have had to enforce the obligation to make that payment; and that, as between the Debtor's estate and all other parties, the obligation to make the installment payment is not extinguished, but continues in existence pursuant to the terms of the arrangement between the Trustees and USRA.
A decree will be entered in conformity with the views expressed above. I do not believe the Court is permitted any further extension of its equitable jurisdiction in this context. By enabling the Government to carry out its proposals on an interim basis, I of course have in no way altered my view that the record does not justify this kind of deferrals by the Trustees. The assumption of liability by Conrail does not necessarily exonerate the Trustees. And even if it did, I do not believe the RRRA can properly be read as requiring a railroad which, by definition, cannot be reorganized on an income basis under § 77, to be reorganized on an income basis in a manner equivalent to unaided § 77. Congress plainly intended to provide the cash needed for interim operations, and intended that Conrail should bear the cost of acquisition and improvement, not the cost of preconveyance operations.
Finally, I believe it appropriate to acknowledge that the holders of the equipment obligations involved in the present application have exhibited commendable forbearance in not seeking to enforce a default, notwithstanding the delays occasioned by the Government's eleventh-hour intervention. I suggest the parties would be well-advised, should similar problems arise in the future, to avoid even the possibility of a technical default.
ORDER NO. 2037
And now, this 8th day of October, 1975, upon consideration of the "Petition of United States of America for an Order Requiring Implementation [by First National City Bank (Citibank) ] of Financial Assistance Agreement" (Document No. 9323), it is ordered, as follows:
1. Citibank and the investors it represents as agent in connection with the conditional sales agreements referred to in the Government's petition, are enjoined from treating as an event of default the events surrounding the Government's attempts to provide the equivalent of payment of the $ 1.1 million installment of interest referred to in the petition.
2. Upon receipt by Citibank as agent of the sum of money necessary to enable it to pay to each investor his or its pro rata amount of such installment, together with interest to the date of payment, Citibank and the investors shall be permanently barred from asserting any default based upon alleged non-payment of said installment, and from enforcing or attempting to enforce any further obligation on the part of the Debtor or the Trustees with regard to said installment.
3. If the sum necessary to comply with the preceding paragraph is furnished by or on behalf of USRA, then upon receipt of said sum by Citibank, USRA shall be deemed to be subrogated to all of the rights and remedies which the original obligees under the conditional sales agreements would have had to enforce payment of said installment, subject, however, to the conditions and limitations set forth in the financial assistance agreement between USRA, FRA and the Trustees, referred to in the Government's petition.
4. As between the Debtor's estate and the Trustees, on the one hand, and USRA, FRA and all other parties (except, in the case of Citibank and the investors it represents as agent, as above provided), the receipt by Citibank of the money aforesaid, and the payment to the investors, shall not be deemed to have extinguished the original obligation pro tanto, nor to have reduced pro tanto the amount of the lien against the equipment in question.
5. If USRA is unwilling to supply and release the sums necessary to carry out the arrangements contemplated in the preceding paragraphs so that the funds can be disbursed by Citibank not later than October 15, 1975, then the Trustees shall forthwith, not later than the close of business on October 16, 1975, pay said sums to Citibank out of the general funds of the Debtor's estate, and the Government's petition shall thereupon be deemed to have been denied.