452 B.R. 352
Bankr. D. Mass.2011Background
- Chapter 7 trustee seeks to pay from a terminated debtor’s 401(k) plan assets the trustee and counsel fees incurred in terminating the plan.
- DOL objects and argues the bankruptcy court lacks jurisdiction to approve fees paid from plan assets.
- Plan assets totaling about $656,241.09 existed; a $10,000 reserve was established to cover plan administration costs.
- A November 23, 2009 order allowed retention of a plan administrator, distributions to participants, termination documents, and the $10,000 reserve.
- ERISA and the Bankruptcy Code intersect because § 704(a)(11) requires the trustee to perform plan administrator duties, while funds held in the plan are not estate property.
- The trustee contends core jurisdiction exists to award fees for ERISA-plan administration; the DOL contends jurisdiction is lacking and that fees come from non-estate assets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the bankruptcy court have jurisdiction to award fees from plan assets? | Robert Plan/NSCO suggest core/related-to jurisdiction. | DOL contends no jurisdiction to award fees from non-estate assets. | Court adopts core/related-to jurisdiction to award such fees. |
| Are 401(k) plan assets estate property for the purposes of fee awards? | Funds in retirement plan may be used to pay trustee costs. | Plan assets are not property of the estate. | Plan assets are not property of the estate for the purposes of this fee dispute. |
| Is § 330/331 authority required for approving fees paid from non-estate assets? | Fees can be approved under core jurisdiction; statute not limiting. | Fees paid from plan assets fall outside estate and lack § 330/331 authorization. | Court relies on 704(a)(11) core jurisdiction rather than § 330/331 for these fees. |
| What is the appropriate scope of the court's ruling on fee payment in this case? | Seek authorization to disburse $10,000 reserve plus reasonable fees. | Restraints on future authority and final disposition remain unresolved. | Fees may be paid from the plan reserve with any remaining amounts as a claim against the estate; separate order to issue. |
Key Cases Cited
- In re NSCO, Inc., 427 B.R. 165 (Bankr. D. Mass. 2010) (ERISA-related trustee duties intersect with bankruptcy jurisdiction)
- AB & C Group, Inc., 411 B.R. 284 (Bankr. N.D. W. Va. 2009) (fees from plan assets fall outside bankruptcy court authority under §330/331)
- Mid-States Express, Inc., 433 B.R. 688 (Bankr. N.D. Ill. 2010) (lacked subject-matter jurisdiction to award pension-fee payments from plan assets)
- In re Trans-Industries, Inc., 419 B.R. 21 (Bankr. E.D. Mich. 2009) (related-to jurisdiction recognized for plan-asset related disputes)
- In re Robert Plan Corp., 439 B.R. 29 (Bankr. E.D.N.Y. 2010) (core jurisdiction over trustee-fee requests under §704(a)(11))
- In re G.S.F. Corp., 938 F.2d 1467 (1st Cir. 1991) (relates to bankruptcy court jurisdiction over administration and fee issues)