80TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session { REPORT No. 1003 MODIFICATION OF RAILROAD FINANCIAL STRUCTURES MARCH 24, 1948.-Ordered to be printed Mr. WOLVERTON, from the committee of conference, submitted the following CONFERENCE REPORT [To accompany H. R. 2298] The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H. R. 2298), to amend the Interstate Commerce Act, as amended, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same. CHAS. A. WOLVERTON, Managers on the Part of the House. CLYDE M. REED, ALBERT W. HAWKES, FRANCIS J. MYERS, Managers on the Part of the Senate. STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE The managers on the part of the House at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H. R. 2298) to amend the Interstate Commerce Act, as amended, and for other purposes, submit the following statement in explanation of the effect of the action agreed upon by the conferees and recommended in the accompanying conference report: The Senate amendment struck out all after the enacting clause of the House bill, and inserted a substitute text. The recommendation of the committee of conference is that the House recede from its disagreement to the Senate amendment and agree to the same. The bill as passed by the House amends the Interstate Commerce Act by adding a new section 20b, providing a voluntary procedure whereby railroads not in bankruptcy or receivership may, under certain specified circumstances, with the approval of the Interstate Commerce Commission, alter or modify their obligations (i. e., bonds, debentures, or other evidences of indebtedness), or mortgages, indentures, or other like instruments, under which obligations have been issued or by which obligations are secured. Such modifications may be made only with the assent of the holders of 75 percent of such obligations. The purpose is to aid in assuring the continuity of sound financial condition of railroads by enabling them, so far as possible, to avoid prospective financial difficulties, inability to meet debts as they mature, and insolvency. The Senate amendment modifies the House bill amost entirely by adding new matter, as explained in more detail below. The proposed section 20b of the Interstate Commerce Act contained in the House bill consists of paragraphs (1) to (11), inclusive. The Senate amendment adds paragraphs (12) and (13) to the proposed section 20b, and also adds a new section 3 to the bill. Both the House bill and the Senate amendment contain the requirement that all letters, circulars, advertisements, and other communications, among other things, to be used in soliciting the assents or the opposition of holders of securities shall, before being so used, be submitted to the Commission for its approval. While this provision is necessary, and should be applied so as to fully protect the interests of affected parties, it is not intended to operate in such a way as to impose unnecessary censorship of normal or ordinary correspondence between a carrier and a stockholder. It is believed that the Commission will have ample authority, through prescribing regulations, to apply this provision reasonably and at the same time insure that it will afford the intended protection. The substantive differences between the House bill and the Senate amendment are explained below: 1. Modification of stocks.-The House bill would permit, under the voluntary adjustment procedure provided for, the modification of bonds, debentures, or other evidences of indebtedness and of the instruments under which they are issued or by which they are secured. The Senate amendment permits, in addition, modification of stocks and of the instruments under which they are issued. Appropriate textual changes were made by the Senate to carry out this policy. 2. Carriers in receivership or section 77 reorganization.-Under the House bill, the voluntary adjustment procedure provided for by the new section 20b would be available only to carriers which are not in equity receivership or in process of reorganization under section 77 of the Bankruptcy Act. By the Senate amendment, paragraph (13) of the new section 20b will in addition permit, under the conditions outlined below, use of the voluntary adjustment procedure by those carriers in equity receivership proceedings, on the date of the enactment of this legislation, whose properties have not been sold under foreclosure and the order of sale confirmed; or those carriers which, on the date of the enactment of this legislation, are in section 77 bankruptcy proceedings which have not reached final consummation of a plan of reorganization. In any such case the carrier must first file an application with the court in whose custody its properties are, for permission to take advantage of the voluntary adjustment procedure. The carrier must show that holders of at least 25 percent of the aggregate amount of securities affected by its proposed plan are in accord with the proposed procedure. The court has final authority to grant or withhold permission. If the court grants permission, the proceedings then pending will be suspended until such time as the Commission advises the court that the application filed with it by the carrier has been dismissed or denied by the Commission or withdrawn, or that the Commission has approved the new alteration or modification, or that 12 months have elapsed since the filing of the application and no alteration or modification has been approved by the Commission. The carrier will thus have a maximum of 12 months to work out a voluntary plan. The court will retain custody of the property, but if a plan is approved by the Commission and is satisfactory to the court, the receivership or bankruptcy proceeding will be terminated and custody of the property will be restored to the debtor. Since the bill does not purport to affect adversely obligations or liens created by the operation for the account of debtors by trustees in other reorganization proceedings or former lessees, it appears unnecessary expressly to state that such obligations must be satisfied. 3. Taxes on issuance or transfer of securities.-By the Senate amendment, in paragraph (12) of the new section 20b, it is provided that sections 1801, 1802, 3481, and 3482 of the Internal Revenue Code, unless specifically providing to the contrary, shall not apply to the issuance, transfer, or exchange of securities or the making or delivery of conveyances to make effective any alteration or modification effected pursuant to the new section 20b. 4. New section 3.-The Senate amendment contains a section 3 which is not in the House bill. Paragraph (a) (1) of this section provides, in the case of plans of reorganization hereafter approved by the Commission in section 77 proceedings, that at any time more than 18 months after the Commission has either certified a plan to a court or has disposed of a like petition filed under this paragraph, any party affected may file a petition and as a result it shall be the duty of the Commission to report to the court any changes, facts, or developments which have taken place since the approval of the plan and which make it necessary or expedient for the Commission to examine or revise the plan. Such a petition cannot be entertained, however, in those cases where an order confirming the plan has been entered, unless an appeal from such an order is pending in the circuit court of appeals, or the matter is pending in the Supreme Court on a petition to review any order of a lower court dealing with the order of confirmation, or the time to make such an appeal or file such a petition has not expired. These same safeguards are also contained in subsequent paragraphs of the section to make certain that orderly court procedures cannot be displaced or interfered with. Paragraph (a) (2) of this section is substantially similar to the paragraph above described, but permits the court, instead of the Commission, to receive a petition and give consideration to whether changes, facts, or developments have occurred which make it necessary or expedient for the Commission to reexamine, revise, or reconsider a plan. If the court so finds, it may return the plan to the Commission for such revision. Paragraph (a) (3) of this section is a parallel provision to the two preceding paragraphs and merely provides that in certain reorganization cases still pending the Commission must report to the court any changes, facts, or developments which have taken place since December 31, 1939, and which were not provided for in the plan it approved. Paragraph (a) (4) of this section is a procedural provision to insure that if a plan is returned to the Commission in accordance with the provisions of the section, all of the proceedings will be governed by subsection (d) of section 77 of the Bankruptcy Act, as amended. Paragraph (a) (5) of this section is also a procedural provision to make certain that petitions alleging new facts or developments must be filed with the court and referred to the Commission. Such action apprises the court of the legal action taken under the new law and suspends further action by the court involving confirmation of the old reorganization plan. The court, of course, retains custody of the property and of the case pending action and report by the Commission. Subsection (b) of this section provides for a public hearing in the event a plan is returned to the Commission. It spells out the factors that the Commission must evaluate and on which parties will offer evidence in reconsideration of a plan. The Commission, after such hearing and consideration, may modify or refuse to modify the plan. If the former, it certifies the modified plan to the court and proceedings continue on the modified plan under section 77 as they did on the original plan. If the Commission refuses to modify, it also transmits its order and the transcript for court consideration. If the court finds that the Commission's refusal to modify the plan is based on sufficient findings and is supported by the record, the original section 77 proceedings shall continue as if the plan had never been returned to the Commission. If, however, the court does not so find, it shall return the plan to the Commission for further consideration, after which the Commission shall again certify the plan to the court. CHAS. A. WOLVERTON, Managers on the Part of the House. 80TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session { REPORT No. 1604 AUTHORIZING THE ISSUANCE OF A SPECIAL SERIES OF STAMPS COMMEMORATIVE OF THE ONE-HUNDREDTH ANNIVERSARY OF THE FOUNDING OF FORT KEARNEY IN THE STATE OF NEBRASKA MARCH 24, 1948.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. TWYMAN, from the Committee on Post Office and Civil Service, submitted the following REPORT [To accompany H. J. Res. 341] The Committee on Post Office and Civil Service, to whom was referred the joint resolution (H. J. Res. 341) to authorize the issuance of a special series of stamps commemorative of the one-hundredth anniversary of the founding of Fort Kearney in the State of Nebraska, having considered the same, report favorably thereon without amendment and recommend that the joint resolution do pass. STATEMENT It is the purpose of this legislation to authorize and direct the Postmaster General to issue during 1948 a stamp commemorating the one-hundredth anniversary of the establishment of Fort Kearney, Nebr. This fort was located at the southernmost point of the Platte River where it meets the Oregon Trail. The land on which it was located originally belonged to the Pawnee Indians and had been partially ceded to the United States in 1893. Fort Kearney is a great symbol of the West. It was the jumping-off point on the Overland Trail to California and Oregon and furnished, during the 25 years of its existence, most of the military protection against Indians for the emigrants passing over the original trail to the West. Nearly 50,000 emigrants were served at Fort Kearney while passing through during the gold rush of 1849. Fort Kearney, Nebr., was a key defense point during the Indian uprisings in 1854-57. With the inauguration in 1860 of the pony express a station was located at Fort Kearney which was the departure into the Indian country. It was also an important receiving station of the Missouri & Western Telegraph Co. beginning in 1860. In view of the important part that this fort has played in the growth and development of the West, it is the view of the committee that a stamp commemorating its founding is warranted. |