Trustees, the net result would be substantially the same as if the original transaction had never occurred (i.e., as if the leased lines had never attempted to pay off their indebtedness, and the railroad had never loaned the $11,880,000 to PC) and, instead, the railroad had arranged an unsecured loan from International in the sum of $41.8 million.
Clearly, secured creditors of the Debtor's estate have no room for complaint. As for other creditors and equity interests, while it is true that the total amount of the unsecured claims against the Debtor's estate will be increased by $41,839,635.54, the Debtor's assets will be increased to the extent of its reinstated claims against PB&W and Penndel.
Moreover, the earning power of the railroad will presumably be enhanced by reason of the removal of obstacles to the affirmance of the two leases. No unsecured creditor has objected to the proposed settlement, and the shareholder interests, represented by the parent company, affirmatively seek approval of the Trustees' petition.
As noted above, the only objection has come from the New Haven Trustee, in his capacity as a shareholder of the parent company. He does not contend that the proposed settlement is not advantageous to the Debtor's estate. Rather, his objection goes to the actions of the parent company in connection with pending refinancing of the parent company's obligation to the Swiss noteholders. It appears that the proposed refinancing has been approved by the shareholders of the Penn Central Company, over the objections of the New Haven Trustee and others. See Allen v. Penn Central Company et al., 350 F. Supp. 697 (E.D.Pa.1972). I adhere to the views previously expressed, that the advisability of the actions of the parent company in this regard are not reviewable in this Court. See In the Matter of Penn Central Transportation Co. (Re: Instructions to the Trustees Concerning Penn Central Company), 328 F. Supp. 1268 (E.D.Pa.1971). Apart from possible jurisdictional questions, it is my feeling that this Court should not attempt to interfere with the decisions of the directors and shareholders of the Penn Central Company, so long as they do not adversely affect the Debtor's estate or the reorganization process.
For the foregoing reasons, an Order will be entered granting the Trustees' petition.
ORDER NO. 1011
And now, this 10th day of November, 1972, upon consideration of the Petition of Trustees for Approval and Authority to Enter into Settlement with Penn Central Company, Penn Central International, N.V. and Certain Creditors of Penn Central International N.V., and with the Cleveland Trust Company and Bank of America (Document No. 3918), and upon hearing duly noticed, and for the reasons stated in the accompanying Memorandum Opinion, this Court finds:
1. That granting the Petition is in the best interest of the Debtor's estate and its ultimate reorganization.
2. That implementation of the settlement referred to in the Petition is in the best interest of the Debtor's estate.
It is therefore ordered:
1. The settlement among the Trustees, Penn Central International, N.V., the Penn Central Company, Penndel Company, The Philadelphia, Baltimore and Washington Railroad Company, Schroeder Trust Company and the Noteholders upon the terms set forth in paragraph 14 of the Petition, is approved.
2. The Cleveland Trust Company and Bank of America are authorized, at the direction of the Trustees and International, to pay over the principal amounts of the deposits referred to in paragraph 8 of the Petition, provided, however, that such payment shall be made without prejudice to any claim of setoff and/or any claim of priority of The Cleveland Trust Company in the amount of $1.5 million and Bank of America in the amount of $665,000 as provided by paragraph 7 of Order No. 1 herein as to which amounts said banks shall be deemed to have the same legal and equitable status as is enjoyed by depositories of the Debtor's funds who paid over sums in compliance with paragraph 7 of Order No. 1 herein.
3. It is adjudged and decreed that, except as to the amounts paid to the Trustees in respect of said deposits, the amounts to be paid to International shall be free and clear of all liens, claims and interests of the Debtor, its creditors, administrative claimants and the Trustees.
4. The Trustees or any one of them or their designees are authorized to take all action necessary to consummate the proposed settlement, including a release of any claim against The Cleveland Trust Company and Bank of America in respect of interest on said deposits and to make all necessary adjustments in the books and accounts of the Debtor and the Trustees necessary to reflect the transactions contemplated hereby.
5. The Cleveland Trust Company and Bank of America are authorized, to the extent necessary, to amend the Proofs of Claim filed herein by or on their behalf, in accordance with the settlement referred to in paragraph 14 of the Petition.
6. This Court reserves jurisdiction to effectuate the terms of this Order.