City investing company liquidating
Appellants are Daniel Rosenbloom, as former Trustee of the Panex Trust, and Norman Halper and Oliver Lazare, executors of the Estate of Paul Lazare, as successors to Paul Lazare, a former Trustee of the Panex Trust (hereafter “Rosenbloom” and “Lazare”, respectively, or the “Trustees”). The predecessor of Panex, Duplan, sought Bankruptcy protection in 1976.
The appeal is from the September 30, 1997, Order of the Court of Chancery, as amended October 10, 1997 (the “Order”), seeking to have it reversed and set aside. In 1983, pursuant to a plan of reorganization, a Final Decree was entered which provided, inter alia a general discharge of Duplan's debts and liabilities and a permanent injunction against any debtors from commencing any suit against Duplan or Panex.
In July 1985, pursuant to the liquidation plan, Wundies, Inc, the wholly owned subsidiary and last remaining operating asset of Panex, was sold.
Liquidating distributions, aggregating approximately million, were made to Panex's stockholders in September and December of 1984 and September of 1985. Also pursuant to the liquidation plan, Gal and Rosenbloom, both of whom had been officers and directors of Panex, were designated Trustees.
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER, Justices, and DEL PESCO 1 , Judge (constituting the Court en Banc). Brown, Esquire (argued), Gordon Fournaris & Mammarella, P. Schoell, Esquire, of Morris, James, Hitchens & Williams LLP, Wilmington, Delaware, for Petitioners below-Appellants Daniel Rosenbloom, Trustee of the Panex Industries, Inc. Connolly, Jr., Esquire, of Connolly, Bove, Lodge & Hutz, Wilmington, Delaware; and Robert T. The Petition was filed by the Trustees of the Panex Trust, a liquidating trust created by Panex, Inc.
The only business operations of Panex remaining at the time of its emergence from bankruptcy were a wholly-owned subsidiary, Wundies, Inc, a manufacturer of children's apparel, and Rochester Button Company (then the largest button manufacturer in the United States), a division of Panex located in Wellsville, New York. Later that same year, the Panex stockholders approved a Plan of Liquidation (the “liquidation plan”) for the corporation under § 337 of the Internal Revenue Code. The Trust was created “for the limited purpose of discharging any ․ liabilities of the Trust of Panex which the Trustees have reasonable grounds to believe may be asserted.” Panex had no known or suspected liabilities at the time it created the Trust except potential liabilities for additional taxes. By July 1987, the statute of limitations had run on Panex's 19 tax years. In 1989, the Tutu Wells action was commenced by property owners in the area of the contamination, but neither Panex, the Panex Trust, Duplan, Laga, Gal nor Lazare was named as a defendant, and none received notice of the lawsuit. They also asserted claims for coverage against various insurers of Panex and Duplan. It was not until March, 1992, that direct actions against Laga, Duplan, Panex, Lazare and Gal (“the Laga defendants”) were commenced. in the United States District Court for the Western District of New York, thereby formally asserting another claim against the Panex Trust. (April 26, 1993)(court approves trustee's plan to continue liquidating trust for the sole purpose of retaining assets until such time as assets could be sold at a fair price).21.