precedent with respect to any further financial assistance under the Act or a commitment with respect to the ultimate reorganization of the estate.
(d) This Order is without prejudice to the right of any party to assert any alleged constitutional right and this Court retains jurisdiction to enter such further orders, upon motion of any party or upon its own motion, as may be appropriate under Section 77 of the Bankruptcy Act or under the Constitution or otherwise.
(e) The obligation to be undertaken by the Trustees under paragraph 1(h) of this Order does not constitute a commitment on their part to enter into an agreement under Section 215 of the Act, and no such agreement will be entered into without the express approval of this Court after a hearing de novo on all relevant issues.
3. The Trustees are authorized to take any action necessary and appropriate to implement and consummate the agreement.
4. This Court reserves jurisdiction over the subject matter of the agreement and its implementation.
MEMORANDUM AND ORDER NO. 1509
Certain Indenture Trustees (the Bank of New York, Bankers Trust Company, the Fidelity Bank, and Manufacturers Hanover Trust Company) have filed a motion (Document No. 7158) for reconsideration of Order No. 1480 in these proceedings.
The Indenture Trustees correctly point out that the Memorandum of this Court, accompanying Order No. 1480, does not fully and accurately reflect the position taken by the Indenture Trustees at the hearing which resulted in that Order. The Indenture Trustees' willingness to permit the transaction to go forward was expressly conditioned upon certain modifications in the terms of the Order approving the transaction; and these modifications were not incorporated. These two conditions were as follows:
1. Requiring a commitment by the Trustees of the Debtor to repay the sums advanced by the government on or before June 15, 1974. As matters now stand, the Trustees have the option to do this, and, if appropriate, might still be ordered by this Court to do so; but this is not necessarily going to happen.
2. That the determination of the precise nature of the government's claim for repayment of the sums advanced be left open since, if the condition discussed above were imposed, those issues would become moot by June 15, 1974. To adopt this approach would, in my view, have been tantamount to rejecting the proposal outright, since the government was unwilling to put up any money on that basis.
The Indenture Trustees assert that the $10.8 million transaction approved by Order No. 1480 will produce results violative of the constitutional rights of the secured creditors, among others; that the Regional Rail Reorganization Act, properly construed, would enable the Secretary of Transportation to obviate at least this particular instance of unconstitutionality by making a § 213 grant, rather than a quasi-loan; and that, by requiring the Trustees to repay the $10.8 million as soon as cash permits, this Court could insure the restoration of the status quo, so that future reorganization decisions could be properly evaluated. There is much to be said for this approach, and, in my view, Order No. 1480 is not inconsistent with that result. But, for the reasons hereinafter set forth, I decline to make any change at this time in the provisions of Order No. 1480.
In the first place, the factual details in support of the contentions of the parties on the erosion issues have not been fully developed on the record in these proceedings. Presumably, these issues will be squarely presented in the forthcoming hearings under § 207 of the RRRA and the pending petitions for dismissal or cessation.
In the second place, a present directive to repay the money by June 15 could be entered only on the assumption that cash flow projections compiled in February will prove to have been precisely accurate. In my judgment, the situation is entirely too fluid to permit any such assumption. And in this connection, it must be remembered that the Trustees retain the option to repay the $10.8 million at any time, without interest. Deferral of repayment until the necessity and desirability of repayment can be demonstrated with certainty appears to be the preferable course, since the Debtor's estate pays nothing for the use of the money.
For all of the foregoing reasons, the motion for reconsideration will be denied. However, this Memorandum will be spread upon the record as an addendum to the Memorandum in Support of Order No. 1480, for purposes of clarification.
© 1992-2004 VersusLaw Inc.