Portrait liquidating trust

There has been a high volume of bankruptcy filings over the last three years of the economic downturn and they do not show any signs of letting up.

Whether it is Hostess Brands—with the future of Twinkies at risk, the prospect of iconic Kodak in the Bankruptcy Court or AMR Corp.’s flight into Chapter 11 reorganization.

In order to establish certainty that the Staff will grant relief, a company contemplating creating a liquidating trust pursuant to a bankruptcy plan should submit its own letter to the Staff requesting no-action relief.

Charitable contributions of art can pose unique challenges.

The Staff has generally noted the following characteristics with respect to liquidating trusts being granted no-action relief: While the Staff has granted no-action relief from Exchange Act requirements if the above requirements are met, it has also expressly denied relief in circumstances where the company requesting relief was not current with its required filings under the Exchange Act.

The Staff’s underlying rationale in granting relief to liquidating trusts appears to be two-fold: (1) that compliance with the reporting obligations (including the cost of auditing annual financial statements and preparing and filing quarterly reports) of the Exchange Act would place an unreasonable financial and administrative burden on a liquidating trust and significantly reduce the amount of distributions to be made in respect of the beneficial interests; and (2) as the beneficial interests are not and will not be traded on the open market and the holders of the beneficial interests will receive at least annual financial reports from the trustee of the liquidating trust, there is no need for the general public to receive the type of information regarding the liquidating trust required under Sections 13 and 15(d) of the Exchange Act.

While no-action relief granted by the Staff to other parties and with respect to certain facts and circumstances form all or part of a persuasive argument for like treatment in similar fact situations, the grant of no-action relief by the Staff does not represent an official action by or on behalf of the SEC Commissioners.

No-action relief granted by the Staff may only be relied upon by the party that submitted the request, based on the particular facts and circumstances, and otherwise may only viewed as setting forth views of the Staff (PDF).

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Gifts of real estate will be discussed in a special December issue.And, of course, a donor will need to establish a relationship with a charity in order to structure a charitable contribution of art.Indeed, in all cases, the structure of the contribution will have to be mutually agreeable.Typically, art contributions are made to qualified organizations that are museums or educational institutions that have public charity status.Before each donation, the donor should confirm that the intended recipient is a public charity or private operating foundation.

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