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IN RE RANDOLPH-WELLS BUILDING CORPORATION

August 30, 1961

IN PROCEEDINGS FOR THE REORGANIZATION OF RANDOLPH-WELLS BUILDING CORPORATION, DEBTOR.


The opinion of the court was delivered by: Juergens, District Judge.

On March 27, 1961, Randolph-Wells Building Corporation (hereinafter referred to as "Randolph-Wells") filed its amended petition asking that bankruptcy proceedings No. 7464 be reopened for the purpose of limiting the time within which bonds of the City State Safe Deposit Company may be exchanged for securities of Randolph-Wells (hereinafter referred to as "1935 Bonds").

Randolph-Wells is the corporate successor to City State Safe Deposit Company, an Illinois corporation (hereinafter referred to as "City State").

City State on February 1, 1927, issued its First Mortgage 6 Per Cent Twenty Year Sinking Fund Gold Bonds (hereinafter referred to as "1927 Bonds") in the aggregate principal amount of $2,359,500. On June 19, 1930, the holders of the 1927 bonds entered into a bondholders' protective agreement whereby such holders were to deposit their bonds with the Chicago Trust Company, as depositary, and to receive certificates of deposit in exchange for their bonds. This action followed default on the 1927 bonds, which occurred prior to June 19, 1930.

On February 6, 1935, a proceeding, entitled "In The Matter of City State Safe Deposit Company, No. 7034", to reorganize City State under the provisions of Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, was filed in this Court. Pursuant to a plan of reorganization approved on July 8, 1935, in proceeding No. 7034, Randolph-Wells was organized as the corporate successor of City State.

On November 14, 1935, an order in proceeding No. 7034 was entered which provided, inter alia, that the new corporation, Randolph-Wells, upon receiving the conveyance of the debtor's property from the trustees be authorized and directed:

To execute its new mortgage bonds, issuable to the holders of the 1927 bonds in the amount of $2,359,500, to the Trust Company of Chicago for distribution to the holders of the old first mortgage bonds of City State; and in order to secure the bonds, to execute, accept and deliver to the Trust Company of Chicago as trustee, its new indenture of mortgage. That the Trust Company of Chicago, a corporation, be authorized upon receipt of delivery of the 1935 bonds to authenticate the same and to distribute the bonds and voting trust certificates deposited with the Trust Company by the trustees to the holders of the 1927 bonds in the following manner:

(a) New bonds of the corporation to be distributed in the same principal amount as the principal amount of the old first mortgage bonds presented by such holders.

(b) Voting trust certificates evidencing common stock of the new corporation to be distributed in proportion of one share of such stock for each $100 principal amount of the old first mortgage bonds (1927 bonds) presented by the holders; such distribution to be made to the holders upon presentation and surrender by the holders of the debtor's old first mortgage bonds (1927 bonds) accompanied by all unpaid interest coupons appertaining thereto, or upon presentation of certificates of deposit evidencing the deposit of the bonds and coupons under the terms of the Bondholders' Protective Agreement dated July 19, 1930, for the deposit of the bonds.

Pursuant to the above order, Randolph-Wells executed and delivered to the Trust Company of Chicago an indenture of mortgage dated November 1, 1935; executed and delivered to the Trust Company of Chicago its new mortgage bonds (1935 bonds) in the aggregate principal amount of $2,359,500 dated November 1, 1935, maturing twenty-five years after date and secured by the mortgage indenture; and issued and delivered to voting trustees shares of its common stock. The voting trustees issued and delivered to the Trust Company of Chicago 23,595 trust certificates evidencing the stock, which voting trust was subsequently terminated on or about October 31, 1945.

In accordance with the provisions of the 1935 indenture, Randolph-Wells directed the Trust Company of Chicago on or about November 26, 1935, to authenticate and deliver 1935 bonds in exchange for the surrender of 1927 bonds or certificates of deposit.

A final decree in proceeding No. 7034 was entered on April 20, 1936. There was no provision made in the No. 7034 proceeding limiting the time within which the holders of the 1927 bonds or certificates of deposit would be entitled to exchange their 1927 bonds or certificates for 1935 bonds and voting trust certificates or shares of stock.

By July 9, 1937, Randolph-Wells was in default on the 1935 bonds and commenced this proceeding (Bankruptcy No. 7464) under Section 77B of the Bankruptcy Act.

On May 2, 1939, this Court entered an order approving the plan of reorganization pursuant to which the 1935 bonds were subordinated to a new first mortgage and converted the 1935 bonds from fixed interest bearing bonds to cumulative income bonds.

Paragraphs I(a) and (b) of the order, approving the documents and directing steps in consummation of the plan as ...


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