Max Rosenn and James Rosen, Circuit Judges and Teitelbaum, District Judge.
The financial problems of the debtor, Spectrum Arena, Inc., led it to bankruptcy shortly after its incorporation. Spectrum was organized*fn1 in May, 1967 to construct and operate an indoor arena to be used for Philadelphia's professional hockey and basketball games, as well as for other sporting and special events ranging from boxing and tennis matches to ice shows and circuses. Even the wide diversity of events scheduled there, however, could not make the operation solvent. In May, 1968, the principal mortgagee, Fidelity Bank, took possession of the arena and the other secured creditors filed a Chapter X reorganization proceeding. 11 U.S.C. § 501 et seq.
The reorganization court gave detailed consideration to the proposed plans and to the modifications and amendments subsequently submitted. It also inquired into various creditors' claims in order to determine their validity. The facts relating to this complicated reorganization are fully set forth in the comprehensive opinions of the district court, 340 F. Supp. at 755, 767, 784, 786, 794, 806.
In December, 1971, at the conclusion of these extensive hearings, the reorganization court, 340 F. Supp. 794, confirmed a plan submitted by the Trustees.*fn2 11 U.S.C. § 621. This plan, which provided for payments in full of secured and unsecured creditors, called for two major changes in the capital structure of the debtor. First, the First Pennsylvania Bank was to extend a $6.5 million mortgage loan and a $500,000 line of credit to the reorganized corporation, making it possible for it to satisfy the first, second, and part of the third mortgage. Second, the fourth mortgagee, Foreman, was to subordinate his claim to all other indebtedness and receive in return all of the stock of the reorganized company.*fn3
The consolidated appeals before us now are brought by Philip Kalodner,*fn3a who holds 92% of the stock of the original Spectrum Corporation.*fn4 The appellant raises numerous challenges to the ruling of the reorganization court, but his primary attack is on the method of financing relied upon in the plan for reorganization. He contends that instead of adopting the Trustees' plan based on a new mortgage loan, the court should have adopted his plan, which was to be financed by the issuance of $9.5 million of tax free industrial bonds, pursuant to 26 U.S.C. § 103. Under this plan, the original stockholders would have retained a stock interest in the reorganized corporation and Kalodner, instead of being in his present position of owning no stock in the reorganized debtor, would have owned a little less than half of the stock.*fn5
Whether or not the confirmed plan satisfied Section 621(2), (3), (4), (5) were questions of fact for the reorganization court. That court determined that the statutory standards had been met and we will not reopen the case to hear evidence de novo. As the Supreme Court has said, "in a complex case of this nature it is not the province of this Court to attempt to retry issues of fact which have been fully litigated below." Protective Committee for Independent Stockholders of TMT Trailer Ferry v. Anderson, Trustee in Bankruptcy, 390 U.S. 414, 444, 88 S. Ct. 1157, 1173, 20 L. Ed. 2d 1 (1968). Our function is merely to determine whether there was "substantial evidence" supporting the district court's decision to reject Kalodner's plan and adopt the Trustees' plan. See In Matter of Riddlesburg Mining Co. Debtor, 224 F.2d 834, 836 (3d Cir. 1955) and In re Mifflinburg Body Works, 205 F.2d 150 (3d Cir. 1953). Stating the principle in slightly different terms, the question before us is whether the trial court's findings of fact "were clearly erroneous." F.R.Civ.P., Rule 52 (a).
We hold that there is substantial evidence here to support the judge's determination. As stated by Judge Higginbotham in his well-reasoned opinion of December 28, 1971, the Kalodner plan was replete with contingencies. The crux of Kalodner's plan, the issuance of industrial development bonds, was also its major weakness. These securities could not be issued without the approval of both the City Council of Philadelphia and the Internal Revenue Service of the United States Government. Neither had given approval as of December 28, 1971, and, as the judge noted, the appellant was not "one scintilla closer" to obtaining approval than he had been the "second" it was submitted to the court in June, 1971. Furthermore, even had the issue been approved by both parties, the bonds would still have had to be marketed to the public. Bache and Co., Inc. did issue an "opinion letter" indicating that it was interested in underwriting the issue, but the letter stressed that their interest was conditioned on a continuation of the current market situation and "should not be construed as a firm commitment."
Finally, had the court waited to see whether Kalodner's plan could be approved and effectuated it would have been jeopardizing the viability of the Trustees' plan for reorganization. As Judge Higginbotham explained, First Pennsylvania's commitments for a $6.5 million first mortgage and a $500,000 line of credit were "terminable at will" and "an indefinite postponement of weeks or months could increase the probability of the First Pennsylvania Company terminating that offer." ARA had promised to provide $1.4 million, but if a plan were not consummated by the end of 1971, ARA had the right to reduce its proposed loan by $500,000. In addition to these possible losses of $7.5 million, delay would have led to a loss of $500,000 as a matter of certainty. Fidelity, the original first and second mortgagee, was willing to waive more than $500,000 in arrears Spectrum owed it, if Spectrum paid by December 31, 1971; payment after the end of 1971 meant an additional $500,000 burden for the reorganized company. The district judge allowed the appellant ample time to try to secure the necessary two-fold approval of the plan he had submitted to the court in June, 1971. Particularly in view of the attendant risks of delay enumerated above, the judge's decision not to postpone the adoption of a plan beyond the end of 1971 was an exercise of sound judgment and not an abuse of discretion.
The appellant has set forth other objections to the plan, but we summarily dismiss them. There was substantial evidence to uphold the trial court's determinations (1) that Foreman's fourth mortgage was valid,*fn6 (2) that the debtor was insolvent,*fn7 and (3) that the terms of the ARA-Spectrum concession agreement permitted ARA to recover its costs in construction, furnishing and equipping the Blue Line Club as a "cost of operating."*fn8 Protective Committee for Independent Stockholders of TMT Trailer Ferry, supra. The appellant's claim that the court should have considered the merits of the debtor's plan as set forth in his fourth and fifth amendments is also without merit; the amendments were untimely. The petition submitted by Kalodner did not qualify as an 11 U.S.C. § 622 modification. Rather, the petition represented an attempt to "substitute a new plan" which the judge was entitled to reject. Country Life Apartments v. Buckley, 145 F.2d 935, 937 (2d Cir. 1944), Cf. Prudence-Bonds Corp. v. City Bank Farmers Trust Co., 186 F.2d 525, 528 (2d Cir. 1951). Finally, in view of our disposition of Kalodner's proposed alternative plan, the contention that ARA would have been obligated to subordinate its claim to the Section 103 industrial bonds Kalodner hoped to have Bache underwrite is moot.
The district court's orders will be ...