The adoption of the procedure of foreclosing and transferring the collateral to a new corporation, so that it, rather than the trustee, would liquidate the collateral, has certain obvious advantages from the viewpoint of committees and their counsel. In the first place such procedure has the advantage of perfecting the deficiency claim forthwith. In the second place, to participate in the benefits of the plan bondholders would have to deposit with the committees. Their bonds, when deposited, become subject to the committees' liens for fees and expenses. The committees and their counsel are thus afforded greater assurance of being paid. The extent, if any, to which the latter was a motivating factor in adopting this procedure is only a matter of conjecture. But it is of interest that if the trustee was able to exercise its broad powers under the indenture, liquidation would redound to the benefit of all of the bondholders, rather than to the benefit of only the assenting bondholders as under the plan. Among these powers of the trustee in this case were the following: "Section 3. If one or more of the events of default shall happen, the Trustee personally, or by its agents or attorneys and when necessary or desirable acting through or with the aid of the proper Swedish authorities, and in its discretion "(a) May sell, subject to the then prior liens, if any, existing thereon, to the highest bidder, the Deposited Property and all right, title and interest, claim and demand therein and right of redemption thereof, which sale or sales shall be made at public auction at such place, which may be within or without the State of New York or within or without the Kingdom of Sweden, and at such time and upon such terms as the Trustee may fix and briefly specify in the notice of sale to be given as herein provided or as may be required by the applicable law; "Section 5. In the event of any sale whether made under the power of sale herein granted or pursuant to judicial proceeding, the Deposited Property may be sold either in one parcel as an entirety or in several parcels, and if in several parcels in such parcels as the Trustee may determine and as it shall deem most advantageous for the holders of the Secured Debentures. "Section 6. Notice of any sale pursuant to any provision of this Agreement shall state the time and place when and where the same is to be held and shall contain a brief general description of the property to be sold and shall be sufficiently given if published once in each week for four successive calendar weeks prior to the sale in a newspaper of general circulation published in the English language in the Borough of Manhattan, City and State of New York, and in a newspaper of general circulation published in the English language in London, England, and in a newspaper of general circulation published in the Swedish language in the City of Stockholm, Sweden, but such publications need not be simultaneous. meet the protective committees' expenses. lows (Registration Statement, Exhibit C-3): Lee, Higginson & Co... Guaranty Co. of New York. The City Company of New York.. The three banking houses contribute as fol $75,000 "Section 7. The Trustee may adjourn from time to time any sale made by It under the provisions of this Agreement by announcement at the time and place appointed for the sale or adjourned sale or sales, and without further notice or publication it may make the sale at the time and place to which the sale shall be so adjourned. "Section 8. Upon the completion of any sale or sales under this Agreement, the Trustee shall deliver to the purchaser the securities, bonds, stock notes, obligations and other property sold with good and sufficient transfers. The Trustee and its successors are hereby appointed the true and lawful attorneys irrevocable of the Company in its name and stead to make all necessary conveyances, assignments and transfers of the property thus sold and for that purpose it may execute all necessary instruments of transfer and may substitute one or more persons with like power, the Company hereby ratifying and confirming all that its said attorney or said substitute or substitutes shall lawfully do by virtue hereof. "Any such sale or sales made under this Agreement, whether under the power of sale herein granted or pursuant to judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever either at law or in equity of the Company of, in and to the property so sold and shall be a perpetual bar both at law or in equity against the Company, its successors and assigns and against any and all persons claiming or purporting to claim the property sold or any part thereof from, through or under the Company, its successors or assigns. "Section 9. The receipt of the Trustee for the purchase money paid at any such sale shall be a sufficient discharge therefor to any purchaser of the property or any part thereof sold as aforesaid; and no purchaser or his representatives or assigns after paying said purchase money and receiving said receipt shall be bound to see to the application of said purchase money upon or for any trust or purpose of this Agreement or in any manner whatsoever be answerable for any loss, misapplication or non-application of any such pur chase money or any part thereof, or be bound to inquire as to the authoriza tion, necessity, expediency or regularity of any such sale. "Section 10. In case of a sale whether made under the power of sale herein granted or pursuant to judicial proceedings, the principal of the Secured Debentures if not previously due shall immediately thereupon become due and payable, anything in the Secured Debentures or in this Agreement to the contrary notwithstanding. "Section 11. The purchase money, proceeds or avails of any such sale whether under the power of sale herein granted or pursuant to judicial proceedings, together with any other sums that then may be held by the Trustee under any of the provisions of this Agreement as part of the Deposited Property or the proceeds thereof, or otherwise, except any funds held in trust for the payment or redemption of any Secured Debentures or for the payment of any coupons which shall have been called for redemption pursuant to Article IV or V hereof or which shall then have matured shall be applied as follows: 'First: To the payment of the costs and expenses of sale, including a reasonable compensation to the Trustee, the Fiscal Agent and the Depositary, their agents, attorneys and counsel, and to all expenses, liabilities and advances made or incurred by the Trustee, Fiscal Agent or Depositary hereunder, and to the payment of all taxes, assessments or liens superior to the lien of this Agreement except the superior liens and any taxes, assessments or other charges subject to which the property shall have been sold. 'Second: To the payment of the whole amount then owing and unpaid upon the Secured Debentures for principal, premium, if any, and interest, with interest at the rate of six percent. (6%) per annum on the overdue principal, premium, if any, and instalments of interest. In case said moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Secured Debentures, then to the payment of said principal, premium and interest, without preference or priority of principal or premium over interest or of interest or premium over principal or of principal or interest over premium or of any instalment of interest over any other instalment of interest, ratably to the aggregate of such principal, premium and interest, subject, however, to the provisions of Section 1 of this Article X. "Third: The surplus, if any, to the Company, its successors or assigns or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.' "Section 12 ** The Trustee shall be entitled to recover judgment and/or to file and prove such claim as aforesaid either before or after or during the pendency of any proceedings for the enforcement of this Agreement; and the right of the Trustee to recover said judgment and/or to file and prove such claim shall not be affected by any sale hereunder or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Agreement; and in case of a sale of the Deposited Property and of the application of the proceeds of sale to the payment of the debt hereby secured, the Trustee in its own name and as Trustee of an express trust shall be entitled to enforce payment of and receive all amounts then remaining due and unpaid by the Company under this Agreement for the benefit of the holders of the Secured Debentures and shall be entitled to recover judgment for the entire amount so due and unpaid, with interest as aforesaid. No recovery of any such judgment by the Trustee, and no levy of any execution upon any such judgment upon the Deposited Property or upon any other property, and no filing and proving of any claim shall in any manner or to any extent affect or impair the lien of this Agreement upon the Deposited Property or any part thereof, or any rights, powers or remedies of the Trustee hereunder or any lien, rights, powers or remedies of the holders of the Secured Debentures, but said lien, rights, powers or remedies of the Trustee and of said holders shall continue unimpaired as before. In case of any receivership, insolvency or bankruptcy proceedings affecting the Company or its property the Trustee shall be entitled to file and prove a claim for the entire amount due and payable by the Company under this Agreement at the date of the institution of such proceedings and for any additional amount which may become due and payable by the Company hereunder after such date, without regard to or deduction for any amount which may have been or which may thereafter be received, collected or realized by the Trustee or the holders of Secured Debentures from or out of the Deposited Property or any part thereof or from or out of the proceeds thereof or any part thereof. "Any moneys collected by the Trustee under this Section 12 shall be applied by the Trustee in the same manner and in the same order of precedence as is hereinbefore provided in Section 11 of this Article in respect of the purchase moneys, proceeds or avails of any sale of the Deposited Property made by the Trustee." " Op. cit. supra note 1. Commission's Exhibit No. 16, Art. X, Sec. 3, 5-12 incl. Of. our discussion of liquidation trusts in our report on Committees for the Holders of Real Estate Bonds (1936), c. V. APPENDIX F PROPOSED RULES UNDER SECTION 17 (c) OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 RULE 17C-1. Definitions of Terms Used in Section 17 (c) and Rules Thereunder. (a) As used in Section 17 (c) of the Public Utility Holding Company Act of 1935 and in the rules and regulations thereunder: (1) "executive officer" means the Chairman of the Board of Directors, the Chairman of the Executive Committee, the President, every Vice-President, the Cashier, Secretary, Treasurer, and Trust Officer of a financial institution, and, in addition, every other officer who participates in the management thereof, regardless of whether he has an official title or whether his title contains a designation of assistant, and regardless of whether he is serving without salary or other compensation; but such term does not include a director or member of a committee who is not also an executive officer within the foregoing definition; in the case of a partnership, "executive officer" includes a partner thereof; (2) "director" means any director of a corporation or any individual who performs similar functions in respect of any company, including a partner in respect of a partnership, a trustee of a mutual savings bank, and a trustee of a voting trust (but such a voting trustee shall not be deemed an officer of such trust); (3) "investment banker” means a person engaged in business as an underwriter or a dealer as those terms are defined in the Securities Act of 1933, but does not include a bank, trust company, banking association, or banking firm which cannot lawfully underwrite or participate in the marketing of securities of a public-utility or holding company. (b) As used in the rules and regulations under Section 17 (c), unless the context otherwise requires: (1) "company" means a registered holding company or subsidiary company thereof; (2) "financial institution" means a bank, trust company, investment banker, banking association or banking firm, or any corporation (other than a registered holding company or subsidiary company thereof) a majority of whose stock, having the unrestricted right to vote for the election of directors, is owned by a financial institution; (3) "financial connection": a person shall be deemed to have a "financial connection" if, and only if, he is an executive officer, director, partner, appointee, or representative of a financial institution. RULE 17C-2. Officers or Directors Exempted by Federal Power Commission. A public-utility company as defined by the Federal Power Act, which is also a registered holding company or sub sidiary company thereof, may have as an officer or director, or both, a person who has been authorized by order of the Federal Power Commission pursuant to the provisions of Section 305 (b) of said Act to hold such position, if such person has a financial connection (as defined in Rule 17C-1) which, in the absence of such order, would make it unlawful under said Section 305 (b) for him to hold such position, and if such person has no other financial connections other than those permitted by this or by any other rule under Section 17 (c). RULE 17C-3. Officers and Directors Approved by a Federal Court. A registered holding company or subsidiary company thereof may have as an officer or director, or both, a person who has a financial connection (as defined in Rule 17C-1), if a court of the United States, in connection with a reorganization of such company or of a predecessor thereof, has specifically directed or approved of the election or appointment of such person as a director or officer of such company: Provided, That such person shall not, by virtue of this Rule, be eligible for such position for a period of more than three years after such direction or approval was last given by such court. If any such court, in connection with such a proceeding, shall have designated or approved of the appointment of any person as a voting trustee under a voting trust agreement provided for by such a plan of reorganization, such person shall be eligible to hold such office either for the term prescribed by such voting trust agreement or for a period of three years after such designation or approval, whichever term shall be the longer, and any such person shall also, for a period of three years after such designation or approval, be eligible as an officer or director, or both, of the issuer of any stock which is held in such voting trust. The provisions of this Rule shall cease to be applicable with respect to any such person if, after such designation or approval, he shall acquire any new financial connection other than such as are permitted by rules under Section 17 (c). As long as a company is permitted by virtue of this Rule to have a person as an officer or director, any subsidiary company thereof which is engaged in the business of performing services or construction for, or selling goods to, associate companies and all of whose outstanding voting securities (except the minimum number of shares required to qualify directors for office) are owned by such company, may also have such person as an officer or director. RULE 17C-4. Owners of Securities. Subject to the provisions of Rule 17C-9, a registered holding company or subsidiary company thereof may have as an officer or director, or both, |