Court, at which the various complex and weighty legal issues could be fully briefed and argued, so that this Court might make an informed decision as to the proper course to follow; and that, in the interim, the status quo should be preserved, to the extent of preventing actual interference with the Debtor's property and the reorganization process.
Accordingly, Order No. 296 was entered, fixing a date for further hearing, on July 26, 1971, and temporarily restraining the New Haven Trustee and all persons generally from attempting to enforce payment from the Debtor's estate or taking action to enforce any lien thereon, until the hearing. In reality, this Order did no more than particularize and call attention to the provisions of Order No. 1 in this proceeding. It is noteworthy that counsel for the New Haven Trustee stated (transcript p. 2467) that he would recommend a stay of any order which might be entered in the Connecticut court "until appellate review can be obtained by the Supreme Court." Nevertheless, the New Haven Trustee has now filed an application for a stay of Order No. 296. Since Order No. 296 clearly did not interfere with the June 22 hearing in the Connecticut court, and since it does nothing more than attempt to preserve the status quo until the hearing in this Court, the present application for a stay is in reality a request that the Order be vacated, so that steps can be taken in advance of the July 26 hearing in this Court to deplete the Debtor's estate or otherwise interfere with this reorganization. The application will be denied.
The principal grounds asserted in the application are that, since the order ultimately entered in the Connecticut court on June 22 does not direct the Penn Central Trustees to make immediate payments (as had been intimated in the Memorandum of Decision of June 11), the restraints of this Court's Order No. 296 are unnecessary ("premature, academic and improper"). There are at least two answers to this argument. In the first place, it is far from clear that the June 22 orders of the Connecticut court would necessarily be interpreted as limiting in any way the conclusions expressed in the June 11 "Memorandum of Decision," which itself may constitute an order of that court. Paragraph 8 of the Order of Remand appears to incorporate by reference the terms of the Memorandum of Decision.
More importantly, the Order of Remand purports to appropriate for the New Haven Trustee one-half of the excess income from the Grand Central Terminal properties, commencing July 1, 1971. The distinction between this provision and a direction to the Penn Central Trustees to pay, may prove to be nebulous. Moreover, a separate order was entered on the same day (Order No. 647) in which the Connecticut court "on its own motion" appointed an attorney "as the court's counsel to take such steps * * * as he may deem to be necessary or appropriate to preserve the equitable lien and constructive trust declared by this court * * *"; including, apparently, recordings in four states to be-cloud the title to the property of the Debtor.
I do not profess a complete understanding of all of the possible ramifications of the June 22 orders, but I am not persuaded that the status quo would continue undisturbed in the absence of the restraints imposed by Order No. 296.
It is further suggested that Order No. 296 is invalid because it does not contain supporting reasons, pursuant to Federal Rule of Civil Procedure 52(a). Assuming the applicability of this Rule in bankruptcy, I believe the reasons were adequately expressed of record at the conclusion of the hearing on June 21.
Finally, it should be noted that there has never been, and is not now, any suggestion that the New Haven Trustee would in any way be prejudiced by preserving the status quo until the hearing in this Court on July 26 (a date selected by agreement of counsel in order to suit the convenience of New Haven counsel).