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IN RE BOWEN

September 3, 1942

In re BOWEN


The opinion of the court was delivered by: KALODNER

The bankrupt's estate consisted of real estate and a block of stock. The bankrupt owned five parcels of real estate, situated in Allentown, Lehigh County, Pennsylvania, all of which were encumbered by various mortgages, judgments, and tax liens of the Federal government. The stock was held by a creditor as collateral security for a loan.

Henry Baker, one of the petitioners who has filed the present certificate of review, owned five of the judgments. Prior to the bankruptcy proceedings he had issued execution on one of the judgments in the sum of $79,242.42 on one of the parcels of real estate (the Hamilton Street property) which was advertised for sale by the Sheriff of Lehigh County. On July 21, 1939, the bankrupt made an assignment for the benefit of creditors, and the assignees secured an order in the Court of Common Pleas of Lehigh County enjoining the sale. The assignees proceeded to advertise the sale of the real estate, and on November 8, 1939, the bankrupt filed his voluntary petition in bankruptcy and obtained an order from the referee to stay the sale.

 As matters thus stood, the referee called the first meeting of creditors on December 8, 1939, and, at the outset, made the following statement (p. 04, N.T.):

 "An examination of the schedules discloses that this is a non-asset case and order was filed upon the bankrupt by the referee to deposit $50.00 as required by the rules to cover the costs of administration, but this was not done.

 "The only assets shown in the schedules consist of real estate amounting to as appraised by the bankrupt $593,000. The debts shown amount to $950,166.66, and of this amount, with the exception of $150. rent and $7,050. unsecured claims, is all represented by liens and taxes.

 "This meeting was called primarily for the purpose of giving the secured creditors an opportunity of getting together and if they saw fit to formulate a plan of liquidating this estate. Under the law the administration costs and fees of the referee or the trustee are not deductible from any funds that should be applied to the payment of liens, and therefore the referee does not propose to move in this estate unless the lien creditors will file a stipulation with the referee asking that the referee sell the real estate under the proper orders, and the statutory fees and costs may be deducted from the amounts passing through his hands for distribution." (Emphasis supplied.)

 In accordance with the suggestion of the referee, David Getz, Esq., of counsel for Henry Baker, on the adjourned meeting of December 11, 1939, placed the following stipulation of record (pp. 07, 08, N.T.):

 "By Mr. Getz:

 "On behalf of the lien creditors that I represent I am willing to stipulate that out of the amount that might be realized out of real estate owned by the bankrupt out of which fund distribution will be payable to lien creditors that a sum not to exceed $4,000. be retained by the referee for distribution of administration expenses in this estate, provided however that any fund realized out of the sale of personal property shall first be used for the payment of administration expenses.

 "This statement is being made pursuant to request by the referee to the effect that because of the state of the record and it appearing that there will be no distribution for general creditors that before a trustee, who might in the future be appointed, can sell the real estate and incur expenses in connection therewith that he be assured that there be a fund out of which the said expenses could be paid.

 "Such portion of the expenses that are allocated toward the real estate fund are to be borne according to the proportion as the lien creditors realize in their dividend."

 "By the Referee:

 "And the expenses above referred to shall include the statutory fees of the referee and the trustee, and the lien holders will join with the trustee in all ...


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