Page:Harvard Law Review Volume 32.djvu/547

UPSET PRICES IN CORPORATE REORGANIZATION 511 that the Court of Appeals was wrong in finding that there had been a transgression of the well settled rule of equity in this case, or that it went further than to see that substantial justice should be done." And in the Boyd case the court suggests the proper course to be followed.^^ "This conclusion does not, as claimed, require the impossible and make it necessary to pay an unsecured creditor in cash as a condition of stockholders retaining an interest in the reorganized company. His interest can be preserved by the issuance, on equitable bonds, of income bonds or preferred stock. If he declines a fair offer he is left to protect himself as any other creditor of a judgment debtor, and, having refused to come into a just reorganization, could not thereafter be heard in a court of equity to attack it. If, however, no such tender was made and kept good he retains the right to subject the interest of the old stock- holders in the property to the payment of his debt. If their interest is valueless, he gets nothing. If it be valuable, he merely subjects that which the law had originally and continuously made liable for the pay- ment of corporate liabilities." In brief, if the plan of organization provides a place for unsecured creditors whereby such creditors are partly or slightly paid, in cash or bonds, or allowed stock, even inferior to that of the old stockholders who advance money to the new company and can be given a priority because of that reason, and if a majority of the unsecured creditors accept this offer, and the dissenting unsecured creditors are given an equal opportunity to participate, can the minority object? Such a plan, it would seem, would contain the "fair offer" in a "just reorganization" of which the court speaks in the Boyd case. It would be fair to all because all classes of creditors would be provided for; it would allow stockholders to participate; and thus the conditions of the decision in the Boyd case would be met, and conveniences of financing not precluded. In other words, if the majority of the class excluded, or relegated to a position inferior to the participating stockholders, consent and the plan is not oppressive or unfair, can the minority of this class object? And must not the reorganization committee provide in some way for these creditors as a class? If the majority of creditors should demand full payment of their claims, and should refuse to accept a plan of reorganization " Northern Pac. Ry. v. Boyd, 228 U. S. 482, 508 (1913).