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Bankruptcy- Municipal Reorganization - Fairness Of Plan, Kenneth J. Nordstrom

Michigan Law Review

A local government district, finding itself hopelessly in debt, filed a petition for relief under Chapter IX of the Bankruptcy Act as amended. The municipal debt composition plan provided that bondholders would receive eight cents on the dollar. The evidence showed that a considerable quantity of bonds were bought by local landowners at much more than eight cents on the dollar, evidently for the purpose of being used in getting the approval of some such plan as proposed, in the expectation of an increase in value of their lands by improvements to be made by the debtor through a loan …