William O. Douglas

“ If there were a showing, for example, that the property was worth more than the amount of first mortgage indebtedness and it appeared that that excess value would be lost to the junior interests in the state proceedings or that the state proceedings were less adequate by reorganization standards than the bankruptcy court to protect such interests, approval of the petition clearly would be justified whether filed by the debtor or by creditors. ”

“ In view of that history it seems clear that when a prior proceeding is pending, a petitioner's showing of 'need for relief' under Ch. X, required to be contained in every petition by the express provisions of § 130 (7) , must demonstrate that at least in some substantial particular the prior proceedings withhold or deny creditors or stockholders benefits, advantages, or protection which Ch. X affords. In absence of such a showing the 'need for relief' has not been established and the District Court is not enabled to make an informed judgment on the 'good faith' issue. ”

“ Thus the necessity of showing 'a need for the machinery of § 77B as an essential in accomplishing a reorganization because other procedures were either unavailable or more cumbersome and expensive' led courts to find an absence of 'good faith' in the sense that no 'need for relief' had been established, where 77B was sought to be employed by a debtor as 'a mechanism for preserving equities at the expense of creditors.' See Report on the Study and Investigation of the Work, Activities, Personnel and Functions of Protective and Reorganization Committees, Securities and Exchange Commission, Pt. ”