Security Trust Co. v. Baker

SIMONS, Circuit Judge.

In a debtor proceeding for reorganization under sections 77A and 77B of the Bankruptcy Act (11 U.S.C.A. §§ 206, 207), this controversy arose as between preferred stockholders of the debtor corporation who had converted their stock into bonds, and unsecured creditors who had become such prior to the conversion. Decision requires construction of Kentucky corporation law, and more particularly of section 564, which as amended by an act of 1910 (chapter 79) has become section 564-1, Kentucky Statutes. The District Court denied priority to the bonds and their holders have…