464 B.R. 697
Bankr. D. Md.2011Background
- Jin Heang Chung created the Jin Suk Kim Trust in 1993, naming Kim as trustee and life income beneficiary.
- The trust documents give Kim broad discretion to manage investments and to receive income, with liability protections for good-faith decisions.
- Kim managed the Debtor for profit, reinvesting income and leveraging assets to acquire additional real estate investments.
- Key assets include Mattapony Center and later La Union Mall, with complex financing and personal obligations tied to the Debtor’s debts.
- KH Funding acted as property manager and, for a period, signed as Trustee, but was not formally appointed as trustee; its role later ended.
- The Debtor commenced Chapter 11 in 2011 and operates without a formal Maryland business-trust registration, board, or certificate of trust.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Debtor is a business trust under §101(9)(A)(v). | Movant contends Debtor is not a business trust. | Kim's management and the Debtor’s business activities show a business-trust purpose. | Debtor is a business trust; motion to dismiss denied. |
Key Cases Cited
- In re Kenneth Allen Knight Trust, 303 F.3d 671 (6th Cir. 2002) (adopts primary purpose test for business trusts, fact-specific inquiry)
- Secured Equipment Trust of Eastern Air Lines, Inc., 38 F.3d 86 (2d Cir. 1994) (multifactor test focusing on corporate attributes, business purpose, activities, and beneficiary benefits)
- In re Happy Trust Three, 122 F. App’x 527 (2d Cir. 2004) (trusts that never engage in business or profit may not be business trusts)
- In re Arehart, 52 B.R. 308 (Bankr.M.D. Fla. 1985) (federal definition of business trust; uniform treatment across states)