October 26, 2010, Decided
COUNSEL: For The Robert Plan of New York Corporation, Consolidated Debtor:Harold S Berzow, Ruskin Moscou Faltischek, Uniondale, NY.
For The Robert Plan Corporation, Debtor: Harold S Berzow, Ruskin MoscouFaltischek, Uniondale, NY.
For Kenneth Kirschenbaum, Trustee: Kirschenbaum & Kirschenbaum, PC, Garden City,NY; Fletcher Strong, Kirschenbaum & Kirschenbaum PC, Garden City, NY; KennethKirschenbaum, Steven B Sheinwald, Kirschenbaum & Kirschenbaum, Garden City, NY.
For Official Committee of Unsecured Creditors, Creditor Committee: S JasonTeele, Sharon L Levine, Lowenstein Sandler PC, Roseland, NJ.
JUDGES: Robert E. Grossman, United States Bankruptcy Judge.
OPINION BY: Robert E. Grossman
The matter is before the Court pursuant to an application by KennethKirschenbaum, Esq. (the "Trustee" or "Administrator"), the Chapter 7 trustee forthe consolidated estates of The Robert Plan Corporation ("RPC") and The RobertPlan of New York Corporation ("RPNY") (collectively, the "Debtors"). The Trusteefiled motions seeking authorization to (1) act as administrator of RPC's pensionplan and RPC's Retirement Savings Plan (the "Plan"), (2) retain the Trustee andcertain professionals to assist the Trustee in carrying out his duties asAdministrator, (3) pay specified expenses related to the administration of thePlan and (4) take any actions the Trustee deems appropriate to bring the Planinto compliance with the ERISA statutes and to terminate the Plan. The U.S.Department of Labor ("DOL") has submitted no objection to the Trustee's requestto act as Administrator and terminate the Plan, but does object to the remainderof the relief requested by the Trustee. According to DOL, the Bankruptcy Courtlacks jurisdiction to rule on the relief requested in the motions because themotions are not core proceedings, nor are they sufficiently related to theDebtors' cases. DOL asserts that because the Plan is not property of theDebtors' estates, and because it is likely that there are sufficient funds inthe Plan to cover the costs of administering the Plan, there is no basis for theBankruptcy Court to assert jurisdiction over the Trustee as Administrator.
For the reasons set forth below, the Court finds that it has jurisdictionover the Trustee while he performs his obligations as Administrator. Because theTrustee is fulfilling his duties imposed by the Bankruptcy Code pursuant to 11U.S.C. Â§ 704(a)(11), the Trustee is subject to this Court's core jurisdictionwhile performing these duties. The Trustee also must comply with therequirements imposed by the Bankruptcy Code when the Trustee acts asAdministrator pursuant to 11 U.S.C. Â§ 704(a)(11). These requirements includeseeking Court authorization to retain and authorize the payment of the Trustee'sprofessionals. This Court has jurisdiction to authorize these requests as theyconstitute core matters arising in the Debtors' bankruptcy cases. The fact thatthe Trustee may seek payment of an award of this Court from non-estate assetsdoes not limit or alter the Court's jurisdiction to make such an award. However,because the Trustee's request for entry of an order awarding fees for theretained professionals does not comply with the applicable Bankruptcy Rules andthe E.D.N.Y. Local Bankruptcy Rules, the request is denied without prejudice.The Trustee's request for entry of an order authorizing the Trustee to seekcompensation for his services as Administrator an hourly rate of $500.00, to payexpenses in connection with the performance of his duties in capacity asAdministrator and to take any actions the Trustee deems appropriate to bring thePlan into compliance with the ERISA statutes is denied. The Bankruptcy Court'sjurisdiction is limited to cases or controversies pursuant to the U.S.Constitution, Art. III, Â§ 2. At this point, there is no case or controversy atissue between the Trustee and the DOL, or any other party, with respect to anyactions the Trustee may take in the future as Administrator. The Trustee'srequests to approve his proposed hourly rate as Administrator and to authorizethe Trustee to pay himself a specific sum as the Administrator are deniedwithout prejudice.
On August 25, 2008 (the "Petition Date"), the Debtors filed voluntarypetitions for relief under Chapter 11 of the United States Bankruptcy Code (the"Code"). On January 19, 2010, the cases were converted to Chapter 7. The Trusteewas duly appointed and qualified as acting trustee for both cases. By orderentered on September 9, 2010, the Debtors' cases were substantivelyconsolidated.
On May 6, 2010 and June 10, 2010, the Trustee filed applications for ordersauthorizing the Trustee to act as Administrator and authorizing the Trustee toemploy certain professionals. On August 6, 2010, the Trustee filed asupplemental affirmation in support of these prior applications. A hearing washeld on August 16, 2010, and both the Trustee and the Office of the UnitedStates Trustee appeared. Thereafter, on September 1, 2010, DOL filed objectionsto the Trustee's applications ("DOL Objection"), and on September 3, 2010, theTrustee filed a reply. On September 17, 2010, the Trustee filed an exhibitconsisting of an article from the Fall 2010 Journal of the National Associationof Bankruptcy Trustees entitled "Terminating an ERISA Retirement Plan inBankruptcy: Can a Bankruptcy Trustee Serve Two Masters?" On September 29, 2010,the Court entertained further oral argument, and on October 13, 2010 DOL and theTrustee filed additional briefs. Thereafter, the matter was marked submitted.
The Plan is sponsored by RPC for the benefit of its employees and is adefined contribution plan governed by the terms of ERISA. Prior to the PetitionDate, RPC was the Plan administrator. 1 Upon conversion of the Debtors' casesand appointment of the Trustee, the Trustee was required under Â§ 704(a)(11) ofthe Code, 2 as amended by the Bankruptcy Abuse and Consumer Protection Act of2005, to continue to perform the obligations required of the plan administrator,as defined in the Employee Retirement Income Security Act of 1974 ("ERISA").Pursuant to Section 18.12 of the Plan, titled "Governing Law," the Plan "and theaccompanying Adoption Agreement shall be construed, administered and enforcedaccording to ERISA, and to the extent not preempted thereby, the laws of theCommonwealth of Massachusetts." 3 There is no dispute that the Plan assets areexcluded from the Debtors' estate pursuant to Bankruptcy Code Â§ 541(b)(7).
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1 Pursuantto Art. 1.01(c) of the Plan, under the Adoption Agreement, the Administrator isRPC as the employer, unless otherwise indicated.2 Section 704(a)(11) of the Code states:
if, at the time of the commencement of the case, the debtor (or any entity designated by the debtor) served as the administrator (as defined in Section 3 of the Employee Retirement Income Security Act of 1974 [("ERISA")]) of an employee benefit plan, [the trustee shall] continue to perform the obligations required of the administrator . . . .
11 U.S.C. Â§ 704(a)(11).3 The remaining language in Section 18.12 of the Plan reads, without aseparate header titled "Section 18.13," "Nothing contained in Sections 8.02,19.01 or 19.05 or this Section 18.13 shall be construed in a manner whichsubjects a governmental plan (as defined in [Internal Revenue] Code Section414(d)) or a non-electing church plan (as described in [Internal Revenue] CodeSection 410(d)) to the fiduciary provisions of Title I of ERISA." 26 U.S.C.A. Â§414 reads in relevant part, "[T]he term 'governmental plan' means a planestablished and maintained for its employees by the Government of the UnitedStates." 26 U.S.C.A. Â§ 414. Further, Section 410(d) of the Internal Revenue Coderelates to churches maintaining a church plan. The Court interprets this part ofSection 18.12 to indicate that the Plan is neither a government plan nor churchplan, and that the Plan is governed by ERISA.- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The Trustee states that in his capacity as Administrator, he will terminatethe Plan and distribute the funds to the Plan participants. As Administrator theTrustee must also determine whether the Plan has been properly administered byPlan fiduciaries and whether legal action is warranted against any party orperson for violation of the Plan provisions or ERISA laws. The Trustee asAdministrator must also determine if any amendments to the Plan are necessaryand if any expenditures or allocations are necessary. The Trustee anticipates hewill incur significant expenses in meeting his obligations as Administratorincluding locating Plan participants and obtaining their cooperation in thetermination and liquidation process.
By application dated May 6, 2010, the Trustee sought authorization to act asAdministrator at an hourly rate of $500.00, and sought authorization to retainthe services of David J. Witz as pension consultant, Kirschenbaum &Kirschenbaum, P.C. as legal counsel, and Travis Whitfield, CPA as independentauditor ("First Application"). In the First Application, the Trustee was notseeking compensation of any of these professionals, but indicated that anycompensation would be conditioned upon further application and approval by theCourt.
According to the representations made by the Trustee in the FirstApplication, as of May 6, 2010, there were approximately 275 participants andeight million dollars ($8,000,000.00) invested in the Plan fund. There was also$130,000.00 in an account known as a forfeiture fund (the "Forfeiture Fund"),which is comprised of employer contributions to employees who left employmentbefore the retirement benefits vested. Pursuant to Sections 19.05 4 and 20.14 5of the Plan documents and Sections 1103(c)(1), 6 1104(a)(1)(A)(ii), 7 and1108(c) of ERISA, payments for the Trustee and retained professionals are to bemade from the Plan assets. There is no requirement under ERISA that theAdministrator obtain an order prior to paying for the costs of administering thePlan. Because the Trustee believed the Plan was fully funded, the Trusteeinitially asserted that he would seek payment only from the Plan assets,specifically, the Forfeiture Fund. However, to the extent that the amount in theForfeiture Fund would be insufficient to satisfy the Trustee's expenses andcompensation, the Trustee contemplated deducting money from each participant'saccount who did not respond to the initial notice of termination. The Trusteefurther indicated that any funds remaining in the Forfeiture Fund after allexpenses were paid would be distributed to the Plan participants or possibly tothe Debtors' estates. The Trustee did not initially contemplate seeking paymentfrom the Debtors' estate and represented that any payment he sought for himselfor the retained professionals would be limited to Plan assets.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -4 "[A]llreasonable costs and expenses (including legal, accounting, and employeecommunication fees) incurred by the Administrator and the Trustee inadministering the Plan and Trust may be paid from the forfeitures (if any)resulting under Section 11.08, or from the remaining Trust Fund."5
"[A]ny and all expenses, including without limitation legal fees and expenses of administrative and judicial proceedings, reasonably incurred by the Trustee in connection with its duties and responsibilities hereunder shall . . . be paid either from forfeitures resulting under Section 11.08, or from the remaining Trust Fund and shall, unless allocable to the Accounts of particular Participants, be charged against the respective Accounts of all Participants, in such reasonable manner as the Trustee may determine."
6 "[T]he assets of a [401(k)] plan . . . shall be held for the exclusivepurpose . . . of . . . defraying reasonable expenses of administering the plan."7 "A fiduciary [under a retirement plan] shall discharge his duties withrespect to a plan solely in the interest of the participants and beneficiariesand for the exclusive purpose of defraying reasonable expenses of administeringthe plan." ERISA Â§ 1104(a)(1)(A)(ii).- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
By supplemental application filed on June 10, 2010, the Trustee soughtauthorization to pay the above-named pension plan experts and consultants up tocertain specified limits subject to his discretion from the Plan funds ("SecondApplication"). On August 6, 2010, the Trustee filed a supplemental affirmationin support of the Second Application, wherein the Trustee sought authorizationto take whatever action the Trustee deems appropriate to bring the Plan intocompliance and to terminate the Plan ("Second Amended Application"). Accordingto the Trustee, the Trustee's professionals have determined that the Plan wasnot in compliance with ERISA and that almost 100 additional participants had tohave funds restored to their ERISA accounts. Consequently, there are now 375total participants entitled to distribution from the Plan, and as a result mostof the Forfeiture Fund has been exhausted. In order to fund the costs associatedwith bringing the Plan into compliance with the applicable rules andregulations, restore funds to participants' accounts, file the necessary taxreturns, provide support to Plan participants and continue with termination ofthe Plan, the Trustee directed that each Plan participant's account besurcharged 3%, which has been placed into an expense account called a "PguyAccount."
Annexed to the Second Amended Application, which was served only upon theOffice of the United States Trustee and DOL, are invoices from the Trustee,Kirschenbaum & Kirschenbaum, P.C., David Witz and Travis Whitfield for servicesrendered as of the date of the Second Amended Application. Pursuant to theSecond Amended Application, the Trustee seeks authorization to pay himself$40,940.00 on an interim basis as compensation for his services asAdministrator. The Trustee also seeks entry of orders approving the employmentof the following professionals in connection with administration of the Plan,and seeks authorization to pay the professionals the following amounts asinterim fees:
1. David J. Witz as Pension Consultant, authorizing payment of $27,631.25;
2. Kirschenbaum & Kirschenbaum, P.C. as legal counsel, authorizing payment of$13,432.75;
3. Travis Whitfield, CPA as accountant, authorizing payment of $6,900; and
4. Fidelity Employer Services Company ("Fidelity"), the existing Plan thirdparty administrator and directed trustee, and Millenium Trust Company, LLC("Millenium") as the third party administrator for the Plan termination process,authorizing payment of their service charges at the Trustee's discretion as thecharges become due and owing.
According to the Trustee, he has been fielding a number of calls fromconcerned Plan participants regarding the Plan, and the only source of funds theTrustee has to cover the additional expenses being incurred in theadministration of the Plan is the Pguy Account. The Trustee represents thatthere is $300,000 in the Pguy Account. If the amounts in the Forfeiture Fund andthe Pguy Account are exhausted, the only other source of funds to reimburseexpenses would be the Debtors' estates. In addition, the Trustee no longeragrees to limit his recovery for costs, fees and expenses solely from the Planassets, and reserves the right to seek payment from the Debtors' estates tocover any further expenses associated with the windup and termination of thePlan above and beyond the amounts in the Pguy Account.
Objection by DOL
DOL does not dispute that the Trustee is required to act as the Administratorpursuant to the Plan documents and the applicable ERISA definitions. DOL alsodoes not object to the Trustee's decision to terminate the Plan because thisdecision would not be a fiduciary decision governed by the fiduciary provisionsof ERISA. However DOL opposes the Trustee's request for Bankruptcy Courtauthorization to retain and pay professionals pursuant to Bankruptcy Code Â§Â§ 327and 330, respectively, and to pay the Trustee for services performed asAdministrator. DOL also objects to the entry of any order specificallyauthorizing the Trustee to take any action he deems appropriate to bring thePlan into compliance with the applicable ERISA laws.
DOL's argument is based on the premise that this Court lacks jurisdictionover the Trustee's actions when he is acting in his capacity as Administrator ofthe Plan. According to DOL, when Congress imposed upon Chapter 7 trustees theduty to administer ERISA plans in 2005, it intentionally avoided creating anyjurisdictional link between an ERISA estate and a debtor's bankruptcy estate,and excluded employee contributions to ERISA plans in the definition of propertyof the debtor's estate set forth in Bankruptcy Code Â§ 541(b)(7). Because thePlan assets are not property of the bankruptcy estate any actions the Trusteetakes as Plan administrator can have no effect on the Debtor's estate. Accordingto DOL, the Bankruptcy Court's jurisdiction would not extend to any acts takenby the Trustee involving these non-estate assets. The only exception DOLconcedes is that this Court may have non-core "related to" jurisdiction over achapter 7 trustee's request for an award of fees incurred in the discharge ofhis duties as plan administrator if the fees were to be paid from the debtor'sestate. However, in this case, DOL believes that the Plan assets are sufficientto pay the Trustee and his professionals, and therefore the Court does not have"related to" jurisdiction over the Trustee's requests.
DOL claims support for its argument in the Supreme Court's observation that"[b]ankruptcy jurisdiction, at its core, is in rem . . . Bankruptcyjurisdiction, as understood today and at the time of the framing, is principallyin rem jurisdiction." Cent. Va. Cmty. College v. Katz, 546 U.S. 356, 362, 370,126 S. Ct. 990, 163 L. Ed. 2d 945 (2006). DOL also argues that because theactions taken by a Chapter 7 trustee in administering an ERISA plan do notinvolve the restructuring of the Debtor's relations with their creditors, itdoes not trigger a bankruptcy court's core jurisdiction.
According to DOL, Â§ 704(a)(11) does not invoke a right created by theBankruptcy Code so there can be no "arising under" jurisdiction with respect tothe relief requested in the First Application and the Second Application. Thefact that the matter arises during the pendency of the bankruptcy case isaccording to DOL an insufficient basis to create "arising in" jurisdiction. DOLargues that because the tasks assigned to the Trustee pursuant to Section704(a)(11) do not occur only in bankruptcy, there is no "arising in"jurisdiction over these matters. In addition, DOL argues the relief sought bythe Trustee does not involve the administration of the estate, which is arequirement of a core proceeding under 28 U.S.C. Â§ 157(b)(2)(A).
DOL also asserts that the Bankruptcy Court does not have "related to"jurisdiction over these matters. DOL agrees with the Trustee that the test fordetermining whether a civil proceeding is non-core but related to a bankruptcycase is "whether the outcome of that proceeding could conceivably have anyeffect on the estate being administered." Turner v. Ermiger, 724 F.2d 338, 341(2d Cir. 1983); Pacor v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984). DOL urgesthe Court to find that the potential effect of an award by the Court on theadministration of the Debtors' estate is too remote to have any effect on theDebtors. The Plan had an account balance of more than $7.6 million on July 10,2010, which should be adequate to cover any shortfall in the Pguy Account.According to DOL, there is no credible basis to believe that the $300,000.00 inthe Pguy Account is insufficient to fund the administration and termination ofthe Plan. DOL argues that the possibility that the Plan funds will be exhaustedfrom the costs of administering and terminating the Plan "appears to be more ofa reflection of the Trustee's exorbitant hourly fee and the manner in which heis employing service providers than a legitimate concern." DOL Objection, p. 13.According to DOL, there is nothing precluding the Trustee from further assessingthe participant Plan accounts to fund any additional costs of Planadministration incurred by the Trustee.
DOL makes clear that under the Plan the Trustee does not need approval fromany court to retain and pay professionals, or to carry out his responsibilitiesas Administrator under the Plan. Under ERISA the plan administrator has thepower to terminate the plan, including hiring and retaining professionals toassist him and to pay such service providers "reasonable compensation" from planassets. 29 U.S.C. Â§ 1108(b)(2). DOL speculates that one of the reasons theTrustee brought the Motion was to obtain a release from any possible wrong hemay commit while administering the Plan under the doctrine of derived judicialimmunity. 8 According to DOL, there is no basis in law to grant such relief tothe Trustee and therefore by seeking Court approval for the disposition ofnon-estate assets, the Trustee is indirectly seeking to obtain a release frompotential fiduciary liability under ERISA, which is denied to all others whoadminister ERISA plans.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -8 Thedoctrine of derived judicial immunity provides a bankruptcy trustee withimmunity in the exercise of his business judgment, where he acts in accordancewith an order of the court, after candid disclosure and on notice to interestedparties. Bennett v. Williams, 892 F.2d 822 (9th Cir. 1989).- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
The last argument made by DOL addresses the difficulty it sees in awardingfees under Bankruptcy Code Â§ 330, which would create a liability of the Debtors'estates, and having the award paid from non-estate Plan assets. An award under Â§330(a) creates an administrative expense obligation of the bankruptcy estate,and any attempt to enforce that obligation against an ERISA plan or any otherthird party would require a separate proceeding, further complicating thebankruptcy proceedings.
To the extent the Court finds it has jurisdiction over the request to retainand pay professionals, and awards any compensation to the Trustee and hisprofessionals, DOL urges the Court to find that the $500.00 hourly rate chargedby the Trustee is not reasonable based on the customary compensation charged byplan administrators in the range of $200.00 to $300.00 per hour, and to limitthe Trustee's interim compensation to $200.00 per hour. DOL also requests thatif the Court entertains the request for payment of fees of the Trustee'sprofessionals, that the Court impose a 30% holdback on any sum awarded toprofessionals. DOL requests that the awards be made on an interim basis, subjectto further review by the Court, after DOL has completed its review of the feesrequested.
Because DOL has questioned the very jurisdiction of this Court to grant anyof the relief requested by the Trustee, except for the request to authorize theTrustee to act as Administrator and terminate the Plan, this issue must beresolved prior to reviewing the specific relief requested by the Trustee.
Prior to enactment of the Bankruptcy Abuse and Consumer Protection Act of2005 ("BAPCPA"), the Bankruptcy Code contained no express provision imposingupon the Chapter 7 trustee the responsibility for administering retirementplans. Courts were divided over whether, upon the filing of a petition underChapter 7 of the Bankruptcy Code, the chapter 7 trustee was responsible foracting as the plan administrator, or whether the prebankruptcy planadministrator continued to act as plan administrator until he or she resignedafter making arrangements for a successor to take his or her place. In re NSCO,Inc., 427 B.R. 165, 174 (Bankr. D. Mass. 2010) (citing In re New Center Hosp.,200 B.R. 592, 593 (E.D. Mich. 1996) and Chambers v. Kaleidoscope, Inc., ProfitSharing Plan and Trust, 650 F. Supp. 359, 369 (N.D. Ga. 1986) as examples of thediverging lines of case law). In 2005, as part of BAPCPA, a new provision wasadded to the Chapter 7 trustee's duties. Pursuant to Bankruptcy Code Â§704(a)(11), the Chapter 7 trustee is directed to continue to perform theobligations required of a Plan administrator, as defined by ERISA, "if, at thetime of the commencement of the case, the debtor (or any entity designated bythe debtor) served as the administrator . . . of an employee benefit plan." 11U.S.C. Â§ 704(a)(11). As a result, Section 704(a)(11) has raised new issuesconcerning the extent to which the Bankruptcy Court has jurisdiction over atrustee's actions when acting in place of the debtor as a retirement planadministrator, and the case law on this issue is unsettled.
a. Fiduciary Duties of Chapter 7 Trustee
To properly consider the jurisdictional issues before the Court, anexamination of the role of the Chapter 7 trustee under the Bankruptcy Code is inorder. Bankruptcy trustees are fiduciaries, and the obligations imposed uponthem to administer the bankruptcy estate are fiduciary obligations as well. Inre NSCO, Inc., 427 B.R. at 174 (citing Hartford Underwriters Ins. Co. v. UnionPlanters Bank, N.A., 530 U.S. 1, 12, 120 S. Ct. 1942, 147 L.Ed.2d 1 (2000)). Achapter 7 trustee's primary obligation is to "collect and reduce to money theproperty of the estate for which such trustee serves, and close such estate asexpeditiously as is compatible with the best interests of parties ininterest[.]" 11 U.S.C. Â§ 704(a)(1). "'As an officer of the Court and as arepresentative of the Debtor's creditors, the Trustee has a duty to realize themaximum return for the estate for further distribution to the Debtor'screditors.'" In re Balco Equities, Ltd., Inc., 323 B.R. 85, 97 (Bankr. S.D.N.Y.2005) (citing In re Mondie Forge, Inc., 148 B.R. 499, 502 (Bankr.N.D.Ohio 1992)). "A trustee has the statutory duty to protect and preserve property of theestate for the purpose of maximizing a distribution to creditors." In re NganGung Rest., 254 B.R. 566, 570 (Bankr.S.D.N.Y.2000). Bankruptcy trustees in theSecond Circuit, along with the Ninth and Eleventh Circuits, are held to a simplenegligence standard with regard to breach of the trustee's fiduciary duties.Gorski v. Kirschenbaum (In re Gorski), 766 F.2d 723, 726 (2d Cir. 1985).
Section 704 of the Bankruptcy Code enumerates the specific obligations of thechapter 7 trustee, which include marshaling assets of the debtor fordistribution to creditors, objecting to the allowance of filed claims, filingtax returns as required under relevant non-bankruptcy statutes, and making afinal report and filing with the Bankruptcy Court a final account of theadministration of the estate. 11 U.S.C. Â§ 704(a). While most of theseobligations are clearly in furtherance of the collection and distribution ofestate assets for the benefit of creditors, trustees have additional obligationsunder the Bankruptcy Code which are not specifically tied to this function.These obligations, including the responsibility for performing the obligationsrequired of a plan administrator, emanate solely from the Bankruptcy Code.Subsection (a)(11) of this section, entitled "Duties of trustee," provides thatthe trustee shall:
if, at the time of the commencement of the case, the debtor (or any entity designated by the debtor) served as the administrator (as defined in section 3 of the Employee Retiremen of an employee benefit plan, continue to perform the obligations required of the administrator.
11 U.S.C. Â§ 704(a)(11).
Bankruptcy Code Â§ 704(a)(11), which requires the Chapter 7 trustee to act asthe plan administrator, imposes upon the Chapter 7 trustee another layer offiduciary obligations under the ERISA laws. Section 3 of ERISA defines a"fiduciary" as a person or entity having "any discretionary authority ordiscretionary responsibility in the administration of" a retirement plan. 29U.S.C. Â§ 1002(21)(A)(iii). Although a bankruptcy trustee is not specificallyincluded in the definition of "administrator" under ERISA, a bankruptcy trusteewill be considered an ERISA fiduciary to the extent the trustee exercisesdiscretion over how the plan is terminated. Beddall v. State St. Bk. & Trust Co., 137 F.3d 12, 18 (1st Cir. 1998). A plan administrator is required in order toassume fiduciary responsibility for the Plan in furtherance of the goal of ERISAto "prevent the misuse and mismanagement of plan assets." Mass. Mut. Life Ins.Co. v. Russell, 473 U.S. 134, 140 n.8, 105 S. Ct. 3085, 87 L. Ed. 2d 96 (1985).By virtue of Bankruptcy Code Â§ 704(a)(11), this additional fiduciaryresponsibility to protect and properly manage non-estate assets in compliancewith ERISA rests with the bankruptcy trustee. The bankruptcy trustee is alsocharged with following the relevant ERISA statutes applicable to planadministrators and adhering to the obligations imposed upon the planadministrator under the plan documents. The standards for Plan termination arefound in the ERISA rules and regulations, created pursuant to 29 U.S.C. Â§Â§ 11359 1104(a) 10 and 1103(d)(1). 11
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -9 "Subjectto subchapter II of this chapter and section 1029 of this title, the Secretarymay prescribe such regulations as he finds necessary or appropriate to carry outthe provisions of this subchapter. Among other things, such regulations maydefine accounting, technical and trade terms used in such provisions; mayprescribe forms; and may provide for the keeping of books and records, and forthe inspection of such books and records (subject to section 1134(a) and (b) ofthis title)." 29 U.S.C.A. Â§ 1135.10 "(a) Prudent man standard of care (1) Subject to sections 1103(c) and (d),1342, and 1344 of this title, a fiduciary shall discharge his duties withrespect to a plan solely in the interest of the participants and beneficiariesand (A) for the exclusive purpose of: (I) providing benefits to participants andtheir beneficiaries; and (ii) defraying reasonable expenses of administering theplan; (B) with the care, skill, prudence, and diligence under the circumstancesthen prevailing that a prudent man acting in a like capacity and familiar withsuch matters would use in the conduct of an enterprise of a like character andwith like aims; (C) by diversifying the investments of the plan so as tominimize the risk of large losses, unless under the circumstances it is clearlyprudent not to do so; and (D) in accordance with the documents and instrumentsgoverning the plan insofar as such documents and instruments are consistent withthe provisions of this subchapter and subchapter III of this chapter." 29 U.S.C.Â§ 1104(a).11 "Upon termination of a pension plan . . . . the assets of the plan shall beallocated in accordance with the provisions of section 1344 of this title,except as otherwise provided in regulations of the Secretary." 29 U.S.C. Â§1103(d)(1).- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Section 704(a)(11) is unique in that it imposes upon the Chapter 7 trusteeadditional fiduciary obligations regarding assets which are not property of thedebtor's bankruptcy estate, it is not the only subsection which effectively
requires the trustee to comply with non-bankruptcy statutes. For example, allbankruptcy trustees are charged with complying with the relevant requirementsunder the Internal Revenue Code and must file tax returns on behalf of therespective debtors. Likewise, under Bankruptcy Code Â§ 704(a)(12), bankruptcytrustees must transfer patients from closing health care businesses toappropriate health care businesses, presumably in compliance with any applicablehealth and safety regulations. The fact that the trustee is charged withfollowing non-bankruptcy law in discharging those duties set forth in theBankruptcy Code does not remove the trustee from the reach of the BankruptcyCourt's jurisdiction. The trustee remains a creature of the Bankruptcy Code, andall of the relevant provisions of the Bankruptcy Code apply to the trusteeregardless of whether the trustee's conduct is subject to other non-bankruptcylaw.
b. Jurisdiction over Core and Non-Core Proceedings
The scope of the Bankruptcy Court's jurisdiction is set forth in 28 U.S.C. Â§Â§ 1334 and 157(a). The Bankruptcy Court has jurisdiction over all cases undertitle 11 and all "civil proceedings arising under title 11, or arising in orrelated to cases under title 11." 28 U.S.C. Â§Â§ 1334(a) & (b), 157(a). Once theBankruptcy Court acquires jurisdiction over a bankruptcy case pursuant to 28U.S.C. Â§ 1334, as delegated to it by Â§ 157, the Bankruptcy Court's power toadjudicate a matter in a bankruptcy case is further refined depending on whetherthe proceeding is "core" or "non-core." 28 U.S.C. Â§ 157(b), (c). In coreproceedings, those that "aris[e] under title 11" or "aris[e] in a case undertitle 11," 28 U.S.C. Â§ 157(b)(1), the Bankruptcy Court has the power to hear andto enter a final order. In contrast, in non-core proceedings, that are"otherwise related to a case that is under title 11," absent consent, theBankruptcy Court must submit findings of fact and conclusions of law to theDistrict Court for final determination. 28 U.S.C. Â§ 157(c)(1). See AB & C Group,Inc., 411 B.R. 284, 290 (Bankr. N.D.W.Va. 2009). The Bankruptcy Courtdetermines, in the first instance, whether a proceeding is core or non-core. Id.According to the Second Circuit, Congress intended an expansive definition of"core" bankruptcy proceedings to prevail. See Baker v. Simpson (In re Baker),613 F.3d 346, 351 (2d Cir. 2010) (citing In re CBI Holding Co., 529 F.3d 432,460-61 (2d.Cir. 2008)). The Second Circuit has elected to give "core"proceedings "a broad interpretation that is close to or congruent withconstitutional limits." Id. (citing United States Lines, Inc. v. American S.S.Owners Mut. Protection & Indem. Ass'n (In re United States Lines, Inc.), 197F.3d 631, 637 (2d Cir. 1999)); see also In re S.G. Phillips Constructors, 45F.3d 702, 705 (2d Cir. 1995).
There is no dispute between the Trustee and DOL, and the case law is clear,that an issue is core if it "would have no existence outside of the bankruptcy."Baker v. Simpson, 613 F.3d at 351 (other citations omitted); see also In reBraniff Intern. Airlines, Inc., 159 B.R. 117, 125-126 (E.D.N.Y. 1993) (statingthat "[c]ore proceedings are matters which govern the administration of thedebtor's estate and are proceedings traditionally within the realm of thebankruptcy court's equitable authority"). The "relevant inquiry," in determiningif an issue is core, "is whether the nature of [the] adversary proceeding [ormotion], rather than the [legal] basis for the claim, falls within the core offederal bankruptcy power." In re Manville Forest Products Corp., 896 F.2d 1384,1389 (2d Cir. 1990).
A proceeding "arises under" Title 11, and is therefore within the Court'score jurisdiction, if it concerns substantive rights created by the Code. In reHousecraft Industries USA, Inc., 310 F.3d 64, 70 (2d Cir. 2002) (stating that"[b]ecause the plaintiffs' Â§Â§ 548 and 549 claims clearly invoke substantiverights created by bankruptcy law, they necessarily "arise under" Title 11); Inre Mid-States Express, Inc., 433 B.R. 688, 2010 WL 2653376 *4 (Bankr. N.D. Ill)("Mid-States Express") (Arising under jurisdiction exists where the "BankruptcyCode, in a strong sense, is the source of the right or remedy, rather than justthe procedural vehicle for the assertion of a right conferred by some other bodyof law.").
Core jurisdiction over a proceeding "arising in a case under Title 11" isless well defined. Courts often construe "arising in" to refer to matters "thatare not based on any right expressly created by title 11, but nevertheless,would have no existence outside of the bankruptcy" such as the filing of a proofof claim or an objection to the discharge of particular debt. Wood v. Wood (Inre Wood), 825 F.2d 90, 97 (5th Cir. 1987); see also Mid-States Express, 433 B.R.688, 2010 WL 265337 *4; In re NSCO, Inc., 427 B.R. at 175. "Arising in"jurisdiction has been described as matters which do not fit within "arisingunder" jurisdiction but still come within the Bankruptcy Court's jurisdictionbecause of the legal nature of the proceeding, not the factual context.Mid-States Express, 433 B.R. 688, 2010 WL 2653376 *5 (other citations omitted).
Finally, the Court maintains non-core jurisdiction over proceedings that are"related to" the bankruptcy case. 28 U.S.C. Â§ 157(c)(1). A proceeding is"related to" a bankruptcy case where the "outcome [of the proceeding] might haveany 'conceivable effect' on the bankruptcy estate", or any "significantconnection" with the bankruptcy estate. Publicker Indus., Inc. v. United States(In re Cuyahoga Equip. Corp.), 980 F.2d 110, 114 (2d Cir.1992). The BankruptcyCourt may not issue determinations on non-core "related to" proceedings withoutconsent from the parties before the court. 28 U.S.C. Â§ 157(c)(1).
c) The Court Has Subject Matter Jurisdiction Over Proceedings Regarding theTrustee's Obligations Under 704(a)(11)
Section 704(a)(11) of the Bankruptcy Code is the source of the Trustee'sobligations as Administrator in this case, and gives this Court corejurisdiction over the Trustee's actions as Administrator. As of the PetitionDate, RPC served as the administrator of the Plan. Upon conversion of theDebtors' cases, the Trustee was required under the Bankruptcy Code to performthe obligations required of RPC as the Plan administrator. This obligation isonly imposed on the Trustee pursuant to the Bankruptcy Code. While the Trusteemust now comply with the relevant ERISA statutes in carrying out this function,the Court still has jurisdiction over the Trustee's actions as Administrator. Tofind otherwise would effectively place the Trustee outside the reach of theBankruptcy Court while the Trustee is carrying out a duty mandated by theBankruptcy Code.
Despite the fact that the Chapter 7 Trustee is obligated under the BankruptcyCode to act as plan administrator, several courts have concluded that theBankruptcy Court does not have jurisdiction over aspects of the Trustee'sadministration of a debtor's employee benefit plan. In Mid-States Express, theBankruptcy Court was asked to determine, inter alia, whether it had subjectmatter jurisdiction to authorize the chapter 7 trustee to pay administrationexpenses associated with the trustee's liquidation of the debtor's employeebenefit plan solely from the plan funds. The Bankruptcy Court concluded thatSection 704(a)(11) was not supplemental to any substantive right created by theBankruptcy Code, and merely put the chapter 7 trustee in the shoes of the ERISAplan administrator. As such the chapter 7 trustee's rights and obligations asthe plan administrator emanated solely from the ERISA statutes and were notaltered by the Bankruptcy Code. According to the Bankruptcy Court, there was no"arising in" jurisdiction over the request by the trustee to pay theadministrative expenses incurred in administering the plan because theunderlying action was to adjudicate non-bankruptcy rights governed by applicableERISA law and regulations. The Bankruptcy Court also concluded that there was no"arising under" jurisdiction because the substantive rights at issue werecreated by ERISA law. Operating under the assumption that a proceeding "arisesunder" title 11 when the Code "is the source of the right or remedy, rather thanjust a procedural vehicle for the assertion of a right conferred by some otherbody of law," the Mid-States Express Court stated "it cannot be said thatsection 704(a)(11) invokes a right created by the Bankruptcy Code." Mid-StatesExpress, 433 B.R. 688, at *4-*5. The Mid-States Express Court also concludedthat it did not have "related to" jurisdiction either because the trustee wasnot requesting the Bankruptcy Court to do anything that the trustee could notalready do without a court order. Because the trustee as the plan administratoralready had the authority under ERISA law and under the plan documents to paythe costs of liquidating the plan from the plan funds, any order authorizingsuch payment could have no effect on the debtor's bankruptcy estate.Furthermore, if the trustee failed to disburse the corpus and pay the expenses,there would be no liability incurred by the estate because the trustee couldonly be forced to pay from the plan, not the estate. 433 B.R. 688Id., *8.
Similarly, in In re AB&C Group, Inc., the Chapter 7 trustee sought approvalfrom the bankruptcy court to retain the services of a local bank which hadperformed certain administrative functions for the debtor prepetition under adefined contribution plan. The trustee also sought entry of an order declaringthat his duties under Bankruptcy Code Â§ 704(a)(11) had been fulfilled, andexculpating him from liability under the ERISA statutes. DOL objected, arguingthat the Bankruptcy Court lacked jurisdiction to rule on the reasonableness ofthe fees to be paid to the bank from plan assets, or to rule on whether thetrustee was free from liability under applicable ERISA law. The Bankruptcy Courtfor the Northern District of West Virginia sided with DOL, finding that whilethe Bankruptcy Court had jurisdiction to authorize the trustee to retainprofessionals under Bankruptcy Code Â§ 327, its jurisdiction did not extend tothe payment of these professionals under Bankruptcy Code Â§Â§ 330 and 331. Thedispositive fact according to the AB&C Group, Inc. Court was that plan funds,which were non-estate funds, would be used to pay the professionals. Id. at 291.The court relied on the prior decisions In re McDonald Bros. Constr., Inc., 114B.R. 989 (Bankr. N.D.Ill. 1990) and David & Hagner v. DHP, Inc., 171 B.R. 429(D.D.C. 1994), for the proposition that "Â§ 327 holds no authority for this courtto grant compensation to the Bank from the [defined contribution] Plan" and"does not provide a jurisdictional basis premised upon 'arising in' thebankruptcy case or 'arising under' chapter 11." Id.
The Court understands the reasoning in Mid-States Express and AB & C Group,Inc., however, the Court disagrees that the focal point for determining thejurisdiction of this Court over the Trustee's requests is the source of thecompensation. The relevant issue is that the only basis for the Trustee toreceive any compensation derives solely from the Bankruptcy Code. Describing Â§704(a)(11) as a mere procedural vehicle for the assertion of rights under ERISAlaw, as did the Court in Mid-States Express, minimizes the complex relationshipbetween the ERISA laws and the Trustee's obligations and rights as defined inthe Bankruptcy Code. While Â§ 704(a)(11) imposes upon the Trustee the requirementto comply with ERISA laws in fulfillment of his duties thereunder, one can findno support for concluding that the Trustee is therefore divested of hisobligations as the Chapter 7 Trustee when acting in the role of planadministrator. For the same reason there is no support for the conclusion thatthis section divests the Bankruptcy Court of its jurisdiction over the Trustee'sactions as Administrator. He is a creature of the Bankruptcy Code and but forhis appointment under the Code, he would have no role as administrator of thePlan. To the extent that the Trustee's duties over the Plan arise out of ERISA,they do so only by operation of Â§ 704(a)(11). In re NSCO, Inc. at 180. Thus, Â§704(a)(11), not ERISA, is the source of the Trustee's obligations. The Trustee'sÂ§ 704(a)(11) duties are an essential part of the total administration of theDebtors' cases. C.f. In re Baker at 351 (finding that adjudication of theDebtor's counsel's malpractice and other claims was "an essential part ofadministering the estate") (other citations omitted). This Court does not "lose"jurisdiction over the Trustee when he acts as Administrator any more than thebankruptcy court loses jurisdiction over a trustee when he files tax returns fora debtor or he arranges for patients being treated by a debtor hospital to moveto another facility. The Trustee, while acting as the Administrator, is stillsubject to the requirements imposed on chapter 7 trustees, and there is nothingin the Bankruptcy Code to suggest that the Trustee is somehow exempt from theserequirement because he is acting as Administrator.
This Court also disagrees with the analysis in AB & C Group, Inc. While theAB&C Group, Inc. Court recognized that employment applications by bankruptcytrustees "arise in" the bankruptcy case and "arise under" title 11 even wherethe trustee seeks to employ professionals solely to administer a non-estateasset such as the Plan, it concluded that its jurisdiction did not extend toawarding fees under Section 330 of the Bankruptcy Code. The Court's analysis wasbased in large part on two decisions, In re McDonald Bros. Constr., Inc., andDavid & Hagner v. DHP, Inc. In In re McDonald Bros. Constr., Inc., the issuebefore the Bankruptcy Court was whether counsel to the debtor was required tofile a fee application in order to receive payment for its services fromnon-estate funds. Judge Wedoff specifically found that the Bankruptcy Court hadjurisdiction to determine whether to permit counsel to the debtor to use theretainer absent entry of a corresponding order awarding fees, because the issuearose in the debtor's bankruptcy case under 28 U.S.C. Â§ 1334(b). Id. at 992(citing In re Wood, 825 F.2d 90, 97 (5th Cir. 1987)). In that context, JudgeWedoff held that the fee application procedure set forth in Sections 330 and 331was not applicable because the retainer was not estate property. Id. at 994.Furthermore, Section 329 of the Code provides a mechanism for judicial review offees paid to counsel to the debtor, regardless of the source of the fees. Id. at997. In turn, the Bankruptcy Court in David & Hagner v. DHP, Inc. relied on theMcDonald Bros. Constr., Inc. decision to conclude that Â§Â§ 330 and 331 do notapply to payments received by debtors' counsel from non-estate sources. Id. at435-36.
Neither In re McDonald Bros. Constr., Inc., nor David & Hagner v. DHP, Inc.support the proposition that this Court lacks jurisdiction to award fees to achapter 7 trustee's duly retained professionals who assist the trustee incarrying out his obligations under the Bankruptcy Code. In fact, neither caseinvolved chapter 7 trustees. The fact that the Trustee may actually collectpayment on any award from non-estate assets does not change the nature of therequest, which is simply for an award of fees for work performed by theTrustee's professionals. Whether the Trustee seeks to collect payment from thePlan or from the Debtor's estate has no bearing on the Court's core jurisdictionover the Trustee as Administrator, including a request for an award of fees andexpenses in connection with his administration of the Plan.
d. Jurisdiction over the Retention and Compensation of Professionals fromNon-Estate Sources
The law is clear that the Trustee is required to seek the Court's authorityto employ professionals to assist him in his duties as Plan Administrator. SeeIn re AB&C Group, Inc., 411 B.R. at 290, In re Trans-Industries, Inc., 419 B.R.21, 35-36 (Bankr. E.D. Mich. 2009) (finding that the Trustee "had authorityunder Â§ 327(a), with the court's approval, to employ professionals to representand assist him in administering the ERISA Plan."). Pursuant to Section 327 ofthe Code, the Trustee must obtain the Court's approval to employ attorneys,accountants and other professional persons "to represent or assist the trusteein carrying out the Trustee's duties under this Title." 11 U.S.C. Â§ 327(a). Asmentioned earlier, Section 704(a)(11) lists one of the Trustee's duties "toperform the obligations required of the administrator" of the Plan. 11 U.S.C. Â§704(a)(11).
Section 330 of the Bankruptcy Code governs compensation of the professionalsthe Trustee retains under Section 327. The Court "may award to a trustee . . .reasonable compensation for . . . services rendered by the trustee [or]professional person[s] . . . and reimbursement for . . . expenses." 11 U.S.C. Â§Â§330(a)(1)(A) and (B). See also 11 U.S.C. Â§ 331 (stating that the Trustee orprofessional person employed under Section 327 "may apply to the court" forcompensation and reimbursement, and the court "may allow and disburse to suchapplicant such compensation or reimbursement."). Section 330(a)(3) provides thatin determining the amount of such "reasonable compensation," the Court must"consider the nature, the extent, and the value of such services, taking intoaccount all relevant factors, including . . . whether the services werenecessary to the administration of, or beneficial at the time at which theservice was rendered toward the completion of, a case under this title." 11U.S.C. Â§ 330(a)(3)(C).
The fact that the source of the funds available for payment of any awardunder this section may come from the Plan, which is a non-estate asset, is notcentral to the determination of the Court's jurisdiction to award fees for theseservices. The court's analysis of the intersection between Sections 704(a)(11)and 330(a)(3)(C) of the Code in In re Trans-Industries, Inc. is on point:
A Chapter 7 trustee's performance of his duty to administer an ERISA plan under Â§ 704(a)(11) is "beneficial toward the completion of" the bankruptcy case, within the meaning of Â§ 330(a)(3)(C), because the case cannot be "completed" without such performance. Similarly, a trustee's performance of this duty is also "necessary to the administration of" the bankruptcy case, within the meaning of Â§ 330(a)(3)(C), because "administration of" the "case" includes the trustee's performance of all of his duties under Â§ 704(a). In this sense, the phrase "administration of" the "case" as used in Â§ 330(a)(3)(C) is broader than the phrase "administration of the estate," as the latter phrase is used in 28 U.S.C. Â§ 157(b)(2)(A). . . . [T]he latter statute lists as one of the examples of "core" proceedings, "matters concerning the administration of the estate."
In re Trans-Industries, Inc., 419 B.R. at 38.
The Court agrees with this analysis. Further, Â§ 330(a)(4)(A)(ii) states thatthe Court "shall not allow compensation for . . . services that were not . . .necessary to the administration of the case." 11 U.S.C. Â§ 330(a)(4)(A)(ii)(II).This Court finds that the retention and fee applications are a necessarycomponent of the Trustee's administration of the Plan and are "necessary to theadministration of the case." Therefore, the application for compensation is acore matter. Whether the Trustee may use the Plan funds to pay this award willdepend upon whether the services performed are compensable under the relevantERISA statutes and the Plan documents. Any order awarding fees would contain nodetermination of whether Plan funds could be used to satisfy the award. However,any order would direct the Trustee to first seek to satisfy the award from Planfunds. This comports with the Trustee's intent, who has indicated that heanticipates using the Forfeiture Fund or Plan participants' funds, to pay anyaward first. This procedure would also ameliorate some of the concerns raised byDOL regarding the complexities of seeking payment of any award from Plan assets.There would be no need for further motion practice by the Trustee in order toseek payment from the Plan. At least one court agrees that this is the correctprocedure to follow. See In re Trans-Industries, Inc., at 38 (stating that"normally, the Court should require that the cost of the Chapter 7 trustee'sadministering the ERISA plan be paid for with the plan's assets rather thanbankruptcy estate assets.").
Turning to the applications as filed, the request for fees for the Trustee'sprofessionals does not comply with the relevant Bankruptcy Rules or E.D.N.Y.Local Rules as the request was not served properly. Therefore, the request isdenied without prejudice to renew upon proper application.
d. Trustee's request for Authorization to Take Actions it Deems Appropriate toAdminister the Plan
While the Bankruptcy Court has jurisdiction over the Trustee in connectionwith his actions as Administrator, in exercising this jurisdiction the Court canonly grant relief authorized by the Bankruptcy Code. The Bankruptcy Code onlyrequires that orders be obtained prior to certain actions applicable to alltrustees. Those include retaining professionals and paying professionals. ThisCourt is subject to the case or controversy restrictions which limit Article IIIjudges as well. NSCO, 417 B.R. at 176. At this point, there is no case orcontroversy before the Court requiring entry of an order authorizing the Trusteeto take unspecified actions in the future in connection with termination of thePlan. Any order approving the Trustee's actions in general in administering thecase must wait until the end of the case, as the Code requires the Court toreview the Trustee's compliance with Â§ 704(a) before a case can be closed. SeeNSCO, 417 B.R. at 181-182. A case cannot be closed until "the estate is fullyadministered and the court has discharged the trustee." 11 U.S.C. Â§ 350(a).Discharge of a Trustee is "recognition, based on the facts put before the Courtin a trustee's final report and final accounting that the case has been fullyadministered." Id. at 181 (citing 11 U.S.C. Â§ 704(a)(9) ("The trustee shall . .. make a final report and file a final account of the administration of theestate with the court and the United States Trustee.")). In order to dischargethe Trustee, the court must determine that there are no further obligations forthe Trustee to fulfill. This request is premature as the Bankruptcy Code has nomechanism by which the Trustee may obtain an order approving future unspecifiedactions to be taken as Administrator. As such, the Court will not comment on theeffect of such final report on the Trustee's obligations under ERISA.
E. Trustee's request for Compensation
With respect to the Trustee's request for compensation for services renderedas Administrator on an interim basis, this request is denied as it is premature.Bankruptcy Code Â§ 326 limits the amount of compensation awarded to chapter 7trustees under Â§ 330 based on a formula tied to disbursement of moneys in theChapter 7 case. Section 326 states that the compensation is payable "after thetrustee renders such services," and the Court is not in a position at this pointin the Debtors' cases to rule on this request. It is undisputed that the Trusteeneither collects nor disburses estate funds when he administers the Plan. Theissue of whether the Trustee, as opposed to professionals retained by theTrustee, is entitled to compensation under Â§ 330 or whether his only source ofcompensation would be the Plan funds is not yet properly before the Court.
For the reasons set forth above, the Trustee's request for entry of an orderauthorizing him to terminate the Plan and retain professionals to assist himwith his duties as Administrator is granted. The request to authorize and awardfees to the professionals is denied pending the filing of fee applications thatcomply with the Bankruptcy Code, Bankruptcy Rules and applicable Local Rules.The Trustee's request for entry of an order awarding him interim compensationand authorizing the Trustee to take any actions the Trustee deems appropriate tobring the Plan into compliance with the ERISA statutes is also denied. An orderconsistent with this Memorandum Decision shall be entered forthwith.
Dated: Central Islip, New York
October 26, 2010
By: /s/ Robert E. Grossman
Robert E. Grossman
United States Bankruptcy Judge