In re Johnston Construction, Inc.

On September 15,1959, an involuntary petition in bankruptcy was filed against each petitioner. An answer was filed by each petitioner which, inter alia, denied the commission of an act of bankruptcy. Thereafter, and before any trial of the issues raised by the answers, a petition for a plan of arrangement under the provisions of § 321 ( 11 U.S.C.A. § 771 ) was filed by each petitioner. Each petitioner failed, within the time fixed by the Court, to obtain necessary consents or to file any application to confirm a plan of arrangement, and indicated that each was then unable to proceed with the plan of arrangement. The Referee thereupon commenced a trial of the issues raised by the answers to the involuntary petitions, but without concluding the trial, continued the matter to January 13, 1960, at which time he discontinued the trial over the objections of the petitioners and directed the entry of an order of adjudication of each petitioner and appointed A. J. Bumb trustee in bankruptcy in each case. Within due time petitions for review were filed.

The question for decision is: did the Referee err when he adjudicated each petitioner to be a bankrupt under the provisions of § 376 ( 11…