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In re Penn Central Transportation Co.

August 29, 1985

IN RE PENN CENTRAL TRANSPORTATION COMPANY; PINNEY DOCK & TRANSPORT COMPANY; LITTON INDUSTRIES, INC.; LITTON SYSTEMS, INC.; LITTON GREAT LAKES CORPORATION AND ERIE MARINE, INC., APPELLANTS


Appeal from the United States District Court for the Eastern District of Pennsylvania (Bankruptcy No. 70-347)

Author: Higginbotham

SEITZ, HIGGINBOTHAM, Circuit Judges .

WEBER, District Judge.*fn*

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

In this consolidated appeal, Pinney Dock & Transport Company ("Pinney"), Litton Industries, Inc., Litton Systems, Inc., Litton Great Lakes Corporation, and Erie Marine, Inc. ("Litton") appeal from final bankruptcy orders of the United States District Court for the Eastern District of Pennsylvania. The court denied their petition for leave to pursue antitrust actions in another forum against Penn Central Corporation ("PCC"), the reorganized company former in the railroad reorganization proceedings of Penn Central Transportation Company ("PCTC") and several secondary debtors pursuant to section 77 of the Bankruptcy Act, formerly codified at 11 U.S.C. ยง 205 (repealed 1978). Pinney and Litton allege that, although they received notice of the reorganization proceedings, their claims for damages based on an antitrust conspiracy were fraudulently concealed from them and that they should therefore be allowed to prosecute those claims now. We will affirm the district court for the reasons expressed in this opinion.

I.

A.

On June 21, 1970, PCTC filed a petition for railroad reorganization under section 77.*fn1 Section 77(c)(7) provides in pertinent part that the court shall "fix a reasonable time within which the claims of creditors may be filed or evidenced and after which no claim not so filed or evidenced may participate" in the Plan of Reorganization ("Plan")*fn2 except an order for cause shown. Accordingly, on February 18, 1971, the district court entered Order No. 164, requiring all proofs of claims against PCTC arising prior to the date of the reorganization petition, except those specifically exempted, to be filed with the court by June 1, 1971. Appendix at 1-32. In Order No. 914, entered September 12, 1972, the court also established a procedure for creditors who had been notified of the proof of claim requirement, and who had failed to comply with the above bar date, to attempt to show good cause why their claims should not be excluded from participation in the Plan. Appendix at 33-44. Pinney, Litton, and Pinney's parent corporation, Standard Slag Co., received notice by mail of Order Nos. 164 and 914. Appendix 580-82. Litton and Standard Slag Co. also filed proofs of claims which were not based upon alleged antitrust violations. Pinney did not participate in the proof of claim procedure.

On March 17, 1978, the district court approved the Plan as amended in its opinion. Matter of Penn Central Transp. Co., 458 F. Supp. 1234, 1346 (E.D. Pa. 1978). Overwhelming majorities of all except three creditor classes then voted to accept the Plan. Litton and Standard Slag Co. were among the creditors who accepted the Plan. On August 17, 1978, the district court entered the Confirmation Order No. 3707 and the Consummation Order No. 3708, setting October 24, 1978, as the consummation date. Matter of Penn Central Transp. Co., 458 F. Supp. 1364 (E.D. Pa. 1978).*fn3

B.

The Consummation Order constituted the final decree in the reorganization process and, pursuant to section 77(f), contains the following relevant sections:

3.06. Discharge of Release of Claims. Subject to the provisions of Section 6.03 below relating to the payment, assumption or satisfaction by the Reorganized Company of certain claims, the Debtors and the Trustees of the properties of the Debtors shall, as of the Consummation Date, be discharged and released forever from

(a) all obligations, debts, liabilities and claims against any of the Debtors, whether or not filed or presented, whether or not approved, acknowledged or allowed in these proceedings and whether or not provable in bankruptcy ... .

6.03. Assumed Obligations. The claims of creditors, claimants and stockholders in respect of obligations of any of the Debtors or Trustees of the properties of the Debtors will be satisfied as provided in the Plans, subject, however, to the provisions of this Order relating to the payment or satisfaction of such claims. Any timely-filed claim ... against any of the Debtors or Trustees and contingent claims in respect of guarantees by any of the Debtors of bonds of non-sudsidiary companies, against any of the Debtors or their Trustees included in a class provided for in the Plans but not liquidated in amount, settled, determined, classified, approved, acknowledged, allowed or adjudicated to be valid until after the Consummation Date will be satisfied pursuant to the Plans in the same manner as if such claim had been so adjudicated or otherwise liquidated prior to the Consummation Date. Without limiting the generality of the foregoing, the following claims and obligations [not pertinent here] shall be assumed and satisfied by the Reorganized Company ... .

7.02. Injunction. All persons, firms, governmental entities and corporation, wherever situated, located or domiciled, are hereby permanently restrained and enjoined from instituting, prosecuting or pursuing, or attempting to institute, prosecute or pursue, any suits or proceedings, at law or in equity or otherwise, against the Reorganized Company ... or against the assets or property of the Reorganized Company ... directly or indirectly, on account of or based upon any right, claim or interest of any kind or nature whatsoever which any such person, firm, governmental entity or corporation may have in, to or against any of the Debtors, the Trustees of the Properties of the Debtors or any of their assets or properties ... and from interfering with or taking steps to interfere with the Reorganized Company ... or the operation of the properties or the conduct of the business of the Reorganized Company ... by reason of or on account of any obligation or obligations incurred by any of the Debtors or any of their Trustees in these proceedings, except the obligations imposed on the Reorganized Company ... by the Plans and this Order or reserved for resolution or adjudication by this Order. All persons, firms, governmental entities and corporations, whereever [wherever] situated, located or domiciled, are hereby restrained and enjoined from instituting, prosecuting or pursuing or attempting to institute, prosecute or pursue any suit or proceedings, at law or in equity or otherwise, against any of the Debtors or any of their assets or property, directly or indirectly, except such suits or proceedings as may be for the purpose of carrying out this Order by consummating the Plans ... .

7.04. Reservation of Jurisdiction. From and after the Consummation Date, the Court hereby reserves jurisdiction, which shall be exclusive to the extent that under applicable law such jurisdiction is presently exclusive:

(h) To consider and take appropriate action with respect to the matters referred to in Section 7.02 above, including action to enforce the ...


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