into a stipulation regarding the testimony of Judlin Girot, the trustee’s accountant. It was stipulated that although the debtor corporation’s books were not up to date, they did reflect that Coci was owed $35,500 on a note dated December 8, 1961, and that he was owed $25,921.92 on open accounts for amounts due from Southern Land’s predecessor known as Ole Square Corporation. This, of course, accords with our specific finding as to the $35,-500 note. With regard to the $25,921.92, we were reluctant to make a specific finding as to that amount in view of Coci’s failure to testify thereto. It may well be that since he only testified as to those sums involving notes, he overlooked this item which was on open account. But in any event, we did not deem it necessary to make a specific finding with regard to that sum in view of our other specific findings. Other evidence supporting our ultimate finding is found in the schedules annexed to the voluntary petition in Judge Mitchell’s case (hereafter referred to as the “schedules”). These schedules were admitted into evidence subject to the objections that they are self-serving, unsworn statements, and that Henican, who prepared the memorandum attached to and made part of the schedules, was not" available for cross examination. We now overrule the objections. The self-serving declaration objection is not applicable. McCormick on Evidence § 275 (1954). We know of no rule which requires documentary evidence to be sworn to prior to its admission. If such were the case, we would seldom receive documentary evidence. Further, Henican was available for cross examination and, in fact, was called on cross examination under F.R.Civ.P. 43(b) by lead counsel for the opposing creditors. Finally, the schedules form part of the record in the case before Judge Mitchell, and even if the schedules had not been introduced into evidence, we could take judicial notice of the contents of that record for evidentiary purposes, United States v. Marcello, 280 F.Supp. 510, 521, n. 4 (E. D.La.1968), although this is not to imply that we take judicial notice that the amounts reflected therein are the true amounts. No debts due to Coci were listed on the schedules themselves. However, the memorandum prepared by Henican was attached to and formed part of the schedules listing the assets, liabilities and financial condition of the debtor. We must thus consider the schedules and Henican’s memorandum as one and not as separate items. Item 83 of Henican’s memorandum indicates that Southern Land was indebted to Coci for $30,000 which he borrowed from the National American Bank for the use and account of Southern Land. Due to the disarray and inadequacy of the books and records kept by Southern Land, the fact that the amount indicated in Henican’s memorandum as owed to Coci does not coincide exactly with any amount testified to by Coci is insignificant. In connection w,ith Henican’s memorandum, we must also remember that his investigation of the financial condition of Southern Land encompassed only the three months from September to December of 1966 when he was president. Obviously, he could not reconstruct the books and records of Southern Land in so short a period of time and become intimately familiar with all of Southern Land’s debts. The fact that he had been counsel to the corporation prior to that time would not have afforded him the opportunity to acquire more detailed knowledge. The significance of Henican’s memorandum is that it does indicate that Coci is a creditor of Southern Land. Henican’s testimony bolstered his memorandum in this respect as he testified that he satisfied himself, as president of Southern Land, that Coci was a creditor of Southern Land and that the amount could have been greater than $30,000. All of this evidence corroborates Coci’s testimony that he is a creditor of Southern Land and substantiates our ultimate finding in that respect. (2) Davis-Southern, Inc. The testimony of Louis C. Davis, President of Davis-Southern, Inc., which is an insurance company, and the documentary evidence introduced in connection with his testimony establish that Davis-Southern, Inc. has a claim against Southern Land. Davis-Southern, Inc. has a claim on a loan of $8,000 which it made to Southern Land on April 19, 1966. This is evidenced by an $8,000 note, dated April 19, 1966, payable on or before thirty days to Davis-Southern, Inc. The note was executed by Sam Recile as president of Southern Land. No payments have been made on the note in whole or in part, and it is due and owing. Davis also testified as to an alleged claim for $14,797.20 on unpaid insurance premiums. While Davis originally testified that he thought the unpaid premiums were about $5,000 or $6,000, the ledger cards of Davis-Southern, which were introduced into evidence, reflect that Southern Land owes Davis-Southern $14,797.20 on unpaid insurance premiums. We make no specific finding, however, with respect to the amount owed on unpaid premiums for reasons discussed below. Again, the stipulation as to Girot’s testimony, the schedules and Henican’s memorandum and the testimony of Henican substantiate our finding as to the $8,000 claim and support Davis’ testimony as to the unpaid insurance premiums. The stipulation regarding Girot’s testimony shows that the records of Southern Land, insofar as they had been reconstructed, acknowledge the $8,000 note of April 19, 1966, and the existence of unpaid insurance premiums in the sum of $31,011.13. Likewise, the schedules reflect that Southern Land owes Davis-Southern the $8,000 note as well as $5,446.95 on accounts payable. Heniean’s memorandum, (paragraph 31), reflects that Southern Land owed Davis-Southern $46,566.98 on unpaid premiums as of September 13, 1966. Henican testified that Southern Land owed money to Davis-Southern. While it is obvious that Southern Land owes Davis-Southern the $8,000 note, we make fio specific finding with respect to the amount owed on the unpaid insurance premiums. The figure which Davis testified was due and owing was as of June in 1967. The relevant date, however, is February 3, 1967. The ledger cards indicate that the balance declined from approximately $31,-000 to $14,797.20 through payments by mortgagees and cancellations from February to June. The fluctuating balance well accounts for the discrepancies appearing in the evidence as to the amount of this alleged claim. While this does not disturb us, we do seriously