Chapter 16 Case Closing Matters

• Jurisdiction: United States

Chapter 16 Case Closing Matters

This chapter provides commentary on issues involved with closing the trust, including final reporting, distributions to beneficiaries and other items.

This chapter outlines some of the issues involved with closing a liquidation trust, including final reporting, distributions to beneficiaries and other items. In addition, this chapter introduces the concepts governing the determination of final tax liabilities and mechanisms to seek prompt determination of those liabilities, which is necessary to closing the trust.

A. Guidance on Case Closings

Each trust will be subject to its own terms and conditions as specified in its trust agreement, plan and disclosure statement, and other documents. Essential activities to close a case within the deadlines and parameters established in the governing documents include the final liquidation of assets, reconciliation of claims and distributions to beneficiaries.

The Office of the U.S. Trustee maintains the authority to review post-confirmation chapter 11 cases:

[The Office of the U.S. Trustee ensures] that a confirmed plan is implemented to the degree necessary to allow the court to close the case.... Because of the United States Trustee's responsibility to monitor the case, and the debtor in possession or trustee, the United States Trustee shall review any application for a Final Decree, and the report(s) required by the order of confirmation. It is within the discretion of the United States Trustee to object to an Application for Final Decree or to the contents of any reports required by the order of confirmation. If no objection has been filed within 30 days of the filing of the application or report(s), it is presumed that the estate has been fully and properly administered. Where no timely Application for Final Decree has been filed, the United States Trustee shall undertake efforts as the United States Trustee deems appropriate to secure the filing of an Application for Final Decree, or seek an order from the court.³⁴⁹

Guidance for the type of final reporting that can serve as a model for closing a post-confirmation liquidation trust can be obtained from the type of responsibilities expected of a chapter 7 bankruptcy trustee. These include:

1. Submission of the Final Report: The case trustee shall submit to the U.S. Trustee a Final Report. The Final Report is the pre-distribution summary of all actions taken by the chapter 7 case trustee to administer the case and a summary of the creditor and administrative claims outstanding at the time of submission to the U.S. Trustee. It is a signed statement by the trustee, submitted under penalty of perjury, certifying that all assets have been liquidated or properly accounted for and that funds of the estate are available for distribution. Prior to the submission of the Final Report, the trustee shall have ensured that the claims-review process is completed, including, if necessary, the completed adjudication by the court of any disputed claim.
The Final Report shall consist of: (1) the Individual Estate Property Record and Report (U.S. Trustee Form 1); (2) the Cash Receipt and Disbursement Record (U.S. Trustee Form 2); and (3) the proposed dividend distribution report. A proposed Notice of the Final Report and the Application for Compensation and Expenses will need to be submitted in a format similar to the examples provided by the U.S. Trustee (Attachment A or Attachment B of the "Amended Memorandum")
With the Final Report, the trustee shall submit to the U.S. Trustee: (1) the application or previously entered order of court for trustee compensation and reimbursement of expenses; (2) the applications or orders of court for compensation and expenses for all professionals retained by the trustee; and (3) appropriate financial documentation relating to the estate to support the Final Report. The applications submitted are to be drawn in accordance with the Guidelines promulgated by the Executive Office for the U.S. Trustees.
2. Distribution of Estate Dividends: If the court awards compensation and expenses as provided in the Notice of the Final Report and the Application for Compensation and Expenses, and the U.S. Trustee has approved the Final Report, upon entry of the compensation and expense order, the case trustee shall commence payment of dividends in accordance with the reviewed dividend distribution report. If, however, the court modifies the fees and expenses, the trustee shall not make distribution of dividends until the revised dividend distribution report has been reviewed by the U.S. Trustee. The payment of the final compensation and expenses shall not be made prior to the payment of the final dividends to creditors, and in no event shall the final dividend to creditors be paid later than 30

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