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When the plan becomes effective, the company should deliver to the Montreal Trust Company, as trustee for the bondholders, a quit claim and release of all its properties and assets in escrow, which would be-- come offective if, during the five-- year period, the company failed to pay current interest on the out-- standing bonds. Also, if the plan is put into effect, the receiver and manager and the liquidator should resign and the present bondholders' action against the company be dis-- continued. Referring to the ordinary cred-- itors' claims, the commissioners thought that halft of the claims should be paid in equal instalments over a four--year period, providing there had been no default to the bondholders in the meantime. _ If at the end of five years there had been no default, the remaining half should be paid in a similar manner. There is no provision for interest on these claims. be run by a board of seven direc-- tors, four {rom the bondholders and three from the preferred sharehold-- ers. At termination of the allotted poriod, the company should be managed by shareholders. Working Capital. Before payment of interest on bonds, the working capital should be maintained at $10,500,000, and if there should be an excess of work-- ing capital in any year, the amount over and above the suggested fig-- ure should be appl¥d to payment of the next interest due on bonds, the commission advises. If a surplus still remains, it should be used to buy bonds on the open market. The commission believes that for a period of five years, or until the bond indebtedness had been reduced to $35,000,000, the company should Ine trust deed covering present bond issue should be amended to extend the maturity date to Dec. 1, 1965, and its provisions as to sinking fund and application of money re-- ceived from the sale of capital as-- sets eliminated, past due interest on interest should be calculated to Dec. 1, 1940, and from that date there should be no further accumu-- lation of interest on interest; other-- wise there should be no alteration of the company's obligations, except such as necessary under this plan. The report advises against any sale at the present and suggests special legislation to make the plan effective. Other recommendations in the re port are: The trust deed covering nresoen cent and on the 6 per cent shares to 3 per cent, non--cumulative, was pre-- sonted yesterday by the Royal Com-- mission investigating affairs of the company,. The -- report, covering forty--six pages and signed by Mr. Justice McTague, chairman, and Sir James Dunn and A. E. Dyment, commis-- sioners, was tabled in the Legisla-- ture by Premier Hepburn. a Abitibi Sale Opposed By Royal Commission: Interest Cut Is Advised Joint Control Proposed Until Debt Reduced: Suggests 7--Man Board McTAGUE _ INQUIRY "In our view the day of dispens-- ing favors in the form of timber concessions to new political friends are long gone by, and for some con-- siderable time the problem will be one largely of judicial administra-- tion of the raw material require-- ments of the industry as presently constituted," the report continues, "A general feeling of insecurity can be detected, which can be rectified only by the removal of suspicion that political considerations and not plain justice prevails in the rela-- tionship between the Government and the industry." In referring to deposit agree-- ment, the commissioners thought that the court should have the right to order a full and independent vote by all members of any class and should have the power to dis-- regard provisions in any agreement which might operate against such an independent vote. Touching on the pulp and paper industry as a whole, in relation to the Government, the report states there has been built up over a period of years a vested interest based on the sanctity of contractual relationship. kolders conclude there is no equity, they simply proceed to foreclosure through the unwholesome fiction of a sale. It is pure fiction because, as pointed out in a report of the Securities and Exchange Commis-- sion of the United States, ordinarily no one but a committee of bond-- holders could purchase the assets, and, in the absence of competitive bids, the holders of the primary securities can buy the property for much less than its real value, not only to the detriment of the junior security holders but also to the financial disadvantage of bond-- holders who have not elected, per-- haps for very excellent reasons, to place their bonds under the control oi the committeec." After reviewing the history of the company's difficulties and referring 10 evidence presented, the commis-- sioners report they are impressed with the inadequacy of existing legislation to meet the situations which arise when companies find themselves in trouble. They hope that sufficient public interest might b* aroused to bring about changes in the laws, but do not express an opinion as to what form these changes should take. They suggest, however, that existing U.S. legis-- lation should be taken as a basis, but as a basis only, as they believe it can be improved. Junior Securities. lhe report notes that the Bond-- holders' Protective Committeo in 1837 brought down a plan which, in principle, admitted there was <ome equity for the junior security holders. i The report notes holders' Protective 1837 brought down APRIL \. "The subject of proration is a delicate one," the report continues. "It is difficult to suggest a policing duty on the Government. From a long range view, one would think the industry itself would appreciate its value and govern itself accord-- ingly. From the point of view of the national interest in acquiring valuable United States exchange, and from the point of view of labor, proration would seem to be highly desirable and we think that the Government should do all it ean to keep it in force." The commission says that if an agreement on Abitibi cannot be ar-- rived at in spirit of co--operation, the matter becomes one of a question of policy for the Government. "We offer no suggestions," the re-- port adds.