Opinion
June 5, 1933.
In Bankruptcy. In the matter of the Blossom Products, Inc., bankrupt. On petition, opposed by certain creditors, to confirm a composition.
Confirmation denied.
Bernard A. Grossman, of New York City, for bankrupt.
Tompkins, Boal Tompkins, of New York City, for Textile Banking Co., Inc., and L. F. Dommerich Co., objecting creditors.
Gettinger Gettinger, of New York City, for Industrial Nat. Bank of New York, objecting creditor.
The bankrupt in 1931 made an offer of composition. Several creditors opposed, alleging that credit had been obtained on false financial statements. After considerable testimony bearing on the issues had been taken, a stipulation was entered into by the bankrupt and the objecting creditors permitting the bankrupt to withdraw the offer. On November 18, 1931, an order was entered on the stipulation, directing that the offer be deemed withdrawn, and the composition proceeding came to an end. Over a year later the bankrupt makes a new offer of composition. This offer is resisted by the same creditors. The referee has found that at the time when the bankrupt withdrew its initial offer it expressly agreed with the opposing creditors that it would not again offer a composition, and he recommends that for this reason the proceeding should be dismissed.
One of the conditions precedent to confirmation of a composition is that it satisfactorily appear to the court that the offer made is "in good faith." Bankruptcy Act § 12, 11 USCA § 30. It would seem clear that an offer of composition is not made in good faith when it is in the teeth of an express agreement by the bankrupt not to make such an offer, the agreement having been made when the bankrupt was permitted by the opposing creditors to withdraw a prior offer.
Confirmation of the proposed composition will accordingly be denied.