Thus, I am faced with the reality of a present plan wherein secured and unsecured creditors could be paid in full -- as opposed to a request that I defer consideration of the Foreman-Snider Plan so that Kalodner may ascertain whether he can produce a viable amended plan with an additional 1.5 million dollars. In fairness to the creditors, I will not defer my adjudication since the present record has already been closed with all parties having had ample time to present their cases. For certainly Kalodner could have long ago anticipated that he might be in error as to his challenge of the Foreman mortgage, and in such a case, he should have made previous efforts to prepare an alternative plan which would provide an additional one and one-half million dollars financing. Accordingly, as to Kalodner's potential future amendment, I make no judgment as to whether at this stage further amendments should be permitted or considered.
This opinion, filed pursuant to Rule 52(a) of the Federal Rules of Civil Procedures (28 U.S.C. Rule 52(a)), constitutes the prerequisite findings of fact and conclusions of law for my prior Order denying and dismissing the petition to strike and disallow the Foremans' fourth mortgage claim, and for my finding that the Foreman-Snider Plan is worthy of consideration for submission to the Securities and Exchange Commission.
II. STIPULATED FACTS
Almost all facts concerning Kalodner's petition to strike and disallow the Foremans' fourth mortgage have been stipulated and are contained in the Stipulation of Facts (D.E. 165) and the accompanying Exhibits (D.E. 166).
The Eagles were incorporated in 1964 to acquire the assets of the Philadelphia Eagles Football team. Jerry and Anne Wolman were issued 52% of the stock of the Eagles, for which they paid $520,000, and Earl and Phyllis Foreman were issued 48% for which they paid $480,000. Of the money contributed by the Foremans, $280,000 represented a loan from Jerry Wolman to be repaid in five years. (D.E. 165, Stipulation 1, hereinafter referred to as "D.E. 165, S-1).
The Spectrum was organized on May 3, 1967, at which time Jerry Wolman was issued 46% of its stock. On August 12, 1967, Jerry Wolman acquired an additional 46% of the Spectrum's issued stock (D.E. 165, S-2) in a complicated transaction which included Wolman's acquisition of Snider's interest in the Spectrum and Snider's acquisition of Wolman's interest in the Philadelphia Hockey Club, Inc. (N.T., August 19, 1971, p. 25).
From August, 1966 to November, 1967, Wolman caused the Spectrum to transfer funds to him or to others on his behalf. Among such amounts transferred to Wolman were $1,000,000 which the Spectrum had received from ARA on August 19, 1966, and $1,000,000 which the Spectrum had received from the Fidelity Bank in June, 1967. At all times after August 18, 1966, Wolman has owed the Debtor a net balance in connection with such transactions, and on November 6, 1967, this net balance was $1,598,353.66 (D.E. 165, S-4; N.T., August 19, 1971, p. 94.)
From March, 1967 to the Fall of 1967, Wolman at various times caused the Eagles to transfer funds to and on behalf of the Spectrum. By the Fall of 1967, the net balance of such transfers was $443,776.65. (D.E. 165, S-5). Such transfers of funds were done purportedly without authorization from the Board of Directors of the Eagles and without the consent or knowledge of the Foremans. Foreman, by letter of October 21, 1967 (D.E. 166, Ex. C), protested to such transfers of funds by the Eagles to or on behalf of the Spectrum and others for the personal benefit of Wolman. (D.E. 165, S-7.) Furthermore, during 1967, Wolman caused the Eagles to transfer funds to himself or on his behalf totalling more than $1,400,000. (D.E. 165, S-8).
On June 1, 1967, Wolman and Joseph King (an assistant secretary of the Eagles), purporting to act on behalf of the Eagles, executed and delivered a Guarantee Agreement (D.E. 166, Ex. B) guaranteeing payment of all sums due or to become due to McCloskey & Co., Inc., (hereinafter referred to as "McCloskey") from the Spectrum and Wolman for the construction of the Spectrum's facilities. (D.E. 165, S-6). This Guarantee Agreement was executed and delivered without the authorization of the Board of Directors of the Eagles and without the knowledge or consent of the Foremans. (D.E. 165, S-7.) On learning of the Guarantee Agreement, Foreman protested at the December 26, 1967 Board of Directors meeting that this guarantee had never been authorized, and asserted that the Guarantee Agreement was not a valid obligation of the Eagles. (D.E. 165, S-9; D.E. 166, Ex. F.)
With Wolman filing a Petition for Arrangement under Chapter XI of the Bankruptcy Act on December 13, 1967, and with the Spectrum going into reorganization under Chapter X of the Bankruptcy Act on May 1, 1968, McCloskey was thereafter prevented from proceeding against either Wolman or the Spectrum for collection of the balance due for the construction of the Spectrum's facilities. (D.E. 165, S-10; N.T., August 19, 1971, p. 37.)
In June, 1968, McCloskey filed a complaint against the Eagles in the Court of Common Pleas of Philadelphia County seeking payment of $1,235,740.48 for the construction of the Spectrum's facilities pursuant to the Guarantee Agreement. The Board of Directors of the Eagles, with Wolman present, resolved to resist the McCloskey suit, contending that the purported Guarantee Agreement was not a valid corporate act of the Eagles. (D.E. 165, S-11.)
With both Wolman and the Spectrum in corporate reorganization, a sale of the Philadelphia Eagles at a "good price" was advantageous to both Wolman and Foreman. Through the sale of the Eagles, Wolman would have funds to eliminate some of his indebtedness, and as a result there would be a better probability of a rearrangement of his personal financial affairs. Kalodner conceded that the sale of the Eagles stock was ". . . obviously of some benefit to him [Wolman]." (N.T., August 19, 1971, p. 101.) Similarly the sale would be advantageous to Earl Foreman in that he was anxious to see the Eagles sold before his equity was lost. Thus, for these mutually advantageous reasons, Wolman and the Foremans entered into a Compromise Agreement as of October 31, 1968, with the following parties: Morgan Guaranty Trust Company of New York (hereinafter referred to as "Morgan"); Jerry and Anne Wolman; McCloskey; Blake Construction Co., Inc. (hereinafter referred to as "Blake"); Earl and Phyllis Foreman; and the Eagles. The Agreement candidly recognized that:
". . . There are pending disputes among the parties including but not limited to (i) the priority of the distribution of the proceeds of any sale of the Eagles, (ii) a claim of McCloskey as to an alleged guaranty of the Eagles, (iii) the amount of the claims of Morgan and the validity of its security, (iv) the amount of the claims of Fidelity and the relative priority of its security interest in the Eagles stock, and (v) the relative priority of Blake's security interest in certain of the Eagles stock; and
". . . The parties hereto desire to compromise all such disputes and prevent any further litigation with respect thereto; . . ."