Page:Harvard Law Review Volume 32.djvu/549

513 I UPSET PRICES IN CORPORATE REORGANIZATION 513 creditors are forever barred by the sale. Foreclosure sales as such in aid of reorganization are merely devices. They should be con- sidered a jBinal adjustment of all rights, as is done in England, only if they result in a complete and just financial structure erected under the supervision of the chancellor. Non-appearing security holders of all classes must be provided for. Their securities in the new company must be kept ready for them for a reasonable time. No reorganization committee fails to provide for a bondholder whose whereabouts is unknown; the same rule should be observed in the case of unsecured creditors. To be sure there is no certain means of ascertaining the amount of unsecured claims; hence a contingent fund must be set aside to pay, or provide securities for, these claims as they appear. There might be a theoretical difficulty in getting the consent of the majority of a class the ex- tent of which is unknown; yet those creditors who fail to use due dihgence in appearing, after reasonable notice by pubhcation, can well be ignored so far as voting is concerned. If this method of majority control under a plan, providing for all parties, and ap- proved by the court, is followed, then a foreclosure in aid of re- organization can well be considered final by the courts; the menace of the Boyd case in holding that a foreclosure decree can be opened at any time, is therefore avoided. In short, majority control of all security holders under a fair plan of reorganization providing for, and open to all security holders, appears to offer a sound solution of the difficulties arising from the doctrine of the Boyd case. How can majority control under a fair plan be provided for, assuming that the courts will not readily establish such a doctrine in its full scope? Provisions in the deed of trust are usually relied on. Deeds of trust, as now drawn up, are voluminous and won- derful documents; yet the conventional provisions as to majority control found therein are open to grave criticism and seem futile and useless. In the first place, unless the courts favor majority control they will not be bound by any covenants in the mortgage which seem to them oppressive, any more than they will in the case of oppressive covenants in an ordinary mortgage. Again,