Weismann v. Goss

SNEED, Circuit Judge:

The Hawaii Corporation (THC) is a corporate bankrupt undergoing reorganization pursuant to Chapter X of the Bankruptcy Act of 1898. Appellants are a group of investors who appeal from an order of the district court, sitting in bankruptcy, subordinating certain of the investors’ claims against THC. Because we find that subordination was appropriate in this case, we affirm.

I

FACTS

Appellants’ claims against THC’s bankruptcy estate arise through a series of transactions involving four separate entities. Prior to 1969, appellants held capital stock and 614% Collateralized…