In re Shamrock Amusement Corp.

The Shamrock Amusement Corporation, operating an open air drive-in the-atre in San Jose, California, filed a voluntary petition in bankruptcy in June 1953, and was thereafter adjudged a bankrupt. From the time this petition was filed, certain creditors of the bankrupt, who also owned 48.8% of its stock, waged an 18 month unsuccessful fight for the survival of the corporate enterprise. At the outset, this group attempted to secure a dismissal of the bankruptcy proceedings, both in their capacity as creditors and as stockholders. Being unsuccessful there, in March 1954, they caused to be filed a petition for corporate arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq. Shortly thereafter the bankruptcy Trustee closed down the theatre operation and made preparation to abandon the premises. Under the terms of the lease held by the corporation, which then had an unexpired term of 16 years, all of the fixtures would become the property of the lessors. The lease contained a provision permitting the lessors to terminate the lease in the event of bankruptcy.

To keep the Trustee in possession of the property, these creditors entered into an agreement with him,…