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Frequently Asked Questions

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CDC LIQUIDATION TRUST DISTRIBUTIONS

1. Has a distribution been made from the CDC Liquidation Trust?

Yes, the first distribution to Beneficial Interest holders was made from the CDC Liquidation Trust on or about December 24, 2012. This distribution equaled $3.30 per Beneficial Interest (prior share). The second distribution to Beneficial Interest holders was made from the CDC Liquidation Trust on or about July 29, 2013. This distribution equaled $1.39 per Beneficial Interest (prior share). The third distribution to Beneficial Interest holders was made from the CDC Liquidation Trust on or about May 21, 2014. This distribution equaled $0.60 per Beneficial Interest (prior share). The fourth distribution to Beneficial Interest holders was made from the CDC Liquidation Trust on or December 21, 2015. This distribution equaled $0.40 per Beneficial Interest (prior share).

2. Will there be more distributions from the CDC Liquidation Trust?

As of December 22, 2015, the Liquidation Trustee has collected and distributed substantially all assets in the CDC Liquidation Trust and has resolved all material claims against the Debtor. After collection of the remaining Trust Assets and payment of all expenses incurred in fully administering the CDC Liquidation Trust, the Liquidation Trustee anticipates that there will be at least one additional distribution from the CDC Liquidation Trust. Any future distributions, however, will be de minimis.

3. How much will the distributions be in total?

The first distribution on or about December 24, 2012, the second distribution on or about July 29, 2013, the third distribution on or about May 21, 2014, and the fourth distribution on or about December 21, 2015, to Beneficial Interest holders from the CDC Liquidation Trust total $5.69.

The “Disclosure Statement” filed with the Bankruptcy Court on July 3, 2012, included a “Liquidation and Distribution Analysis” as of May 1, 2012. Based on certain assumptions and estimated valuations, it was estimated therein that the range of distribution to holders of Allowed Equity Interests in Class 3A was approximately $5.01 to $6.10 per share.

For additional information, please review Article IV of the Disclosure Statement. PLEASE NOTE that the Liquidation and Distribution Analysis has not been updated to reflect actual events since May 1, 2012, which may differ from the assumptions or estimates upon which such analysis is based.

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FEDERAL INCOME TAX CONSEQUENCES

The “Disclosure Statement” filed with the Bankruptcy Court on July 3, 2012 (Docket No. 476) includes a detailed discussion of the tax consequences of the Plan and the CDC Liquidation Trust in Article IX entitled “Tax Consequences of the Plan, and Disclaimer”, see Disclosure Statement, pp. 40-44. The tax discussion below in Questions 2 through 5 is taken in substantial part from Article IX of the Disclosure Statement. This discussion is provided herein for convenience and is subject to the limitations contained in the Disclosure Statement. For information regarding the tax consequences of the Plan and the CDC Liquidation Trust, the entire Plan and Disclosure Statement should be reviewed by each Beneficiary of the CDC Liquidation Trust, including Article IX of the Disclosure Statement.

Included in the Disclosure Statement, among other statements, is the following: EACH BENEFICIAL INTEREST HOLDER OR OTHER PARTY IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, AND LOCAL INCOME TAX CONSEQUENCES, AND ANY APPLICABLE FOREIGN AND OTHER TAX CONSEQUENCES OF THE PLAN. The disclaimers set forth in Article IX of the Disclosure Statement are incorporated herein by reference.


1. What type of tax reporting documentation will I receive as a holder of Beneficial Interests in the CDC Liquidation Trust?

The CDC Liquidation Trust has prepared a summary (the “Summary”) of the information that has been provided by the CDC Liquidation Trust and the Disputed Ownership Fund (“DOF”) to Beneficial Interest holders with respect to tax matters related to the CDC Liquidation Trust and the DOF since their establishment. It is the intention of the Liquidation Trustee to update the Summary annually. Please follow this link to view a copy of the Summary as of February 28, 2014.

2. How is the CDC Liquidation Trust generally treated for U.S. federal income tax purposes?

The CDC Liquidation Trust is intended to qualify as a “liquidating trust” as described in Treasury Regulations Section 301.7701-4(d) and Revenue Procedure 94-45, 1994-2 C.B. 684. In general, a liquidating trust is treated for federal income tax purposes as a “grantor trust.” Under U.S. federal income tax laws, a grantor trust is disregarded, and the grantors are treated as if they directly own undivided interests in all of the trust’s assets. For U.S. federal income tax purposes, the CDC Liquidation Trust will be taxed as a grantor trust under IRC Sections 671-677 (nontaxable pass-through tax entities). The applicable Beneficial Interest holders (former shareholders of the Debtor) will be deemed to be the grantors and owners of the CDC Liquidation Trust and its respective Trust Assets.

3. What is the tax treatment of the initial transfer of Trust Assets to the CDC Liquidation Trust?

• For all U.S. federal income tax purposes, all parties with respect to the CDC Liquidation Trust must treat the transfer of Assets to the CDC Liquidation Trust as (i) a taxable transfer of the Assets to the Beneficial Interest holders of the CDC Liquidation Trust, followed by (ii) a transfer of the Trust Assets by such Beneficial Interest holders to the CDC Liquidation Trust, with Beneficial Interest holders being treated as grantors and owners of the CDC Liquidation Trust. Each Beneficial Interest holder that is a beneficiary of the CDC Liquidation Trust will generally recognize gain or loss in its taxable year that includes the Effective Date in an amount equal to the difference between the amount realized in respect of its Equity Interest and its adjusted tax basis in the Equity Interest. The amount realized should generally equal the fair market value of the Trust Assets deemed received for U.S. federal income tax purposes under the Plan in respect of each Beneficial Interest holder’s Equity Interest. A Beneficial Interest holder that is deemed to receive for U.S. federal income tax purposes the Trust Assets under the Plan in respect of its Equity Interest should generally then have a tax basis in their Beneficial Interest in the Trust in an amount equal to the fair market value of their share of the Trust Assets transferred to the Trust on the date of receipt of the assets by the Trust.

• Because each Beneficial Interest holder’s share of the Trust Assets in the CDC Liquidation Trust may change depending upon the resolution of Disputed Claims, the Beneficial Interest holders may be prevented from recognizing for tax purposes all of their losses from the consummation of the Plan until all Disputed Claims have been resolved.

• The CDC Liquidation Trust and the beneficiaries of the CDC Liquidation Trust, as applicable, must value the Trust Assets consistently and use the valuations for all U.S. federal income tax purposes. The Liquidation Trust Agreement provides (i) consistent valuation of the Trust Assets by the CDC Liquidation Trustee and the beneficiaries of the CDC Liquidation Trust, (ii) the CDC Liquidation Trust to determine the fair market value of the Trust Assets, and (iii) the CDC Liquidation Trust to send the fair market value determinations to each beneficiary of the CDC Liquidation Trust.

4. Will the CDC Liquidation Trust file U.S. federal income tax returns?

The CDC Liquidation Trust will be required to file federal income tax returns as a grantor trust under IRC Section 671 and Treasury Regulations Section 1.671-4, and report, but not pay tax on, its respective tax items of income gain, loss deductions and credits (the “Tax Items”). Each Beneficial Interest holder will be required to report that holder’s proportionate share of such Tax Items on his, her or its U.S. federal income tax return, and pay any resulting federal income tax liability, regardless of whether the Liquidation Trustee distributes sufficient cash to fund the tax.

5. Who is taxed on income or gains earned by the CDC Liquidation Trust?
• The following discussion assumes that the CDC Liquidation Trust will be respected as a grantor trust for U.S. federal income tax purposes. No ruling has been requested from the IRS and no opinion of counsel has been requested concerning the tax status as a grantor trust of the CDC Liquidation Trust. There can be no assurance that the IRS will agree with the tax classification of the CDC Liquidation Trust, or any reserves within the CDC Liquidation Trust, as a grantor trust or part of a grantor trust. A different classification could result in a different income tax treatment of the CDC Liquidation Trust, or a reserve within the CDC Liquidation Trust. Such treatment could include, but is not limited to, treatment as a tax partnership for federal income tax purposes, or the imposition of an entity-level tax on the CDC Liquidation Trust, or a reserve within the CDC Liquidation Trust. Such a tax, if imposed, could result in a material reduction in the amount that would otherwise be available for distribution to the Beneficial Interest holders.

• The federal income tax consequences to a Beneficial Interest holder receiving, or entitled to receive, a payment on accounts of its Equity Interest may depend on a number of factors, including the nature of the Equity Interest, the Beneficial Interest holder’s method of accounting, the Beneficial Interest Holder’s tax jurisdictions, and particular tax situations applicable to the Beneficial Interest Holder. Because each Beneficial Interest holder’s Equity Interests and tax situations differ, Beneficial Interest holder’s should consult their own tax advisors to determine how the Plan affects them for their taxing jurisdictions, based on their particular tax situations.

• In general, a Beneficial Interest holder that receives a payment under the Plan on account of its Equity Interest recognizes income or loss for United States federal income tax purposes measured by the difference between (i) the amount of cash and the fair market value (if any) of any property received and (ii) its adjusted tax basis in the Equity Interest. The character of any income or loss that is recognized will depend upon a number of factors, including the status of the holder of the Equity Interest, the nature of the Equity Interest in its hands, whether the Equity Interest was purchased or granted at a discount, and the holder’s holding period of the Equity Interest. Generally, the income or loss will be capital gain or loss if the Equity Interest is a capital asset in the holder’s hands.

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TRANSFERABILITY OF BENEFICIAL INTEREST

1. Is my Beneficial Interest transferable?

Pursuant to the Liquidation Trust Agreement dated December 19, 2012, the Beneficial Interests of any Beneficiary in the CDC Liquidation Trust are not transferable except after written notice to the Liquidation Trustee only: (i) pursuant to applicable laws of descent and Distribution (as in the case of a deceased individual Beneficiary); or (ii) by operation of law (as in the case of a merger of a Beneficiary that is an entity or divorce).

The Liquidation Trustee shall not be required to record any transfer in favor of any transferee which, in the sole discretion of the Liquidation Trustee, is or might be construed to be ambiguous or to create uncertainty as to the holder of the interest in the CDC Liquidation Trust or constitute a violation of applicable laws or might cause the CDC Liquidation Trust to be required to register the Beneficial Interests in the CDC Liquidation Trust under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and any other applicable federal, state and local laws requiring registration of securities. Until a transfer of a Beneficial Interest is in fact recorded on the books and records maintained by the Liquidation Trustee for the purpose of identifying Beneficiaries, the Liquidation Trustee, whether or not in receipt of documents of transfer or other documents relating to the transfer, may nevertheless make distributions and send communications to Beneficiaries, as though it has no notice of any such transfer, and in so doing the Liquidation Trustee shall be fully protected and incur no liability to any purported transferee or any other Person.

Any purported assignment, pledge, mortgage, sale, transfer or other disposition other than as permitted by the limited exception above is void and will not be registered on the register maintained by the Liquidation Trustee.