American United Life Ins. Co. v. Haines City

On June 19, 1939, the City of Haines City, Florida, filed a petition for composition of its debts under Chapter IX of the Bankruptcy Act, as amended, 11 U.S.C.A. § 401 and ff. An interlocutory decree confirming a plan was entered October 2, 1939. By it the principal of the Citys indebtedness was to be refunded dollar for dollar by new bonds bearing lessened interest and with a distant maturity. The coupons for past due interest and accrued interest on past due bonds were to be taken up on a low percentage basis within a brief time, or at the holders option deposited in escrow with a named agent for transferable certificates of deposit, to be held for a period to expire November 16, 1940. Prior to that date the city was to make adjustments of past due taxes and assessment liens owed to it, so as to collect as much as possible on them, and remit the proceeds of collection to the escrow agent, who before May 16, 1940, would retire certificates therewith at 40 percent of par and thereafter until Nov. 16, 1940, at 50 percent of par. On Nov. 16, 1940, the escrow was to be closed, the city notified what certificates were outstanding, and their holders were to have new bonds like those issued for the principal of the old bonds, dollar for dollar, except that coupons maturing prior to April 1, 1940, would be removed. On October 10, 1940, the City filed a petition to modify the plan so as to allow it to raise money to redeem the remaining certificates at 50 percent of par in another way. On notice to creditors a hearing was had, and on Nov. 14, 1940, the Court granted the petition for modification over objection of appellant here, American United Life Insurance Company, which still held an unredeemed certificate for $16,430. Under the original plan appellant would on Nov. 16th be entitled to new bonds for $16,430, with interest coupons of April 1, 1940, and Nov. 1, 1940. It claimed the market value of the bonds had risen to 65. Under the modification, it could receive only 50 percent of par, without any interest.