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Walter Energy Release Sought

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Walter Energy filed with the U.S. Bankruptcy Court a motion for the entry of an order authorizing and directing the trustee of Walter Industries’ deferred compensation plan trust to terminate the trust and release the trust’s assets to Walter Industries.

The motion explains, “Because assets of a rabbi trust, by definition, belong to the grantor and revert to the grantor upon bankruptcy or insolvency, the Participants do not have a preferred claim to the Trust Assets. Here, the Trust Agreement expressly provides that: (1) the Participants have no preferred claim to, or any beneficial interest in, the Trust Assets, (2) the Participants’ status does not exceed that of the Company’s unsecured creditors, and (3) in the event of Walter Industries’ bankruptcy or insolvency, all Trust Assets are subject to the claims of the Company’s general creditors.”

The motion continues, “Under the Trust Agreement, the Trustee is required to cease payments of benefits to Participants if the Company is insolvent. By filing the Chapter 11 Cases, the Company is ‘insolvent’ within the meaning of the Trust Agreement….The Debtors have determined that releasing the Trust Assets to the Debtors will benefit the Debtors, their estates, and their creditors. While termination of the Trust and release of the Trust Assets are authorized under the terms of the Trust Agreement and therefore may constitute ordinary course transactions, the Debtors seek the Court’s authorization, out of an abundance of caution, to the extent that these transactions may constitute use of the Debtors’ property outside the ordinary course of business.”

The Court scheduled an April 27, 2016 hearing on the motion. Read more WLT bankruptcy news.

The post Walter Energy Release Sought appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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