Opinion ID: 152730
Heading Depth: 2
Heading Rank: 2

Heading: The method of payment is consistent with the Trust's purpose

Text: We also reject the Colleges' claim that the equities support awarding the Colleges judgment-rate interest. Once the judicial process resolved the dispute concerning the extent of the Trustee's authority over allowed claims, the Trust paid the Colleges' Allowed Claims. Included in the payment to the Colleges was an additional amount representing their ratable share of the return on the Trust's investments that had accrued during the duration of the litigation over the Colleges' Allowed Claims. This method of payment to the Colleges is consistent with the Trust's mandate of equal and fair treatment to all claimants. Trust Agreement arts. 2.2 (stating that a purpose of the Trust is to ensure that all holders of similar PD claims are paid in substantially the same manner), 3.1(a), 3.4(a); see 11 U.S.C. § 524(g)(2)(B)(ii)(V) (the Bankruptcy Code provision under which the Trust was established which states that the Trustee must pay all claimants with similar claims in a substantially equivalent manner). The Colleges' argument that the payment rate was imposed on the Colleges without an express agreement does not adequately consider the Trustees' responsibility to pay all claimants with similar claims in a substantially equivalent matter. Trust Agreement 3.4(e)(iii). The Trust has not paid statutory judgment-rate interest to any other PD claimant. Even if no other claimant would benefit from the application of judgment-rate interest because the additional amount they received from the Trust was greater, the Trust acted consistent with its mandate by using the same method of computation in making additional payments to all similarly situated PD claimants, including the Colleges. Awarding judgment-rate interest would frustrate the Trust's purpose to ensure, to the extent possible that funds are available to pay present claims and future demands that involve similar claims in substantially the same manner. See Trust Agreement art. 2.2, 3.4(e)(iii); see also In re Celotex Corp., 204 B.R. at 605. A stated purpose of the Trust is to preserve, hold, manage, and maximize the Trust Assets for use in paying Allowed Asbestos Claims. Plan art. 5.1. However, the Plan Documents recognize that, when the Trust was established, the total number and amount of claims that ultimately may be allowed was unknown. Trust Agreement art. 3.4(a); see Bankruptcy Dismissal Order, Adv. No. 02-522 at 9. The Trust consequently pays claimants only a percentage of their allowed claim amounts. Plan art. 5.1; Trust Agreement art 3.4(a). Given that PD claimants receive only a percentage of their allowed claim amounts, and given that the Trust's resources are not unlimited, the bankruptcy court correctly reasoned that the Plan Documents do not contemplate the accrual of post-judgment interest on [a]llowed [c]laims at the federal statutory rate. Bankruptcy Dismissal Order, Adv. No. 02-522 at 10. Unlike the method of payment used by the Trust, the federal statutory rate is not linked to the Trust's return on investments and thus, additional payments on certain allowed claims at such a rate could potentially deplete the pool of money from which all claimants obtain money damages. Therefore, as the bankruptcy court reasoned, awarding judgment-rate interest to the Colleges would be inconsistent with the purpose of the Trust to preserve its assets for use in paying all present and future Claims in substantially the same manner. Id. at 10.