plummeting to 55 and 60 degrees, and often even 70 degrees below zero, where they remain for many months.
The Slope is the home of an abundance of wildlife. It is estimated that some 400,000 caribou migrate yearly to the Slope. There they join countless bear, moose, dall sheep, fox, hare, squirrel, lemming, and wolf, as well as geese, duck and numerous other species of water fowl. Moreover, the Slope is traversed by some 350 rivers which spawn a variety of fish. The ecologist fear that the pipeline will obstruct the migration of the caribou, that oil spills will pollute the rivers and destroy the fish, and that any upsetting of nature's balance will make the Slope as inhospitable to wildlife as it is to man.
It had been suspected for many years that oil deposits might lie under the Slope. Shortly after the turn of the century, the United States Geologic Survey made a report on geologic conditions in the area, with a view to the location of oil. The first intensive exploration for oil and gas on the Slope came after the Second World War and was conducted by the United States government, concerned over the security of the nation's oil supplies. In 1958, oil exploration by private oil companies commenced. After many failures, in July of 1968 Arco and Humble reported a major strike near Prudhoe Bay. In the months that followed, other oil companies made similar discoveries in the Prudhoe Bay Field. It was soon estimated that the eons of geologic development had resulted in the trapping of some ten billion barrels of recoverable oil in the Prudhoe Bay Field. Other oil fields were soon discovered on the Slope and the estimates ran to a total of 30 billion barrels of recoverable oil and many billion cubic feet of recoverable gas. The oil discovery appeared to be the most important in the history of North America.
Understandably, the strike had enormous impact upon the State of Alaska, creating an atmosphere reminiscent perhaps of the days when gold was discovered there at the turn of the century. On September 10, 1969, the State of Alaska auctioned off oil leases on the Slope. Various major oil companies participated in the bidding and shortly thereafter commenced oil drilling operations on the tracts for which they had successfully bid. The drilling operations, however, required logistical support: construction materials to build the network of facilities necessary to conduct the drilling operations and to accommodate the men who were to work on the Slope; drill casing for the rigs which have to bore many thousands of feet to reach the oil; and fuel for power and heat, without which the drilling operations cannot be carried on nor life sustained. Similar logistical support was expected to be required for the men constructing the pipeline should the pipeline permit be issued.
Because of the climatic conditions on the Slope, there is only one feasible way to consistently supply this logistical support: by air. Red Dodge Aviation possesses a contract carrier certificate issued by the Alaska Transportation Commission to transport cargo from Anchorage and Fairbanks to the Slope. Red Dodge carries cargo under contract with various oil and construction companies, utilizing the two Lockheed Hercules aircraft, N30FW and N40FW which are the subject matter of the turnover petition before us. Shortly after the oil strike, negotiations were concluded for the sale of Red Dodge Aviation stock by its then owner, Earl "Red" Dodge, to Flying W, theretofore a New Jersey based executive jet and charter flight operator with extensive real estate holdings, including an airfield on which was located the so-called "Flying W Ranch". Flying W was and is a publicly held corporation whose stock is traded over the counter; presently there are some 1700 shareholders located all over the United States.
As the facts which we find from the plenary hearing will show (see infra), following the acquisition of Red Dodge, Flying W embarked on a major financial commitment in Alaskan cargo aviation. Infected, at it were, by the exuberant Klondike-like spirit which gripped Alaska in the fall of 1969 when the oil lease sale was held in Anchorage, and anticipating the early issuance of the permit to the Alyeska
Pipeline Company, a consortium formed by the oil companies for the construction of the trans Alaska pipeline, Flying W staked its corporate future in the Frontier State. Five of Flying W's major shareholders, Edwin, Brooke and Robert Matlack, and James and William Whitesell, through the instrument of personal guarantees of corporate obligations, staked their personal fortunes there as well.
Perhaps the most graphic illustration of the exuberant spirit, in view of the difficulties visited upon Flying W by its involvement with three Lockheed Hercules aircraft, is the fact that, during the winter of 1969, Flying W placed orders for two additional Hercules aircraft with delivery scheduled for the spring of 1970!
The events occurring since the fall and winter of 1969 are the sinews of this lawsuit. Suffice it to say, for purposes of this prologue, that the question of the trans Alaska pipeline has become a national cause celebre and that, because of the objections raised by the ecologists, both in the form of public discourse and of litigation, the pipeline permit has not been issued by the Interior Department, and no one knows when it will be; nor, for that matter, can anyone be certain of the ultimate pipeline route.
As the result of the delay, the level of activity on the Slope has fallen off from the original flurry, and with it has fallen off the business of Red Dodge Aviation. These events have led Red Dodge and its parent, Flying W, into bankruptcy reorganization court.
This has been a vexatious litigation, but, after all, the stakes are high. The shareholders of Flying W have their entire investment on the line and several of them have their personal fortunes at stake because of their guarantees of corporate obligations. The Banks, which seek recovery of the aircraft which are their security for a loan balance of well over $7 million on which no principal or interest has been paid for over two years, are properly concerned about impairment of their security by continued flying operations; they contend that they are being deprived of fundamental rights by continuation of reorganization proceedings which they believe to have no reasonable prospect of success. PSL, owner of the N50FW, which Red Dodge formerly used in Alaska, and of three spare aircraft engines, which Red Dodge is presently using, has huge claims as well as the engines at stake. And, needless to say, the general creditors whose claims total some $3,258,073 must be concerned about the outcome, for the general creditors will probably be "wiped out" along with the shareholders if the reorganization aborts. However, it is regrettably impossible to reconcile and accommodate in this adjudication the interests of all of the contending parties.
Many of the facts set forth in this prologue are not of record. Most of those which are not of record are matters of a judicial or of common knowledge.
In any event, the facts just recited are only at the threshold. We have related them because they are necessary to an understanding of those findings of fact which we now make and the conclusions of law which we draw therefrom.
Because of the protracted and complex nature of the case, the high stakes involved, and the high probability of an appeal, we have set forth extremely extensive findings. We feel that the parties and the reviewing court are entitled to no less. This Opinion will constitute our findings of fact and conclusions of law under Fed. R. Civ. P. 52(a).
II. PROCEDURAL HISTORY OF THE CASE
According to the docket of the clerk of the court, there have been over 230 papers docketed in the case to date. Full understanding of the case requires that we set forth a procedural history by describing the more significant aspects of the proceedings.
A. The Flying W Petition, and Order Number One
On September 24, 1970, at 9:25 a.m., Flying W filed with this Court a petition for reorganization under chapter X of the bankruptcy act. On the same day, Judge Kraft entered an order appointing the trustees, which, inter alia, provided:
"4. That Robert C. Duffy, Esq., and Eugene M. Bernstein . . . be and are hereby appointed trustees of the estate of the said Debtor and that the said trustees upon filing a bond as hereinafter provided shall be vested with all of the right, title and interest of the Debtor, as of the date of the filing of the said Petition for Reorganization, in all of its property . . .";
"5. That the said trustees shall qualify by entering into bond to the United States in the sum of $100,000 with such sureties as shall be approved by the Court . . ."; "11. That the said trustees shall be vested with full power and authority, and he is hereby instructed and directed to take all the properties, assets and business of the Debtor, real and personal, wherever situated and of whatever nature, into his exclusive possession and control, and the Girard Trust Bank, Farmers Bank of the State of Delaware, PSL Air Lease Corporation, or any other person, their officers, directors, agents, employees, attorneys, nominees, successors, assigns, or other representatives, be and they are hereby jointly and severally, ordered and directed to surrender and turn over to the possession and control of the trustee any of the above properties, assets and business of the Debtor, real, personal or mixed, now in its or their possession and control, and the said Girard Trust Bank, Farmers Bank of the State of Delaware, PSL Air Lease Corporation, or any other person, and each and every of its or their said officers, directors, agents, employees, attorneys, nominees, successors, assigns, and other representatives, be and they [sic] hereby jointly and severally restrained, enjoined and stayed from, in any manner whatsoever, interfering with or disturbing the trustee's right to exclusive possession and control of said properties, assets and business, real, personal or mixed." (emphasis added).