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RECEIVER APPOINTED FOR BANK BRISTOL TRUSTEES,
Situation Now Is Practically the Same as When Bank Closed in April, 1932, Except That Expensive Attorney's Fees and Court Costs Are Additional Liens Upon the Closed Bank's Assets
The Bank of Bristol, closed by the state banking department in April, 1932, as insolvent, today was back in receivership, trustees having surrendered their control over the assets which they secured through plan evolved by majority depositors to liquidate the assets over period possibly seven years in the hope securing greater returns to the depositors.
In general creditors' bill asking Chancellor S. Miller wind up the trust, the trustees indicated that the plan under which they were given control of the assets was not workable. They stated that of the guarantors on note the Reconstruction Finance Corp., "endorsed by H. W. Powers and number of other endorsers, most, if not all" of them, "except Powers, are said to be insolvent and he has been forced on account of same, to. gether with other demands upon him as surety, to file his tition for extension of time, in the United States court at Greeneville, Tenn.'
Young Is Made Receiver
Mr. Powers was president of the bank when it collapsed. Chancellor Miller appointed Young receiver the bank, and receivership proceedings are now in order in the usual fashion, except that liens are undisturbed. Except that there is different receiver and liens under the trustee plan are carried over, the situation practically the same as when the bank taken over last spring by the state department. The truswere Mr. Powers, Judge H. Campbell, and H. G. Noffsinger. No money has ever been paid positors. Approximately was on deposit when the bank closed. In the interim between the closing and the present, however, there has been long and expensive litiga tion, attorneys' fees alone amounting to many thousands of Expensive Fees Will Be Paid Fees already have been approved for two sets of lawyers, those rep. resenting the state banking department. and $1,500 to an attorney representing minority depositors; $1,000 goes to Special Master S. H. Garst who acted in connection with the sale of assets to the trustees; approximately $400 to stenographers, the other court costs may amount $1,500 or more. Pontiac Counsel for the trustees, Judge H. Haynes and Judge Robert Burrow, have never filed claim for fee In some quarters was believed today these attorneys Outsells have lost their opportunity for compensation. It has been indicated. however, that claim will be filed their behalf. While the various fees have been All Other approved by the court they have never been paid, and in his court order appointing Young receiver in its the chancellor directed that the receiver, after paying running penses of the operation the Price Range trust. taxes, "and other such recognizede priorities, will apply. BO far practicable, funds coming into his hands to payment of the balance owing on counsel fees of the attorneys of D. D. Robertson, bank superintendent. and to the figures for months. cost of the suit which complainant trustees purchased said asPONTIAC ECONOMY STRAIGHT Collateral Insufficient To Liquidate Loans ten page general creditors' bill filed with the court asking appointment of the receiver. Citing the trust agreement dated 2nd CAR May 1932, the bill declared that after the of the trust agreement the trustees were forced to litigate with the State Bank who resisted the and that the litigation continued for year. expensive damaging to the assets. The delay while the lower court and the supreme court upheld the trusALL tees in the suit, the bill said, and COMBINED the uncertainity and expense, "serlously impaired and injured the objects contemplated" by the agreement.
The sale of assets to the trustees by the court for $215,000, four instalments of $53,750 falling due 12, 18, and months was traced. and was pointed out that the interests of beneficiaries of the trust in the assets were pledged to secure and make certain to positors their pro rata share of the price. Setting forth the fact that before the bank suspended pledged large amount of assets secure certain loans obtained from the Reconstruction Finance Corporation, the National Exchange Bank of Roanoke, the First Na tional Bank of Abingdon, the credbill stated that the R. itor's may be deficit claims there after exhausting the collateral. "The National Exchange Bank of Roanoke, Va., holds the assets of Bank of Bristol, for loan the made to the Bank of Bristol. notes the petition aggregating "and the claim of said continued. Roanoke Bank has been reduced approximately $23,000. may true that most of that bank holds of doubtful solvency, but would seem at least probable that sufficient to satisfy said claim." In addition to the collateral notes, the petition continued. the "Roanoke bank holds written, blanket guarW. Powers and others, anty which believed to it that of loss on its there no danger said claim." exists with resimilar situation made by the First gard to the loan of the National Bank except that the petition continued, collateral are and amount Abingdon bank smaller and holds only as Claim Collateral Insufficient set forth The creditors' petition that the trustees were embarrassed by and claim the possibility there the probability some that deficits owing to deficit or of the bank or all creditors some the equity of holding collateral, the assets which included was trust the that serious by them. and raised regard question to be protected whether equities the the risk and ficiaries said trust, the and feel the from the court questions which these and other and seem certain have arisen arise the The on curtailments, the bill continued "and has several times threatened sult, on account of which the trus. tees have heretofore made payment to it: but as Indicated, because of the surprising question now raised. that there may be no surplus or equity realized from the collateral holds, complainants are in doubt about the further course to pursue with regard to The also has insisted upon payment of three notes held by collateral, aggregating $8,500, and has instituted suit on the notes against the maker and endorsers in court at Greeneville, the bill continued. The R. C. notes are of the Appalachian Duroc Farm, which now out of business, and are pay. able to the Bank of Bristol. "They are endorsed by H. Powers and number of other endorsers,' the petition stated, "most, if not all of whom, except Powers, are said to be insolvent. The other endorsers failed to help Powers meet the deof the R. C. for submand stantial curtailment of the principal and interest and fees, ow. notes, and being unable ing on said to do so alone he has been forced, together with on account of same, other demands upon surety. to file his petition for composition, extension of time, in the States court at Greeneville, United Tenn." Sullivan County Sued For Warrants further complication has arisen through suit instituted in federal court by the Reconstruction Finance Corporation against Sullivan county, Tenn., on county warrants assigned to the R. F. by the Bank of Bristol as part of the collateral loan, the petition pledged for stated, adding that "The county claims that its warrants are not negotiable and that it is entitled to offset its deposit against the said warrants in the hands of the R. C., and whether such warrants are negotiable or not, would seem that the county might compel the exhaustion of the other pledged assets before increase the diffiThese questions administering the trust culties and the R. claims that it may have deficiency claim if warrants are eliminated as part of the collateral held by it for the loan the creditors' bill stated. Attempted To Secure New R. F. C. Loan In order to pay depositors, costs and attorneys fees, and to protect the with the Roanoke bank, application made to the R. C. for was loan secured by deed of trust the Bank of Bristol building, the on petition but the loan has not been granted. The creditors' bill then stated that the trustees "have arrived at the conclusion that and best for all to thus come into court with this general creditors' bill and ask for direction and instruction in the administration of said trust and to fully settle and liquidate same through receiver to be named by the court to the end that the rights of all parties may be ascertained and determined and protected, said property conserved and protected, and all of said assets liquidated promptly or in such manner as the court may deem wise and best." For the purpose of the suit, the petition asserted, the trustees "tender to and place under the jurisdiction of this court all said assets, for such action and disposition as may be lawful. and ask that the court determine the rights and interests of all interested in all or any part thereof, according to the equities and the law applicable.
The trustees stated they were ready to account for all assets and property entrusted to them, and that they will cause to be filed complete statement of their stewardship.
Complete Order of Chancellor Miller
The text of the order handed down by Chancellor Miller follows: "On this the 22nd day of September, 1933, at his chambers in Johnson City, Tenn., the bill in this cause, which has been filed. was presented to Chancellor S. E. Miller and motion made in behalf of complainant trustees to sustain said bill as special, general creditors bill and or general creditors' bill, as therein prayed: also for receiver and Injunction as prayed. "Service of notice on this motion walved by officers of respondent Bank of Bristol, and service of the notice waived by W. De. Friece as respondent in behalf of himself and those he may represent according to the terms of said bill. "After reading said bill and due consideration thereof. said motion is sustained and it is accordingly hereby ordered: "(1) That said bill be sustained special, general creditors' bill behalf of all creditors of. and persons in, the trust represented by complainants H. G. Noffsinger, H. T. Campbell and H. W. Powers, trustees; and sustained as a regular general creditors' bill, as against respondent Bank of Brisfol. an insolve corporation not in the banking business. "(2) That Young be and he hereby appointed receiver for this court to take over. manage, protect and to liquidate under the orders of the court herein, all the property, equities, rights or interests in property, real or personal, of every kind and description. belonging to the trust of which complainants are the trustees, which trust covers and includes all of the assets formerly owned by respondent Bank of Bristol, purchased by said trustees the court sale referred to in said bill; provided, however, that the assets so to be taken by said are to stand over in the same condition and subject to the same liens, rights or priorities, such as they are or may be now subject to in the hands of complainant trustees; it being the purpose net to hereby prejudice, or disturb the rights of anybody in said property assets. "And said assets will be turned over into the hands of said receiver, after the execution by him of receiver's bond in the penalty $10,000, conditioned as prescribed by law. "The receiver will cause to be made due inventory and report the assets coming into his hands, which he is hereby authorized and directed to conserve and protect. "He will proceed to collect the debta owing to said trust: and in so far as he may deem best he will take such steps as may be ably required to protect the equities any assets in pledge for debts of the Bank of Bristol. "The receiver is authorized employ counsel, and is instructed and to do all such things empowered as may seem and necessary to protect said equities and assets from loss or sacrifice, and save as much as possible for the beneficiaries of complainants said or those interested in any trust, wise in said assets. "The receiver will proceed as expeditiously as possible to collect debts owing said trust, and after expenses of the paying the said trust, and such operation claims as taxes. or other such recognized priorities, he will apply. BO far as practicable, funds coming inhis hands, to payment of the balance owing on counsel fees of the attorneys of D. D. Robertson, bank superintendent, and to the cost of the suit in which complainant trustees purchased said assets, and which will be eredited upon the first purchase money note to fall due, executed by said trustees to the clerk and master for assets. "(3) That persons interested in, or having claims against said trust, or against respondent Bank of Bristol. file same herein. and they are hereby enjoined from in any wise interfering with said sets or attempting to sue or subject same, on account of such claims, except by petition in this case, or proceedings otherwise had by of the court herein. "(4) The will report time to his the court from action in the premises, and for directions and instructions from the matter arising not court to any expressly by the terms of this order; and the case will await the further orders of the court."
