Migrated IT from corporate mainframe, resolved personal injury claims and terminated employee benefit plans and complex insurance programs.Achieved recovery rate of 98.06% against projection of 60-68%.
Considering quarterly fees to be an "administrative expense for which the liquidation trust was responsible," the court found that "imposing post-confirmation quarterly fees upon the liquidation trust [was] neither an attempt to modify the plan nor a violation of separation of powers...." Id. Although liquidation trustees have not generally been held personally liable for environmental damage, the potential exists under federal and state law.
Specifically, if a liquidation trustee engages in activities that could constitute managing or operating of trust property under 28 U.
Regardless, the increase of chapter 11 liquidation plans will result in the increased use of liquidation trusts.
Liquidation trusts typically allow for a larger return than a "fire sale" of the debtor's assets, which are transferred into a trust for the benefit of creditors upon confirmation of a liquidating plan.
A liquidating plan usually contemplates establishing a liquidation trust, assigning assets and causes of action, and appointing a liquidation trustee. 1989) ("Trustees of an estate in bankruptcy are subject to personal liability for willful violations of fiduciary duties."). To avoid such personal liability, trustees must take the utmost care in their duties, particularly considering the differing causes of action that could accrue. Supreme Court held that under the Internal Revenue Code, a liquidation trustee must "pay the tax due on the income attributable to the corporate debtors' property because [26 U. C.] §6012(b)(3) requires him to make a return as the 'assignee' of the 'property..a corporation.'" Holywell Corp.
After confirmation and appointment, the liquidation trustee then serves as the liquidation trust's representative and is responsible for complying with the trust agreement (and confirmation order), liquidating the assets and making distributions to trust beneficiaries. This necessitates a liability policy and/or an indemnity agreement to protect the liquidation trustee from errors and omissions. As a "trustee," a liquidation trustee has potential exposure for numerous liabilities. Indeed, trustees can be exposed to personal liability for acting outside of their official capacity and for breaches of fiduciary duty. The trustee received notice of the levy and then paid the debtor's president's allowed administrative claim from the liquidation funds of the estate. §6332 for failing to honor the levy, even though the trustee notified the government that he was going to disburse the funds and the IRS raised no objection at that time. A liquidation trustee is generally required to pay post-confirmation quarterly fees out of the funds of the trust. 1996) (dicta indicating that the liquidation trust would have been liable if amendments to 28 U. §1930(a)(6) had occurred before plan confirmation). One court addressing this issue held that because "Congress intend[ed] such fees be paid by chapter 11 debtors prior to conversion or dismissal...," and because the trust has "essentially stepped into the shoes of the original debtor," then the trust is "liable for any such fees which may be imposed." In re CSC Indus. Nonetheless, liquidation trustee position can be lucrative.