Citations
- 64 F.2d 847
Full opinion text
WOOLLEY, Circuit Judge.
The National Radiator Corporation was . engaged in the manufacture and sale of radiators, boilers and other instrumentalities of radiation. It was organized in 1927 by the consolidation or merger of six independent in the radiator industry. _ Pre*>the consolidation an appraisal of ^mr assets was made m the sum of $26,-192,000 (speaking for convenience always m rolmd numbers)-
_ Upon the basis of this appraisal and a showing of earnings of the constituent corn-P^ies for the previous four years in sums between $2,456,000 and $3,488,000 a year, the new corporation, with $2,972,000 in cash an-d eurrsnt liabilities of $1,478,000, issued $12,000,000 Gold Sinking Fund Debentures, hearing 6y2 per cent, interest, of which $10,-705,000 became outstanding. It also issued 60,000 shares of $7.00 Cumulative Convertihie Preferred Stock and 270,000 shares (no Par value) of common stock at an estimated value of $11,500,000, making total liabilities 1° securityholders of all grades of about $23,-000,000. Neither then nor later did it place mortgage liens upon its properties,
With this capital structure, completed in August, 1927, the new corporation embarked in business, and earned $993,000 in the last four months of that year. In 1928, howev- or, the construction of residential, eommer- and buildings throughout the couatiy, on which the business of the corp0rati0n was dependent, began to fall off. imme(jiateiy unfavorable competitive conditions developed. Construction work continued to decline, causing the corporation to suffer in each of the three years succeeding its organization an average deficit of $600,000 before interest on the debentures or a deficit of $1,310,000 after interest but before sinking fund charges. In this situation, which was becoming progressively worse, the corporation defaulted in interest on the debentures due February 1, 1931,-though unquestionably having in hand more than enough money to pay it. A Reorganization Committee, being appointed, set to work and evolvf a' Í0 we shall advert presently. T° Plan abou1i 9® P® «°f tbe T fntjholders assented. About 3 per cent. stood süent and 1 per cent objected Tins took time. Another mterest payment came J™ A^st ftbe