Chapter 17 Summary and Conclusion

• Jurisdiction: United States

Chapter 17 Summary and Conclusion

In recent years, the use of liquidation trusts has been successfully employed to handle significant large-scale litigation involving multiple actions and to distribute recoveries to multiple claimants. The original structures used in the 1980s in the asbestos litigation and Dalkon Shield litigation have evolved to handle General Motors, Tronox and other very large matters. These cases were resolved by recognizing that complex business operations needed to be distinguished from the wide range of other highly litigious matters involved in these bankruptcies. The trust strategies and structures adopted have also been successfully employed in much smaller cases as an effective and efficient means for wrapping up business affairs, closing down operations, and leaving a mechanism in place to handle long-tail litigation and claims resolution. Today's economic environment has increasingly come to favor splitting the operating assets away from litigation assets as a more efficient means of managing liquidation procedures and enabling a faster and more timely allocation of recoveries among stakeholders.

Liquidation trusts provide a unique but highly adaptable mechanism that gives time to marshal assets with uncertain recoveries and to resolve creditor issues and claims that may be disputed. Liquidation trusts also provide the necessary time and separate funding mechanisms for managing and pursuing complex litigation involving multiple parties, insurers, intercreditor disputes, intercompany disputes among debtors, and other constituencies.

This Practitioner's Guide to Liquidation and Litigation Trusts has introduced how and when these vehicles may be used. We have provided an introductory overview of the most common issues faced when establishing, managing...