The proof with respect to the cash value of assets available for distribution reveals that classes 1 through 6(b), (including class 2) will receive cash payments for the full value of their claims. Furthermore, the members of class 6(c) will receive less than 100% of the dollar value of their claims. This would appear to be the case, even if no monies were allocated to class 2. Thus, it appears that the estate will be totally exhausted by only a partial distribution to General Mortgage Income bondholders.
The above analysis reveals that the claims of all classes junior to 6(c) have no value, since distribution is to proceed in accordance with the absolute priority rule. And, a priori, the debtor is unquestionably insolvent, as the value of its assets is far less than even a portion of its total liabilities.
Submission of the Plan to a class of creditors for voting is not required, according to Section 77(e) (para. 2) (para. 4) "if the Plan provides for the payment in cash to such class . . . . of an amount not less than the value of their claims" or if the interest of such class has "no value". Likewise, according to the same statute, submission of the Plan to stockholders for voting is not required if the debtor is insolvent.
Here it appears that members of classes 1 through 6(b) will be paid cash in an amount equal to their claims. Members of class 6(c), on the other hand, will be paid less than the full value of their claims. The claims of members of classes 6(d) and all those junior thereto have no value, as all assets will be depleted by distribution to the Income bondholders. Therefore, the only class of creditors which is materially and adversely affected by the Plan, and who need vote thereon, is the class of holders of the Series A General Mortgage Income Bonds. Of course, the clear insolvency of the debtor makes submission of the Plan to stockholders likewise unnecessary.
In sum, this Court finds that the Plan complies with Sections 77(b) and (e) of the Bankruptcy Act, is fair and equitable, and should be approved as certified to the Court by the I.C.C. Only the members of class 6(c) are materially affected by the Plan, and entitled to vote thereon. The Trustee shall therefore within twenty (20) days of the entry of an Order conforming to this Opinion, mail to each member of the affected class, a copy of this Opinion and the accompanying Order, and the Interstate Commerce Commission decision and Order dated December 22, 1980.
Also included in that mailing to voting creditors shall be a ballot and a notice that the creditors' acceptance or rejection of the Plan must be received by the Trustee within sixty (60) days of the date of said Notice, in order for that vote to be counted.
The Trustee shall certify the results of the voting on the Plan to this Court and the I.C.C. within fifteen (15) days after expiration of the sixty (60) day voting period. Thereafter, the Court shall schedule a hearing on confirmation. It is anticipated that all parties who intend to apply for allowances as class 2 administrative creditors shall do so no later than the expiration of the voting period. Of course, the I.C.C. shall be included in the process of granting administrative allowances, for the purpose of determining maximum limits.
The counsel for the Trustee shall submit an appropriate order within five (5) days of receipt of this opinion.