§347 Section 347 addresses the treatment of unclaimed funds in all cases under Title 11. Examples of cases in which undistributed funds might fall through the cracks of §347(b) include, but are certainly not limited to, (1) liquidating chapter 11 cases that do not involve a single entity that purchased substantially all of the debtor's assets, (2) liquidating chapter 11 cases that sell substantially all of the debtor's assets to one entity that itself is not in existence or in a position to accept the unclaimed funds five years from the date of the confirmation order, (3) liquidating chapter 11 cases in which the party entitled to a distribution rejects the distribution due to it because, , it has determined that it is not cost-effective to locate and make distribution to the parties beneficially entitled thereto, and (4) liquidating chapter 11 cases in which the debtor entity has been legally extinguished and the funds remaining on hand five years from the date of the confirmation order are the proceeds of litigation claims (and not the proceeds from the sale of the debtor's assets). These sections are designed to achieve finality, judicial economy and the avoidance of disruptive wasteful litigation over funds that remain unclaimed five years after confirmation. The funds remained in the court registry until the court determined disposition). Generally, chapter 11 funds deposited in a court registry are commingled with chapter 7 and 13 unclaimed funds. Additionally, in one instance, a court ordered that a substantial amount of undistributed funds held in its court registry from a reorganization were subject to forfeiture to the federal government. If the disposition of undistributed funds is not addressed by the plan proponents in the liquidating plan, and notwithstanding that §347(a) does not apply to cases under chapter 11, it seems that in practice undistributed funds in liquidating chapter 11 cases are often disposed of in accordance therewith and Chapter 129, and such funds are frequently deposited into the registry of the court. 1998) (the liquidating trustee transferred unclaimed funds to court registry even though the reorganization plan did not provide for such disposal. We have not uncovered procedures that bankruptcy clerks use to distinguish between chapter 7 and 13 unclaimed funds and chapter 11 funds held in bankruptcy court registries. These undistributed funds, sometimes meager and sometimes not, that fall through the cracks of §347(b) are the focus of this article. Bankruptcy Court for the District of Delaware had more than 0,000 in its court registry relating to liquidating chapter 11 cases.
plan provided that any remaining amount under ,000 could be distributed to the Make-A-Wish Foundation of Northern Illinois. Trustee supported the plan trustee's proposal to distribute the money to charity so long as the donations benefited children in some fashion and were not made to a charity whose primary objective was to promote religious activity. 1, 1956, for the purpose of eluding state escheat lruptcy, ¶347. While the 1978 Bankruptcy Reform Act added §347(b), §347(a) remains substantially unchanged from the 1956 revisions. In 2003, the court reopened the case and ordered these funds to be deposited into the court registry pursuant to Chapter 129.Additional support for the efficacy of these types of provisions in liquidating plans may be found in the doctrine may be a source of authority for parties wishing to donate undistributed funds on hand after administration of liquidating chapter 11 plans even if the confirmed plans did not provide therefore. The court determined that the amount of the funds was negligible in light of the 17,198 shareholders represented in the class action and that the administrative costs and postage expenses involved in distributing the funds to the thousands of claimants effectively prohibited distribution. The balance increased by ,148,983.66 in the third quarter of this year.Courts that have deviated from the scheme for disposition under Chapter 129 have found that Chapter 129 does "not limit the discretion of the district court to control the unclaimed portion of a...judgment...." is an example of a case in which frustration of purpose in respect of the proposed distribution of funds caused the court to exercise its equitable powers and to deviate from the disposition of funds prescribed by Chapter 129. The problem of distributing a common fund among class members, some of whom cannot be found, is typical. This data pertains to transfers of funds from all federal courts, not exclusively transfers from bankruptcy courts. 8 Conversations with representatives of the Office of the Clerk of the Bankruptcy Courts for the Southern District of Georgia and Southern District of Florida.The Company’s sales have deteriorated and it is in default of certain financial covenants contained in the loan documents with the Bank.The orderly liquidation value of the Company’s assets (the Bank’s collateral) is sufficient to pay the Bank off in full, but little or nothing will be left over to pay junior priority secured creditors and unsecured creditors. The buyer is interested in purchasing the Company’s assets, but wants to protect itself against successor liability and fraudulent transfer claims. And what about those liquidating 11 cases in which the debtor's assets are sold in a series of sale transactions to multiple buyers? In our experience, not once has an asset buyer in a sale-based liquidating chapter 11 plan negotiated for the payment of these funds five years after the date of the confirmation order.