The opinion of the court was delivered by: LUONGO
Before me are three Petitions for Review of orders entered by the Bankruptcy Judge in proceedings involving the Debtor, Scientific Resources Corporation (SRC).
In 1965, SRC acquired substantially all of the capital stock of Hilco Homes Corporation from Martin Cohen, Anita Cohen, Walter Drucker and Richard Drucker (hereinafter referred to as petitioners) for an agreed price of $896,000. Eventually petitioners instituted suit to collect a substantial unpaid balance of the purchase price, and, on December 26, 1973, obtained a judgment
in their favor in the Common Pleas Court of Philadelphia in the amount of $752,198.14, plus interest from April 1, 1968. Meanwhile, on October 12, 1973, SRC had filed a petition for arrangement with creditors under Chapter XI of the Bankruptcy Act. Upon application by counsel for the Debtor, I granted Debtor's request to remain in possession and to continue operating its business without the appointment of a receiver. The Chapter XI proceeding was thereafter referred to Bankruptcy Judge Emil F. Goldhaber. In due course, petitioners filed their proof of claim for an amount in excess of one million dollars, representing the amount of their judgment with interest to October 12, 1973.
The First Meeting of Creditors was held on November 15, 1973, and hearings were held on that date and on November 20, December 10, and December 14, 1973. Petitioners applied to me on December 13, 1973 for the appointment of a receiver, contending that the matters disclosed in the examinations of officers and former officers of the Debtor required such appointment. I referred the matter to Bankruptcy Judge Goldhaber to hear and decide since he had already heard a substantial amount of evidence in the case. On December 14, 1973, after hearing argument, the Bankruptcy Judge denied the application. On the same date, after having heard testimony filling more than 500 pages, the Bankruptcy Judge terminated the First Meeting of Creditors and scheduled a hearing on Confirmation of the Plan and objections thereto for December 18, 1973. The Plan of Arrangement provided generally for the conveyance of a large portion of SRC's assets to Rocky Mountain Industries, Inc. (RMI), in return for RMI securities which, when added to RMI securities already owned by SRC, were to be delivered to creditors of SRC in satisfaction of SRC's debts. The Asset Purchase Agreement between SRC and RMI was dated September 1, 1972, was executed in February 1973, and was approved by Debtor's shareholders in October 1973. That Agreement had been incorporated in an Exchange Offer filed under the Securities Act of 1933 in an effort to accomplish voluntarily that which was finally submitted as the Plan of Arrangement under Chapter XI. The Prospectus for the Exchange Offer was before the Bankruptcy Court as an exhibit attached to the Chapter XI petition.
At the hearing on Confirmation on December 18, 1973, a substantial majority of creditors in number and amount
accepted the Arrangement. On April 17, 1974, the Bankruptcy Judge filed his Opinion and Order dismissing Petitioners' Objections and Confirming the Arrangement.
Meanwhile, in the period of time between the hearing on Confirmation of the Plan and the filing of the Opinion Confirming the Plan, petitioners had filed suit in the Court of Common Pleas of Philadelphia (March 18, 1974) against RMI seeking to set aside the Asset Purchase Agreement as a fraudulent conveyance. Upon petition of RMI, that action was removed to this Court (Civil Action No. 74-850, E.D. Pa.). On April 3, 1974, Debtor applied to the Bankruptcy Court for an order restraining petitioners' suit against RMI. The Bankruptcy Judge entered an Order on May 9, 1974 restraining petitioners from proceeding further in the suit against RMI.
(a) Order dated April 17, 1974 Confirming debtor's Plan of Arrangement;
(b) Order dated December 14, 1973 denying application for appointment of a receiver; and
(c) Order dated May 9, 1974 enjoining petitioners from prosecuting the suit against RMI.
All three Orders will be affirmed.
The Supreme Court order promulgating the new Bankruptcy Rules provided that they were to become effective July 1, 1974 and "shall be applicable to proceedings then pending except to the extent that in the opinion of the Court their application in a particular proceeding would not be feasible or would work injustice." There is no reason why the new rules should not be applied to these petitions. New Bankruptcy Rule 810, made applicable to Chapter XI proceedings by ...