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IN RE GILCHRIST CO.

March 10, 1976

In re GILCHRIST COMPANY, Debtor: In Proceedings for Arrangement under Chapter XI of the Bankruptcy Act

Green, J.


The opinion of the court was delivered by: GREEN

GREEN, J.

 Presently pending before the Court are the appeals of several creditors of the Gilchrist Company (Debtor) from an order of the bankruptcy judge confirming a Plan of Arrangement. For the reasons set forth in the opinion of the bankruptcy judge and for the additional reasons set forth in this memorandum, we have affirmed the aforesaid order of the bankruptcy judge.

 I. FACTS

 The Gilchrist Company is a corporation which operates ten retail stores in and around Boston, Mass. The Debtor has been in existence more than 75 years. It is a publicly owned corporation the stock of which is held primarily by Uni-Shield International Corporation. Uni-Shield International Corporation is a holding company and parent corporation of Debtor.

 Debtor filed for an Arrangement with its unsecured creditors pursuant to Chapter XI of the Bankruptcy Act. Subsequently, Debtor proposed to its unsecured creditors a Plan of Arrangement pursuant to which said creditors would receive 50% of the proven claims in the form of 42.5% in cash and the other 7.5% in three notes, each for 2.5%, payable October 1, 1975, February 1, 1976 and June 1, of 1976. The notes were to be guaranteed by an irrevocable letter of credit by First Pennsylvania Bank. The Plan related to a group of more than 1200 creditors who approved the Plan by the requisite majority in number and amount. See, Bankruptcy Act ยง 362.

 The First Meeting of Creditors was held on April 17, 1975 and continued without hearing until the requisite number and amount of acceptances by creditors were achieved. On August 12, 1975, the bankruptcy judge gave notice of a Final Meeting of Creditors to be held on August 25, 1975, inter alia, "to hear and consider confirmation of the Plan heretofore accepted in writing by a majority in number and amount of unsecured creditors whose proofs of claim have been filed". One objecting creditor, National Union Electric Corporation, filed a complaint objecting to confirmation on August 22, 1975. At the hearing on August 25, 1975, the bankruptcy judge gave the objecting creditor until August 29, 1975 to take appropriate discovery and otherwise prepare for an evidentiary hearing on confirmation set for that time. In the interim days between August 25 and August 29, the objecting creditor took numerous depositions, including those of Donald E. Stamm, of Credit Exchange, Inc., Secretary to the Creditors' Committee; John J. Ginley, of First Pennsylvania Bank, which was to fund the Plan; Harry S. Sylk, Receiver; Melvin Gold, Controller of Uni-Shield International Corporation; and Sidney J. Golub, Vice President of the Debtor.

 At the evidentiary hearing on August 29, 1975, the objecting creditor, National Union Electric Corporation, presented an amended complaint objecting to confirmation. Also, a complaint objecting to confirmation has been filed by four other creditors: Genesco, Inc.; Levi Strauss & Co.; Devon Apparel, Division of Interco, Inc.; and Territory Financial Corporation.

 At the August 29, 1975 evidentiary hearing, the objecting creditors asked the bankruptcy judge to deny confirmation based upon the depositions and exhibits attached thereto and to take judicial notice of the remainder of the record before the bankruptcy judge in this matter, and also before the bankruptcy judge in related bankruptcy proceedings of the Uni-Shield International Corporation and other companies affiliated with it. Although Rule 201 of the Federal Rules of Evidence, on which the objecting creditors rely, does not require the bankruptcy judge to take judicial notice on as broad a scope as requested by the objecting creditors *fn1" , it is clear that the bankruptcy judge did consider all of the records filed in not only this action but in the action of affiliated companies. In addition, it is clear that the bankruptcy judge considered all of the depositions filed in assenting to the objecting creditors' request that the action be treated as one for summary judgment.

 The bankruptcy judge denied the motion for summary judgment on the ground that there remained unresolved genuine issues as to material facts; and the record fully supports this determination.

 The bankruptcy judge then considered the objecting creditors' amended complaints as on trial. With respect to the admissibility of evidence offered during this aspect of the proceeding, the bankruptcy judge found that "the depositions offered into evidence by the objecting creditors, except the deposition of the executive vice-president of the Debtor [Mr. Golub], were inadmissible under Rule 32(a) of the Federal Rules of Civ. Procedure." (Conclusion of Law No. 4). This determination by the bankruptcy judge is clearly supported by the law; neither unavailability of the non-party witnesses nor any other basis was shown to justify the admission of the non-party discovery depositions. See, F.R.Civ.P., Rule 32(a).

 During the trial, the objecting creditors did not call any witnesses and of the depositions offered by them, only that of Mr. Golub was determined to be admissible. The Debtor offered into evidence the records of the notes of testimony of the April 17, 1975 First Meeting of Creditors in addition to an upgraded Plan of Arrangement which provides:

 
General unsecured claims shall be settled and satisfied by the payment to the holders thereof of 50% of their allowed claims as follows: 50% in cash at the time of confirmation.

 Thus, the Plan of Arrangement confirmed by the bankruptcy judge provides for a 50% cash payment to the unsecured creditors without any part thereof being deferred and secured by notes.

 The instant appeal is from the confirmation of the upgraded Plan. On February 26, 1976, we entered an order, based upon our review of the trial record, affirming the bankruptcy judge's order of confirmation. However, in considering the bankruptcy judge's determination concerning summary judgment we had occasion to consider all of the depositions offered by the creditors and are convinced that even if the excluded ...


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