Richards Layton & Finger

Can the Claims of Individual Creditors Be Assigned to a Litigation Trust?

January 2009

Can the bankruptcy plan provide that the securities claims -- which are not estate causes of action because they belong to the bondholders individually, not to the company -- be assigned to the litigation trust so that the trust can efficiently litigate these claims and distribute the proceeds thereof to the bondholders? This article explores the history, the more recent case law and the open issues, which could be important in structuring a plan in future cases.