673 F.

2d 11

In the Matter of BOSTON & PROVIDENCE RAILROAD

CORPORATION, Debtor.
Appeal of BOSTON & PROVIDENCE RAILROAD
STOCKHOLDERS DEVELOPMENT GROUP.
No. 81-1431.

United States Court of Appeals,

First Circuit.
Argued Jan. 6, 1982.
Decided March 11, 1982.

Armistead B. Rood, Washington, D. C., and Albert B. Wolfe, Boston,

Mass., for appellant.
Albert B. Wolfe, pro se.
Arthur P. Schmidt, Boston, Mass., with whom Robert D. Canty, and
Gaston Snow & Ely Bartlett, Boston, Mass., were on brief, for Shawmut
Bank of Boston, N. A., Charge Trustee, appellee.
Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit
Judges.
PER CURIAM.

This is an appeal from the district court's findings and order, entered on April
21, 1981. The respondent Shawmut Bank is the Charge Trustee under an
indenture of equitable charge that was created on April 20, 1971, on behalf of
the holders of certain Certificates of Contingent Beneficial Interest (CCBI's).
The trustee had petitioned for approval of a proposed compromise settlement of
all claims against the Penn Central Corporation, the successor grantor under the
indenture. The district court's findings and order approved the proposed
compromise as prudent, fair, and equitable, and ordered the trustee discharged.

A court approving a compromise in reorganization proceedings does not play

the same role as a court approving a compromise between individual litigants.

Bankruptcy proceedings, by definition, coerce the bankrupt's creditors into a

compromise of their interests. Therefore, the trustee has a fiduciary obligation
to manage the reorganization for their protection, and the supervising court
must play a quasi-inquisitorial role, ensuring that all aspects of the
reorganization are "fair and equitable". See Protective Committee for
Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S.
414, 424, 88 S.Ct. 1157, 1163, 20 L.Ed.2d 1 (1968).
3

Before approving the compromise in this case, the court had a duty to apprise
itself of all facts necessary for an intelligent and objective opinion of the
probabilities of ultimate success should the potential claims against Penn
Central be litigated. Id. It had the obligation to form an independent judgment
of the complexity, expense, and likely duration of litigation, as well as any
other factors relevant to a full and fair assessment of the wisdom of the
compromise. Moreover, Anderson requires this analysis to be set forth on the
record in sufficient detail that a reviewing court could distinguish it from "mere
boilerplate approval" of the trustee's suggestions. Id. at 434, 88 S.Ct. at 1168.

We reluctantly-because of the extreme prolongation of the proceedings in this

matter-conclude that the present record of facts and analysis does not meet this
standard. The trustee's petition and supporting affidavit gave only the most
cursory description and conclusory evaluation of the potential claims against
Penn Central and their values. They are equally elliptical in their assertions that
the reduction for payments to the trustee properly amounts to $270,000. Even if
the court was drawing on other information, beyond the petition and affidavit,
its findings and order do not demonstrate an independent evaluation of that
information.

We can sympathize with the district court and the predicament created by this
particular appellant's confusing and ambiguous remarks, its eleventh hour claim
of surprise and accompanying request for continuance. Yet the court must act
independently, out of its own initiative, for the benefit of all creditors. This
obligation prevails even where the creditors are silent, id. at 435, 88 S.Ct. at
1168, and even where, as here, one particular creditor has engaged in conduct
that might well amount to a waiver of objections in another context.*

We will therefore retain jurisdiction over this appeal, but remand to the district
court for further examination of the trustee and the factual background of the
proposed settlement, and for preparation of more complete findings, in
accordance with this opinion. Of course, the district court retains its discretion
to direct the inquiry in an efficient manner and to limit its scope to those claims
that have not been resolved earlier in this reorganization.

All motions pending before this court are denied. No costs at this time.

We note that the appellant was of little more assistance in this appeal than in
the district court
We must also note, however, that the trustee's brief was no more helpful than
its affidavit and petition before the district court.
In the past, we have published our dissatisfaction with both sides' contributions
to our own role in seeking a "fair and equitable" reorganization. See In re
Boston & Providence Railroad Corp., 501 F.2d 545, 547-48 & n.2, 550.
Considering the generous sums that each party alleges it is entitled to by way of
allowances, one would expect to see more useful advocacy.