The Moffet, Hodgkins & Clarke Co.
The creditors’ committee of the concern have just issued a circular letter to those interested, which brings to light some singular facts, The meeting was held on June 29 in this city. The report says: The question as to the acceptance, by the creditors, of the Moffet, Hodgkins & Clarke proposition, as printed at pages 123 to 132 of the committee’s report was first considered. Among other things it was stated that the creditors had been led to give consideration to any proposition, amounting practically to a reorganization of the Moffett, Hodgkins & Clarke Company, or to an extension, with control vested for three years in a committee representing the creditors, in the hope that the gentlemen whose names are embraced in that corporate name might put in, and have their friends put in, the stocks of the various water works companies and the other companies, to the end: first, that Moffett, Hodgkins & Clarke should have a pecuniary interest in the new corporation which they proposed to organize, measured not only by possible profits to accrue to them if the new corporation should succeed, but also by a substantial contribution to the capital of the new company, in the stocks of the various corporations, whose capital shares, as many of the creditors thought, should have been put into the Moffet, Hodgkins& Clarke Company on its organization; and, second, that they should, in some measure, be held to the responsibility of making, or opening up a market for the securities proposed to be issued by the company, predicated on the value of collateral of the creditors assenting to the proposition. It was found by the committee that Moffett, Hodgkins & Clarke were indisposed to accept an extension, or to contribute the stocks of all the various corporations held by them and by their friends, and the committee reported adversely on the proposition.
The scheme proposed by those gentlemen might, no doubt, have found favor with the committee had they offered to assume some substantial risk on its success. But, as they declined to do this, the committee did not recommend the plan, which seemingly tied the creditors’ hands and left Moffett, Hodgkins & Clarke free to work for the promotion of the interests of the proposed company, or the reverse, as their judgment or interests might dictate.
Msreover those gentlemen, while the work of the committee was progressing, divided up among themselves the stock of some of the most valuable or promising of the corporations, and it was understood that Mi. Hodgkins would not take an interest in the new corporation proposed to be formed.
It was understood that Moffett, Hodgkins and Clarke, as individuals, hold the stock and arc the officers, agents and ministers of the various corporations whose securities are pledged to the creditors of the corporation Moffett, Hodgkins & Clarke Co., and thereby control and manage the corporations, receive the revenues, make the disbursements, fix their own compensation as officers and agents, and generally finance the companies, and have to do with the issuing bonds held for extensions, etc.; and that when Moffett, Hodgkins & Clarke Co. went into the hands of receivers the effect, apparently, was to change the course of the revenues, which had theretofore been transmitted to the company, so that they flowed directly into the hands of those gentlemen.
It seemed to the committee and to the creditors’ meeting that, in the situation, it is necessary for the creditors to take organized action for the protection of what they hold as pledgees or owners. I n order to do this it is not necessary that the securities should be deposited with a committee, or that the owners or pledgees should part with possession, control, or any right which they may have to enforce their claims in any manner, at any time or in any forum, or to dispose of their collateral or securities in any way which may, or otherwise might, at any time be opened to them What was proposed by the committee, aqd was approved by the creditors’ meeting amounts to united action for protection of the security holders only, through careful watching and supervision of the plants. The only restraint put on a creditor or security holder is embraced in the power delegated to the committee concerning preliminary steps to bring about a foreclosure; and the only obligation incurred is a very moderate pecuniary one, which cannot exceed for the whole three years’ supervision six per centum of the amount of the creditor’s claim; or in the case inhere collateral has been sold, six per centum on the original claim for which the securities were pledged as collateral.