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King, Lawrence P.

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Cedarville University

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Buffalo Law Review Volume 19 Number 3 Article 19 4-1-1970 Materials on Reorganization, Recapitalization and Insolvency. by Walter J. Blum and Stanley A. Kaplan. Lawrence P. King New York University Follow this and additional works at: https://digitalcommons.law.buffalo.edu/buffalolawreview  Part of the Business Organizations Law Commons Recommended Citation Lawrence P. King, Materials on Reorganization, Recapitalization and Insolvency. by Walter J. Blum and Stanley A. Kaplan., 19 Buff. L. Rev. 707 (1970). Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol19/iss3/19 This Book Review is brought to you for free and open access by the Law Journals at Digital Commons @ University at Buffalo School of Law. It has been accepted for inclusion in Buffalo Law Review by an authorized editor of Digital Commons @ University at Buffalo School of Law. For more information, please contact lawscholar@buffalo.edu. MATERIALS ON REORGANIZATION, RECAPITALIZATION AND INSOLVENCY. By Wal-ter J. Blum and Stanley A. Kaplan. Boston: Little, ]rown and Company.1969. xxi + 868 pages. $13.50.LAWRENCE P. KING*This classroom tool is the latest revision of earlier materials dated 1948,1956 and 1960.1 In essence, it wends its way through the restructuring of cor-porate entities within and without a proceeding under the Bankruptcy Act, dueto or disconnected from the ill of insolvency. Depending on the structure of aparticular course on Corporate Reorganization, a value judgment will have tobe made as to the point of commencement into this area, and which omissionsare most appropriate. While the materials contained in the book are excellent,the instructor will find a need to supplement them in some cases, and omit partsin other instances, depending upon his particular course.To give just a brief description of the coverage of the book, in addition tothe materials pertaining to reorganization under the Bankruptcy Act there areincluded sections dealing with mergers, acquisitions, rights of dissenting stock-holders, reorganization under the Public Utility Holding Company Act, railroadreorganizations and mergers, regulation of public utility rates, and even wageearner proceedings under chapter XIII of the Bankruptcy Act. Although someof the others are rather broadly interrelated, it is unclear why the last mentionedsubject was included at all. And how an instructor is to broach the subject ofwage earner proceedings in the midst of rather heady discussions of complexcorporate problems is perhaps inexplicable. It may be that the general idea wasto give a bird's-eye view of the Bankruptcy Act in its entirety, but because somany other areas are included having nothing to do with a bankruptcy proceed-ing in any of its aspects, it certainly seems to have been an unnecessary in-clusion. Of course, the easy answer is that if it does not fit, anyone using the bookmay omit any reference to it. But where one has to say at the beginning of class,"the following parts of the book will be omitted" either he looks foolish in theway he has structured the course, or he looks foolish in settling upon the partic-ular book for use in that course.One general statement by way of providing some description of the bookmay well be made. The approach taken by the editors is distinctly weightedtoward the economic and financial aspects of corporate reorganizations, ratherthan what could be labeled purely procedural problems. The materials, of whichthere is a generous amount, perhaps even more than cases, and which includeexcerpts from articles, speeches, reports of the Securities and Exchange Com-mission, and the like, focus on this approach in all parts of the book. This is* Professor of Law, New York University.1. As mentioned on p. vii: "A not insubstantial part of these materials previously ap-peared in Blum, Materials on Insolvency and Reorganization, 1960. This collection was arevision of the 1956 edition of these materials and of Blum and Katz, Materials on Reorga-nization, 1948."BUFFALO LAW REVIEWpointed out not by way of criticism, but rather to indicate the essence of thebook. Thus, if one wanted to consider a rather important current problem in-volving the consolidation of proceedings under the Bankruptcy Act involvingsubsidiary or affiliated companies, one would find the materials sparse indeed togive it any consideration. On the other hand, there is some consideration of theappropriate relief problem, whether a corporation should be put through a chap-ter XI arrangement or a chapter X reorganization by the inclusion of the UnitedStates Realty and Improvement Co.,2 Shlensky,3 and American Trailer Rentals4cases, all decisions of the United States Supreme Court. But there is no follow-through of the procedural, even economic problems raised by these decisions.One might well be left with the impression, from a mere recital of these decisions,that stockholders' rights are adequately, perhaps fully, preserved if the corpora-tion is forced into a chapter X reorganization instead of being permitted anarrangement under chapter XI as desired by the debtor and its creditors.5 In-vestigation of lower court cases, however, proves the fallacy of so broad anassumption.6 It would have been worthwhile to devote some pages to a discussionof the availability of new money when a proceeding is switched from chapter XIto chapter X, in the attitude of creditors toward one or the other, and to the factthat stockholders' rights can, in actuality, be completely wiped out through sucha change, either because creditors or new investors will acquire the stock, or thecompany will be adjudicated bankrupt and liquidation will ensue. Without evensome note following these cases to raise such questions, the instructor is leftcompletely to his own imagination and devices. In addition, this location in thebook would have been an excellent place for the inclusion of a brief excursioninto the basic differences between chapter X and chapter M proceedings, al-though some indication of them may be gleaned from the cases mentioned.Reviewing a casebook or a "materials" book is, for the most part, an impos-sible task. The essential question the reviewer must respond to is whether or notthe book is a good or useful tool for an instructor to assign to his class as thedaily source material around which the classroom discussion centers. This re-viewer is really not capable of answering that basic question or offering advice asto the general utility of the book in the classroom. There are several reasons.First, I am not sufficiently knowledgeable to make a value judgment on all thematerials covering what in some schools would be within the ambit of courses2. SEC v. United States Realty and Improvement Co., 310 U.S. 434 (1940); p. 221.3. General Stores Corp. v. Shlensky, 350 U.S. 462 (1956), p. 321.4. SEC v. American Trailer Rentals Co., 379 U.S. 594 (1965), p. 236.5. A chapter XI arrangement proceeding may affect only the rights of unsecured cred-itors. A chapter X reorganization may affect the capital structure and the secured indebted-ness as well as the unsecured debt of the debtor corporation. In chapter X, the courtgenerally must appoint a disinterested trustee to administer the debtor and the SEC isusually a party or has the option of becoming one while neither would occur in a chapterXI proceeding.6. See, e.g., In re Herold Radio & Electronics Corp., 191 F. Supp. 780 (SMD.N.Y. 1961);Weintraub & Levin, From United States Realty to American Trailer Rentals: The Avail-ability of Debtor Relief for the Middle-Sized Corporations, 34 FoRann L. Rzv. 419, 429(1966).BOOK REVIEWSand seminars devoted to corporate law in all its aspects, as distinguished fromgeneral insolvency law. Second, individualistic teaching styles must be consideredand personal prejudices taken into account. For example, I would rather ap-proach the general subject matter covered by this book from a purer problemmethod technique. All areas of general commercial practice today are peculiarlysusceptible to a problem method approach, and my personal bias is much morefavorable toward teaching tools which make this attempt rather than towardthose which are more traditional. There are, accordingly, an insufficient numberof problems in this book for my taste, but that is a purely personal matter.Third, it is too early for me, as a reviewer, to state baldly that the book containstoo much and too little. In teaching a course in this area I personally would notbe able to assign this book because there would be too much to be omitted fromit and too much that would have to be added to it. Thus, how can a reviewersuggest to other instructors that they should or should not adopt the particularbook? All that can be said, but which adds little, is that the book exists and itcontains thus and so.One caveat of a peculiar nature should be expressed. The statutory ap-pendix contains, among other things, excerpts from the Bankruptcy Act. Itshould be noted, however, that some of the sections of the Act are set forthinaccurately in that they do not reflect 1966 and 1967 amendments made tothese particular sections. For example, section 2 does not contain added para-graph (2A); section 64a(4) does not contain the 1966 amendment while, in-explicably, section 64a(5) does; the inclusion of section 67 is very poorly draftedin that section 67b does not reflect the change made in 1966 and immediatelyfollowing it is part of section 67d without any indication that it comes fromparagraph d instead of paragraph b; section 70c does not reflect the 1966change; and, sections 334 and 337 do not indicate the 1967 amendments madethereto. I have been informed that an errata sheet has been mailed out, whichI have not seen, to correct various errors in the book itself but apparently noneof the statutory inaccuracies have been noticed.

Materials on Reorganization, Recapitalization and Insolvency. by Walter J. Blum and Stanley A. Kaplan.

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Materials on Reorganization, Recapitalization and Insolvency. by Walter J. Blum and Stanley A. Kaplan.

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