UPSET PRICES IN CORPORATE REORGANIZATION 501 different in the case of the usual foreclosure sale in aid of a reorgan- ization; there the mortgage debtor or holders of inferior liens, as a class, are not seeking the protection of the court. It is a con- fusion of ideas to assert that such a foreclosure sale, because of the lack of public bidding, requires the chancellor to become a party and safeguard the minority; a foreclosure sale is not a foreclosure sale at all but merely a left-handed device to effect a reorganization. "For it rarely happens in the United States that foreclosures of rail- way mortgages are anything else than the machinery by which arrange- ments between the creditors and other parties in interest are carried into effect, and a reorganization of the affairs of the corporation under a new name brought about." ^ Hence so long as the reorganization plan is fair and open to all parties, and the majority approves, the court should refuse to act. The vice of fixing an upset price is the power it gives the minority to harass the majority, to delay proceedings, and to attempt to set aside a sale after it has been held. It is this fear of an attack upon a sale that causes counsel for a reorganization committee often to request the fixing of an upset price. So soon as it is clear that the courts will not fix upset prices, or set aside sales, or en- join reorganization committees, or allow indiscriminate interven- tions, minority bondholders during a reorganization will demean themselves like minority stockholders. Only fraud or oppression — and concrete allegations and proofs not generalities ought to be required — should cause the chancellor to give heed to the minority. Indeed, the lower federal courts, instead of firmly establishing or denying the rights of a minority to have an upset price fixed, have hesitated and equivocated; the authorities are unsatisfactory; ^^ the property, the plan of reorganization would not be a fair one and would lack the consent of a majority of all classes of bondholders; the court could well refuse to accept such a plan, and could threaten to fix an upset price. This threat and the cost of the litigation involved, as a practical matter, would force the senior hen-holders to reach an understanding with the junior lien-holders and thus the unsatisfactory guess- ing at a value on the property would be avoided. See Cook on Corporations, 7 ed., note I, § 886, pp. 3465-66. 3* Chief Justice Waite in Canada Southern Ry. Co. v. Gebhard, 109 U. S. 527, 539 (1883). '8 In the following c^ses an upset price has been fixed, or the right to have an upset price fixed, recognized. Blair v. St. Louis H. & K. Ry. Co., 25 Fed. 232, 233 (1885); Cen- tral Trust Co. of New York v. Washington County R. Co., 124 Fed. 813, 818 (1903); Investment Registry Limited v. Chicago & M. E. R. Co., 212 Fed. 594, 609 (1913);
