In re Progress Shoe Co.

RAYFIEL, District Judge.

Lester Krieger and Sam Rosen, creditors of the above-named debtor, move to review the order of Hon. LOUIS J. CASTEL-LANO, Referee in Bankruptcy, dated July 7, 1952, and upon review to modify the said order to the extent that the claim of Abraham Ulano and William Pomerantz, as trustees, he held to be subordinate to their claims.

The learned Referee has found that the claims of the above creditors are of the same class and hence that neither is entitled to priority over the other.

The petition to review was filed by Abraham Ulano as trustee, and alleges that the Referee erred, first, in finding that Lester Krieger, Sam Rosen and Abraham Ulano and Benjamin Pomerantz, as trustees, should share pro rata in accordance with the amount of their respective claims in the surplus remaining.in the debtor’s hands after the payments provided for in the debtor’s third amended plan of arrangement had been made, and, second, in failing to find’ that Ulano and Pomerantz as trustees, were entitled to priority in payment over Krieger and Rosen.

I'agree with the Referee’s finding that both these claims are of the same class. The claim of Ulano and Pomerantz, as trustees, arises from a resolution duly adopted by the debtor corporation on June 18, 1946, providing for the purchase by the corporation, out of surplus, each year for the succeeding five years, of thirty shares of the preferred stock of the debtor corporation at the redemption price of $100 per share. The trustee’s claim is for their pro rata share in the sum of $2486 which had accrued on December 1, 1950, at which time the corporation had a surplus. The obligation was not paid but was carried as a liability on the debtor Corporation’s books.

Krieger and Rosen each filed a claim herein, Krieger’s in the sum of $30,098.99 and Rosen’s in the sum of $21,186.82. The claims arose by reason of a breach of contract of employment and represents the value, as fixed by arbitration, of their minority stock holdings in the debtor corporation. The arbitration awards were both confirmed by order and judgment of the Supreme Court of the State of New York.

I agree with the Referee that the said claims are of the same class and as he stated in his opinion “ * * * no showing has been made of any equitable considerations by which one creditor should be subordinated in payment to the other.” The provisions of the Bankruptcy statute, Secs. 2, 57, sub. d, 63 and 65 and the decisions thereunder provide for the equal treatment of creditors upon distribution, unless the court is moved by equitable considerations to withhold payment, subordinate or postpone payment of one creditor to the payment of another. Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281, Collier 14th ed. vol. 3, p. 2291.

Accordingly the petition to review is dismissed and the motion of Krieger and Rosen is denied.