CORPORATIONS-APPRAISAL STATUTES-TIME WITHIN WHICH DEMAND FOR APPRAISAL MUST BE MADE

A resolution to merge the corporation in which plaintiff held shares with defendant corporation was adopted by the shareholders over plaintiff\u27s objection. Eight days later, plaintiff made written demand on defendant corporation for payment of the fair value of his shares. The statute required that such demand be made upon the surviving corporation within twenty days after the merger . . . was effected, and provided that a merger became effective upon issuance of a certificate of merger by the Department of State. The articles of merger were not promptly filed and the certificate of merger did not issue until 42 days after the plaintiff\u27s demand was received. The court below dismissed plaintiff\u27s petition for appointment of appraisers to fix the value of his shares, construing the phrase, within twenty days after the merger . . . was effected, as fixing both the beginning and the end of the period in which demand must be made. On appeal, held, reversed. Since the statute fixed the ending date only, plaintiff was entitled to demand payment of the fair value of his shares at any time after the shareholders approved the plan of merger and before the expiration of twenty days after the merger was effected. Duddy v. Conshohocken Printing Co., (Pa. 1948) 60 A. (2d) 394

BANKRUPTCY-STATUS OF CLAIMS IN BANKRUPTCY PROCEEDING FOLLOWING DEFAULT IN CHAPTER XI ARRANGEMENT

A significant question arising under the Bankruptcy Act of 1938 which has not been satisfactorily dealt with by the statute is the relative status, in a bankruptcy proceeding precipitated by the debtor\u27s default under the terms of a chapter XI arrangement, of claims of creditors participating in the arrangement and of those who became creditors after confirmation. Specifically, the problem is whether the old creditors, those who participated in the arrangement, can prove to the amount of their original claims, or merely to the extent of their claims as scaled down by the terms of the arrangement; and whether the new creditors, those extending credit after confirmation of the arrangement, can participate in the bankruptcy proceeding, and if so, whether their claims should be accorded priority over those of the old creditors. A satisfactory solution must be premised upon the policy underlying chapter XI arrangements, debtor rehabilitation. To foster rehabilitation, the status accorded old and new claims should provide an incentive to old creditors to participate in the arrangement, and, at the same time, furnish an inducement to new creditors to extend credit after confirmation. The statute contains no express solution to these problems. The few courts considering the matter have reached divergent and unsatisfactory results. It has been recognized that the answer lies in legislative action, for a proposed amendment is currently pending before Congress. Facing the possibility of a business recession, an examination of the problem and its background and evaluation of the proposed legislation are particularly timely and desirable

BANKRUPTCY-STATUS OF CLAIMS IN BANKRUPTCY PROCEEDING FOLLOWING DEFAULT IN CHAPTER XI ARRANGEMENT

A significant question arising under the Bankruptcy Act of 1938 which has not been satisfactorily dealt with by the statute is the relative status, in a bankruptcy proceeding precipitated by the debtor\u27s default under the terms of a chapter XI arrangement, of claims of creditors participating in the arrangement and of those who became creditors after confirmation. Specifically, the problem is whether the old creditors, those who participated in the arrangement, can prove to the amount of their original claims, or merely to the extent of their claims as scaled down by the terms of the arrangement; and whether the new creditors, those extending credit after confirmation of the arrangement, can participate in the bankruptcy proceeding, and if so, whether their claims should be accorded priority over those of the old creditors. A satisfactory solution must be premised upon the policy underlying chapter XI arrangements, debtor rehabilitation. To foster rehabilitation, the status accorded old and new claims should provide an incentive to old creditors to participate in the arrangement, and, at the same time, furnish an inducement to new creditors to extend credit after confirmation. The statute contains no express solution to these problems. The few courts considering the matter have reached divergent and unsatisfactory results. It has been recognized that the answer lies in legislative action, for a proposed amendment is currently pending before Congress. Facing the possibility of a business recession, an examination of the problem and its background and evaluation of the proposed legislation are particularly timely and desirable