ization petition was filed, the debtor corporation:

owed about $8,073,636.72, that its property at a fair valuation was worth about $6,193,591.46, and that it was insolvent, the excess of its debts over the fair value of its property being about $1,880,045.26.

The special master likewise found that:

on October 31, 1938, the indebtedness of the debtor, including $354,132.10 unpaid indebtedness incurred by the trustees in the operation of debtor's business, was about $6,822,004.07, that the fair value of debtor's property was about $5,055,769.80, and that debtor was then insolvent, the excess of its debts over the fair value of its property being about $1,766,234.27, or over 27 percent of its debts.

The court, by order dated February 10, 1939, decreed:

That the Debtor, National Radiator Corporation, is hereby adjudicated and found to be insolvent, both as of March 18, 1938, and as of October 31, 1938.

FAIRNESS AND FEASIBILITY OF THE PROPOSED PLAN

The proposed plan does not provide for the issuance of any securities other than common stock. It does not give recognition to any interests junior to those of creditors. The fairness of not recognizing junior interests where no value exists for them, has been judicially recognized.3

Under the circumstances described in the preceding sections, it is clear that there is no value in this property for any interests other than the creditors. Indeed, upon the basis of findings in the proceeding, it has been determined that the value of the property is not sufficient to meet even the claims of creditors. Participation by the preferred or common stock without further contribution by them could only be effected at the expense of the creditors, and, under the established judicial principles, would render a plan of reorganization which so proposed, unfair and inequitable.

A plan of reorganization is required to be not only fair, but feasible. The immediate question of feasibility is whether, under the proposed plan, the reorganization proceedings can be terminated and the company left with sufficient working capital for its immediate needs. As of the end of last year, the total current assets, as reported by the trustees, aggregated $1,834,267.89, of which cash on hand and in banks amounted to $326,873.84. The total current liabilities amounted to only $89,558.83. Certain additional cash payments will be required under the plan, and provision must be made for the reorganization expenses. Assuming that the reorganization expenses are held to a minimum, it would appear that the company will have adequate working capital presently to continue its operations, provided that, as testified, a line of bank credit aggregating between $400,000 and $500,000 can be arranged.

In re 620 Church St. Building Corporation, 299 U. S. 24 (1936).

It would also appear that the company would probably not be required to suspend operations even if for the next year it is unable to reverse the earnings trend of the past years. Although the company sustained losses in both 1937 and 1938 a substantial part of these losses is represented by depreciation and, therefore, does not correspondingly affect the company's cash position. Unless, on the other hand, there is a marked improvement in the results of operations, it is difficult to see how the suggested modernization program can be carried out either from the company's own funds or by raising funds from others.

In view of the debtor's history, it would be unwise to attempt to reorganize it on the basis of anticipated uniform or certain operating results. The debtor's cash requirements, and the uncertainty of its future earnings, likewise make it unwise to issue any securities bearing a fixed charge or a creditor's claim against the property. Under all of the circumstances, the limitation of the new capitalization to common stock alone is sound.

A vital element in the feasibility of any plan is the quality of the management. The plan provides for a board of directors of not more than eight members, and it is proposed that the initial board is to consist of four persons who either personally or through their associates have long been identified with the company, an additional commercial banker, the two present trustees (one of whom was for a short time preceding this reorganization proceeding the treasurer of the company), and the counsel for the trustees.

From the history of the company it is reasonable to infer that its past difficulties may in some part be attributed to errors of judgment on the part of its management. Recognition of this fact by the present plan, as indicated by the elimination of useless plants and the introduction of members not formerly associated with the company who may bring to it a fresh outlook, tends to justify the proposed composition of the initial board of directors.

By the Commission: Chairman Douglas and Commissioner Healy not participating.

Filed March 14, 1939, United States District Court for the
Western District of Pennsylvania.

4 S. E. C.

77, 466. 35

41, 820. 77

35,743.88

136, 376. 17

70, 292.88

(816, 140. 72)

(477, 464. 61)

(369, 026. 40)

(166, 932. 96)

(770, 056. 47)

Profit or loss after provision for accrued interest on income debentures.

() denotes loss.

[No. 704]

IN THE MATTER OF

DOMINION STORES, LTD.

File No. 1-450. Promulgated March 18, 1939

WITHDRAWAL FROM REGISTRATION AND STRIKING FROM LISTING.

Statutory Definition of "Rules" of an Exchange.

Where exchange seeks to block withdrawal by an issuer of its common stock on the ground that its "rules" have not been complied with, it is necessary to show the existence of a rule governing delisting: held, that an alleged "settled praetice" which has not been consistently followed, nor sufficiently defined to permit uniform application, and which is not generally known or accepted, does not constitute a "rule" of the exchange within the terms of Section 12 (d).

Terms.

Where the action of an issuer in applying for withdrawal and delisting of its common stock has been approved by a majority of its stockholders, and where there are no rules of the exchange from which it seeks withdrawal, governing delisting, held, application granted effective 30 days from date of order.

FINDINGS AND OPINION OF THE COMMISSION

Dominion Stores, Limited, a Canadian corporation, has filed an application pursuant to Section 12 (d) of the Securities Exchange Act of 1934 and Rule X-12D-2 (referred to as Rule JD2 but renumbered on September 10, 1938) to withdraw 280,014 shares of its common stock without par value from listing and registration on the New York Stock Exchange. These shares were listed on the New York Stock Exchange in 1928 and registered with the Commission on April 22, 1935, upon application by the corporation and approval by the Exchange. The stock is also listed and traded on the Toronto Stock Exchange, and is traded on the Montreal Curb Exchange.

After appropriate notice to the New York Stock Exchange, the stockholders of registrant, and the general public, a hearing was held before a trial examiner in Washington, D. C., on September 13, 1938. A representative of the Exchange appeared and opposed the granting of the application. No stockholders appeared.

The registrant is a Canadian corporation operating 471 chain retail grocery and meat stores in Canada. It has no property and conducts no business in the United States. The principal reason

4 S. E. C.