Chapter 2 Overview

• Jurisdiction: United States

Chapter 2 Overview

A Practitioner's Guide to Liquidation and Litigation Trusts is written for attorney and non-attorney professionals who are primarily involved in corporate bankruptcy matters. It is also designed for those professionals outside of the bankruptcy profession who seek guidance on the most common issues faced in establishing, managing, monitoring and ultimately concluding a liquidation trust or litigation trust.

The narrative is organized into four sections. The first section provides an introduction to corporate bankruptcy and an overview of liquidation and litigation trusts from both business and legal perspectives. The second section discusses mechanisms for creating and managing these trusts. The third section addresses such specific issues as taxes, jurisdiction, case management, mass tort and environmental litigation. The fourth section deals with the factors involved in concluding these trusts. Exhibits and appendices are included to assist the reader with sample trust agreement provisions, sample provisions for bankruptcy plan and disclosure statements, copies of critical IRS guidelines, a table of authorities and important case citations, and summary checklists of issues involved in establishing a liquidation or litigation trust. A glossary has also been provided for reference.

SECTION I: INTRODUCTION TO LIQUIDATION TRUSTS

The initial section addresses the context in which liquidation and litigation trusts should be considered in corporate bankruptcy matters. Chapter 3 provides an overview of basic restructuring options and reviews the process for those practitioners not experienced with handling bankruptcy cases. Chapter 4 discusses alternative liquidation vehicles and other post-confirmation vehicles, as well as an introduction to the general concepts that underlie the use of a liquidation trust approach. Chapter 5 identifies recent bankruptcy trends and developments in applying liquidation trusts.

SECTION II: LIQUIDATION TRUSTS

Section II provides a general discussion of the legal mechanisms and business issues involved in establishing and operating a liquidation trust. Chapter 6 identifies the purpose and goals, beneficiaries, benefits and disadvantages of using these trusts, as well as the necessary criteria to define the trust as set forth by the IRS. Chapter 7 outlines key issues to anticipate when establishing the trust, including obstacles to taking control over assets and liabilities, as well as issues involved with...