vote for the Plan were proofs of claim in amounts in excess of $500,000, which claims the Debtor allegedly expected to be disallowed; (5) allegedly the letter failed to specify why four members of the Creditors' Committee dissented from the recommendation to accept the Plan and why two of those four resigned; (6) allegedly the letter failed to disclose the nature and extent of the allegedly fraudulent transfers to Debtor's parent corporation and officers; (7) allegedly the reference to the fact that the "non-interest bearing notes will be secured by an irrevocable bank letter of credit" failed to disclose that there was at that time no commitment whatsoever for such irrevocable letter of credit; and (8) allegedly the scope and extent of the negotiations between Debtor and First Pennsylvania Bank were not disclosed.
There is authority to support the contention of the objecting creditors that recipients of securities issued in connection with the arrangement chapter of the Bankruptcy Act are entitled to as much information as are those persons acquiring stock under ordinary conditions. In Re American Trailer Rentals Company, 325 F.2d 47, 53 (10th Cir. 1963) reversed on other grounds Securities and Exchange Commission v. American Trailer Rentals Co., 379 U.S. 594, 85 S. Ct. 513, 13 L. Ed. 2d 510 (1965). "Under Section 17(a), Securities Act of 1933, 15 U.S.C. § 77q(a), the failure to state the whole truth with regard to a security is equally as unlawful as statements of half-truths or deliberate falsehoods." In Re American Trailer Rentals Co., supra, at 53 (cases omitted).
As the final Plan of Arrangement accepted by the requisite majority of creditors, and representing the only operative Plan of Arrangement before this Court, does not involve any securities, assuming, arguendo, that the solicitation of acceptances ran afoul of the disclosure provisions of the 1933 Act, the critical issue is whether a re-solicitation is now required? The objecting creditors argue in the affirmative relying on In Re American Trailer Rentals Company, supra, and the line of cases holding that where proxies are solicited in violation of Section 14(a) of the 1934 Act, a re-solicitation is required and that where a tender offer is made in violation of the Williams Act, § 14 (e) of the 1934 Act, a corrected tender offer is required. See e.g., Corenco Corp. v. Schiavone & Sons, Inc., 362 F. Supp. 939 (S.D. N.Y. 1973).
The cases on which the objecting creditors rely do not support the proposition that a re-solicitation is required where no securities are involved in a Plan of Arrangement. For example, in In Re American Trailer Rentals Company, supra, the objecting creditors' primary authority, the Securities and Exchange Commission and the Circuit Court took the position that a re-solicitation providing the needed information relative to securities listed in a Plan of Arrangement is required. See, Id., at 53. Perforce, where no securities are involved in a Plan of Arrangement, as in the action sub judice, the need for such a re-solicitation is obviated -- there are no holders of securities to be protected, which is the rationale behind such re-solicitation. See, Id. Thus, the upgrading of the Plan of Arrangement from 7 1/2% debt security to cash moots the issue.
However, the fact that the final and operative Plan of Arrangement does not involve any securities and, as a result thereof, the solicitation of acceptances did not violate any provision of the 1933 or 1934 Acts, does not end our inquiry. For, it is clear that material misrepresentations or omissions may indeed prevent a good faith acceptance of the Plan under § 366 (4) of the Bankruptcy Act.
We find that the bankruptcy judge's conclusion that there has been a good faith acceptance is supported by the evidence. First, the evidence presented shows that the Debtor made available to the Creditors' Committee all of the information which the objecting creditors have alleged the Creditors' Committee failed to make available to the general creditors. The duties of the Creditors' Committee are set forth in Bankruptcy Rule 11-29 (a) as follows:
(a) Functions. The committee selected pursuant to Rule 11-27 may consult with the trustee, receiver, or debtor in possession in connection with the administration of the estate, examine into the conduct of the debtor's affairs and the causes of his insolvency or inability to pay his debts as they mature, consider whether the proposed plan is for the best interests of creditors and is feasible, negotiate with the debtor concerning the terms of the proposed plan, advise the creditors of its recommendations with respect to the proposed plan, report to the creditors concerning the progress of the case, collect and file with the court acceptances of the proposed plan, and perform such other services as may be in the interest of creditors.
It is clear that the Creditors' Committee is not required to forward to each creditor all of the raw data it receives and considers in the process of carrying out its duties.
Of course, a fair presentation of the status of the Debtor is required. Where, as here, there is no suggestion that either the objecting creditors or any of the creditors who accepted the Plan were misled, and where, as here, the information disclosed by the Creditors' Committee is a fair summary on its face, reversal of the bankruptcy judge's order of confirmation cannot be predicated merely upon the assertion, advanced by a handful of creditors, that additional material could have been supplied to the general creditors.
In addition, there is no evidence to support the suggestion of the objecting creditors that the Creditors' Committee in this case was under the control of the Debtor or acted collusively with the Debtor. Accordingly, the contentions of the objecting creditors that Debtor was involved in material misrepresentations and omissions in the solicitation of acceptances for the Plan of Arrangement is unsupported by the evidence. The bankruptcy judge's determination that there was a good faith acceptance of the proposed plan as required by § 366 (4) of the Act is not clearly erroneous.
Finally, the objecting creditors contended at oral argument that an informal meeting of creditors held in the law offices of the Debtor on October 15, 1974 ran afoul of Bankruptcy Rule 208 (c)
; and they point to the minutes of that meeting taken by counsel for Debtor and allegedly attached to the affidavit of Mr. Howard T. Glassman. This contention was first stated on appeal at oral argument. Neither the minutes nor the affidavit is in the record before us, and, consequently, we will not consider this contention.
We have considered all of the contentions raised by the objecting creditors, whether or not raised below, in accordance with the scope of review as posited in Bankruptcy Rule 810. We find no reason to disturb the bankruptcy judge's order entered below; accordingly, the following order affirming confirmation of the Plan of Arrangement has been entered.
AND NOW, this 26th day of February, 1976, IT IS ORDERED that the order of confirmation entered by the Bankruptcy Judge on September 19, 1975, is AFFIRMED. Memorandum to be filed hereafter.
BY THE COURT:
CLIFFORD SCOTT GREEN, J.