Guest Kathy D Posted October 7, 2009 Share Posted October 7, 2009 Can anyone shed some light on the Lyondell bankruptcy and the the decision of the US bankruptcy judge that employees with deferrals in the DCP would "stand in line" behind secured and unsecured creditors. We are just entering DCP enrollment season and I need to be able to address this, aside from the usual disclaimers. For instance, on an anectodal basis I am not aware of a US bankruptcy judge violating the sanctity of a Rabbi Trust to reach in and claim employee deferrals. Thanks to all. Kathy Link to comment Share on other sites More sharing options...
jpod Posted October 7, 2009 Share Posted October 7, 2009 By definition, a Rabbi Trust (or at least a compliant one) must by its terms provide that is assets revert to the employer for the benefit of creditors in the event of bankruptcy. Link to comment Share on other sites More sharing options...
mbozek Posted October 8, 2009 Share Posted October 8, 2009 Can anyone shed some light on the Lyondell bankruptcy and the the decision of the US bankruptcy judge that employees with deferrals in the DCP would "stand in line" behind secured and unsecured creditors. We are just entering DCP enrollment season and I need to be able to address this, aside from the usual disclaimers. For instance, on an anectodal basis I am not aware of a US bankruptcy judge violating the sanctity of a Rabbi Trust to reach in and claim employee deferrals. Thanks to all. Kathy Assets in an unfunded nonqualified plan are general assets of the employer which can be seized by the employers bankruptcy creditor's. In re IT group, 305 BR 402 (2004). In a Rabbi trust the assets must be subject to the claims of the employer's creditors. mjb Link to comment Share on other sites More sharing options...
Guest Kathy D Posted October 8, 2009 Share Posted October 8, 2009 Can anyone shed some light on the Lyondell bankruptcy and the the decision of the US bankruptcy judge that employees with deferrals in the DCP would "stand in line" behind secured and unsecured creditors. We are just entering DCP enrollment season and I need to be able to address this, aside from the usual disclaimers. For instance, on an anectodal basis I am not aware of a US bankruptcy judge violating the sanctity of a Rabbi Trust to reach in and claim employee deferrals. Thanks to all. Kathy Assets in an unfunded nonqualified plan are general assets of the employer which can be seized by the employers bankruptcy creditor's. In re IT group, 305 BR 402 (2004). In a Rabbi trust the assets must be subject to the claims of the employer's creditors. Thank you. While assets are subject to claims of creditors, I am concerned about past practice in terms of secured and unsecured creditors. Link to comment Share on other sites More sharing options...
jpod Posted October 8, 2009 Share Posted October 8, 2009 Kathy D: I take it, therefore, that you are not questioning the propriety of the assets reverting to the benefit of creditors. The affected employees are general creditors, behind the secured. Whether they stand ahead of, equal with, or behind other general creditors is a bankruptcy law issue having nothing to do with the existence of the Rabbi Trust. Link to comment Share on other sites More sharing options...
mbozek Posted October 22, 2009 Share Posted October 22, 2009 Can anyone shed some light on the Lyondell bankruptcy and the the decision of the US bankruptcy judge that employees with deferrals in the DCP would "stand in line" behind secured and unsecured creditors. We are just entering DCP enrollment season and I need to be able to address this, aside from the usual disclaimers. For instance, on an anectodal basis I am not aware of a US bankruptcy judge violating the sanctity of a Rabbi Trust to reach in and claim employee deferrals. Thanks to all. Kathy Assets in an unfunded nonqualified plan are general assets of the employer which can be seized by the employers bankruptcy creditor's. In re IT group, 305 BR 402 (2004). In a Rabbi trust the assets must be subject to the claims of the employer's creditors. Thank you. While assets are subject to claims of creditors, I am concerned about past practice in terms of secured and unsecured creditors. If the employees are not secured creditors they will be general creditors who usually receive less than 10 cents on the dollar for their claims. mjb Link to comment Share on other sites More sharing options...
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