In re Di Cristina

OdliN, Judge,

delivered the following opinion:

This case is that of a voluntary petition in bankruptcy. The referee has submitted all the papers in this case to the court, and it appears that on November 16, 1923, the bankrupt offered a composition to pay 5 per cent to all of his creditors except those entitled to priority, said payment to oe made one year after the composition should be approved; but this offer of course to be effective on tbe examination of tbe bankrupt-in open court, as provided by tbe Bankruptcy Law of 1898. Tbe referee certifies to me that tbis examination bas been bad, and that all of tbe creditors have signed tbeir acceptance of tbe composition, for wbicb reason tbe referee recommends that tbe same be approved by tbis court.

On examination of tbe papers, it seemed to me at first that tbis ridiculously small offer, even tbougb accepted by tbe creditors, should be disapproved. Tbe debts of tbe bankrupt amount to nearly $19,000, 5 per cent of wbicb would be about $950. There are listed in tbe schedules of tbe bankrupt debts due tbe bankrupt .amounting to $18,468. It'seems to me incredible that these claims should not yield much more than $950, because if such be tbe case then nearly all these debtors of tbe bankrupt, twenty-eight in number, would be themselves virtually bankrupt. I find, however, a decision by United States District Judge Morton, rendered October 31, 1921, in tbe case of Be Crosby, reported in 215 Fed. 880. Judge Morton distinctly bolds that if tbe creditors do not see fit to appear and protect tbeir interests after being duly notified of pendency of offer in compromise, no evident fraud being practised, tbe court ought not to refuse approval of tbe composition, notwithstanding a report of tbe referee, under tbe Bankruptcy Act, § 12 b, in wbicb tbe referee states that in bis opinion the composition is not in tbe best interests of tbe creditors.

It will be noticed that tbe case in Boston decided by Judge Morton is much stronger than tbe case pending before me for decision at this time. In tbe Boston case tbe creditors simply remained inactive; they neither approved nor disapproved tbe offer of composition. But in tbe present case, wbicb I am' called upon to decide, tbe creditors have specifically accepted this apparently ridiculous offer of 5 per cent. *

Following the reasoning of Judge Morton, there being no evidence of fraud, I am obliged to hold that the court of its own motion ought not to refuse approval of the composition. The court must entertain the presumption, as suggested by Judge Morton, that these creditors of the bankrupt have sufficient and proper reason for their action.

Therefore the offer of composition is not disapproved by me, and matter set for hearing at San Juan, 9 a. m., February 9, 1924..

Done and Ordered in open court at San Juan, Porto Bico, this 24th day of January, 1924.