Vanston Bondholders Protective Committee v. Green et al. (329 U.S. 156)
U.S. Supreme Court · decided December 9, 1946 · Supreme Court Database (Spaeth)
- Citation
- 329 U.S. 156 · 67 S. Ct. 237
- Decided
- December 9, 1946
- Term
- October Term 1946
- Vote
- 8–0
- Majority author
- Justice Black
- Issue area
- Economic Activity
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Mr. Justice Black delivered the opinion of the Court. December 2,1930, a Kentucky District Court appointed an equity receiver of Inland Gas Corporation to take com-píete and exclusive control, possession, and custody of all of Inland’s properties, and enjoined Inland’s officers from paying its debts. At that time there was no interest unpaid on Inland’s first mortgage bonds. February 1, 1931, semiannual interest coupons fell due on these bonds. The debtor could not pay; the court did not direct the receiver to pay. The indenture trustee, acting under the terms of the indenture, promptly declared the entire principal due and payable despite the previous assumption of custody of the estate by the federal court. In 1935, the same District Court approved a creditor’s petition for reorganization under § 77B of the Bankruptcy Act, and at a subsequent date the reorganization was continued as a Chapter X proceeding. The indenture provides for payment of interest on unpaid interest. Inland is insolvent, but its assets are sufficient to pay the first mortgage bondholders in full, including the interest on interest. Should interest on interest be paid, however, subordinate creditors would receive a greatly reduced share in the reorganized corporation. These latter concede that the first mortgage bondholders should receive simple interest on the principal due them, but challenge their…
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