Securities Law Commons^™

Bankruptcy-Test Of Feasibility Under Chapter Xi Arrangement, Paul B. Campbell S.Ed.

Michigan Law Review

The Slumberland Bedding Company started in business in 1952 with a capitalization of $13,000. Within less than one year the corporation was "clearly heavily insolvent," having debts in excess of $85,000 and assets valued "at least several thousand dollars less than $42,250." Preferred creditor claims against the assets of the business amounted to more than $32,200. In this rather dismal context a petition for an arrangement under chapter XI of the Bankruptcy Act was filed. A plan was submitted which provided for independent capital to be put into the business to pay certain claims in full and to pay a …