Bpp liquidating trust
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This information has been prepared by Schulte Roth & Zabel LLP (“SRZ”) for general informational purposes only.
Do they have to report to shareholders and not the SEC?Transmission or receipt of this information does not create an attorney-client relationship with SRZ.Electronic mail or other communications with SRZ cannot be guaranteed to be confidential and will not (without SRZ agreement) create an attorney-client relationship with SRZ.13, 2014, and S would reimburse the trustee for preservation and maintenance expenses as of June 1, 2014, shortly after the trustee had stated his intention to abandon the Property.Nevertheless, the parties disputed whether S could be surcharged for expenses incurred prior to June 1, 2014. 1984) (if trustee incurs “properly identified” preservation expenses “primarily for the benefit of” the secured lender, Code Section 506(c) provides an exception if the lender has either “caused” or consented to the accrual of these expenses); , 762 F.2d 10, 12 (2d Cir. Other courts have explained that Code Section 506(c) essentially requires a “quantifiable and direct benefit to the secured creditor; indirect or speculative benefits may not be surcharged, nor may expenses that benefit the debtor or other creditors.” , 243 F.3d 228, 232 (5th Cir. These judicially imposed legal hurdles to a secured lender surcharge are meaningful.
“To recover expenses under this provision, the trustee bears the burden of proving” that: “(1) the expenditure was necessary, (2) the amounts expended were reasonable, and (3) the creditor benefited from the expenses.” , 739 F.2d 73, 76 (2d Cir.
In the court’s view, it was “obvious that [S] obtained some benefit from the expenses.
Consider the security, lawn mowing and roof repairs paid for by [the trustee], to name just a few of the expenses surcharged.” confirms the practical difficulty that a trustee ordinarily has in surcharging a secured lender for the expense of preserving its collateral.
S’s position, reasoned the court, could “result in the unjust enrichment that the statute aims to prevent … Such would be the case here if [S] were to avoid the surcharge, given that there is no indication it could have sold the Property earlier and avoided these expenses.” S’s position would also “limit Section 506(c) to expenses incurred during the usually brief window of time when the trustee has attempted to abandon but has not been authorized to abandon.” Because of all these concerns, the court saw “no basis for adopting a rule that is largely unmoored from the statutory text.” at *7.
The precise language of the statute “limits the trustee’s recovery to ‘necessary’ preservation and disposal costs and expenses.” If a trustee were to delay in realizing an asset’s value “and the value turns out to be less than the creditor’s secured interest, the creditor can challenge the necessity of the costs incurred by the trustee.” Finally, the court rejected S’s argument that the trustee had failed to quantify the benefit it had received.
The bankruptcy court later granted the trustee’s request to surcharges for those expenses. 1982) (surcharge denied; legal services of debtor’s counsel could not be imposed on secured lender; reorganization legal services “primarily of benefit to the debtor” and any “tertiary benefit bestowed upon the secured Property …