Rosehedge Corporation v. Millie Sterett

This case involves proceedings under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq., which have culminated in a sale of the properties of the bankrupt. The properties were purchased on behalf of Appellant Rosehedge, a secured creditor of the bankrupt. The District Court, upon a review of the order of the referee confirming the sale, entered its order approving and confirming the sale, but added a proviso the effect of which was to cancel appellant’s chattel mortgage upon the personal property included in the sale. This appeal is taken from that provision in the order of the District Court.

The ultimate question is whether, in purchasing the property of the bankrupt, Rosehedge had utilized its claim against the bankrupt as a credit upon or part payment of the purchase price. If so, the claim had been satisfied and it was proper to require the cancellation or surrender of the security for such debt.

Rosehedge assigns as error the judgment of the District Court upon this ultimate question. It further contends that, in entertaining the question at all, the District Court acted without jurisdiction or in abuse of discretion.

The bankrupt is Moulin Rouge, Inc., which…