Oren L. Benton - Page 18

                                       - 18 -                                         
          “termination of an estate” as used in section 1398(i) could have            
          a different meaning in the context of other types of bankruptcy             
          proceedings, e.g., chapter 7 liquidating proceedings.  The                  
          possibility of differing treatment, however, may be appropriate             
          and may account for the use of “terminate” in section 1398(i),              
          instead of the term “closed”.                                               
               An important difference between chapter 11 and other                   
          bankruptcy proceedings is that the chapter 11 debtor is generally           
          discharged at the time of confirmation of the plan.  In addition,           
          at or about the time of confirmation the estate’s assets are                
          either returned to the debtor and/or (as in this case)                      
          transferred to a liquidating trust for the benefit of creditors.            
          A liquidating trust for the benefit of the estate’s creditors has           
          been treated as a taxable entity separate from and not a                    
          continuation or arm of the estate and/or the debtor.  Holywell              
          Corp. v. Smith, 503 U.S. 47 (1992); see also In re Shank, 240               
          Bankr. 216 (Bankr. D. Md. 1999).  In Holywell, the Supreme Court,           
          in overruling the lower courts, held that when a plan of                    
          reorganization caused the transfer of the bankruptcy estate’s               
          assets to a liquidating trust for the benefit of creditors, the             
          plan did not merely substitute the trustee for the debtor as the            
          fiduciary of the bankruptcy estate, but created the trust as a              
          separate entity and taxpayer.                                               

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011