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Drexel employees similarly situated were treated as ERISA claims.
As a result, the priority of the claims of petitioner and other
former Drexel employees against Drexel’s bankruptcy estate was
elevated.
Drexel’s plan of reorganization (plan) assigned petitioner
and other former Drexel employees to DBL Group Class 6B.
Pursuant to the plan, members of that class were to receive
marketable securities known as certificates of beneficial
interest (CBI’s) in the DBL Liquidating Trust (trust) and limited
partnership interests known as DPI-A’s. The distributions to be
made to members of Group Class 6B were based on the face amount
of each noteholder’s note. In exchange for the distributions,
members of the class were to release their ERISA claims.
Petitioner voted to approve the plan.
On April 30, 1992, the plan was confirmed by the bankruptcy
court. Pursuant to the plan, on that date, petitioner received
certain CBI’s and DPI-A’s, all of which were valued at $8,455.54.
On September 30, 1993, petitioner received certain additional
CBI’s and a DPI-A, all of which were valued at $2,089.69.
Pursuant to a closing agreement between Drexel and the IRS, the
distributions were treated as wage income for withholding and
information reporting purposes. A letter dated August 29, 1992,
sent to petitioner by the trust stated:
Pursuant to the order of the Bankruptcy Court
confirming the plan, holders of securities issued under
the plan are required to take positions on their tax
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