Massachusetts General Law Chapter 156C, Section 45 is hereby amended by inserting, in line 22, after the word "trustee." the following language:-
(c) The Court shall only appoint a Liquidating Trustee as contemplated by subsection (a) who is free of any conflicts of interest. Any proposed or considered Liquidating Trustee shall provide a complete listing of his previous dealings with the parties and their counsel prior to an appointment becoming effective. The parties in the litigation shall have the opportunity to question the proposed Liquidating Trustee at a hearing and to object to any proposed Liquidating Trustee on the grounds of any actual or apparent conflict of interest. If any party to the litigation later learns of an actual or apparent conflict of interest that was not disclosed by the Liquidating Trustee, it shall have grounds to move the Court to remove the Liquidating Trustee.
Prior to the appointment of a Liquidating Trustee, the Court must determine which of the parties' claims are derivative and belong to the Limited Liability Company. Derivative claims and choses in action shall be assigned to the Liquidating Trustee, who shall have the exclusive authority to litigate, prosecute and/or settle such claims and choses in action, or shall have the discretion to choose to not pursue such claims, subject to the provisions set forth below. Should the Liquidating Trustee choose to not pursue any derivative claims, such claims will be forever barred and the Members of the LLC will have no right to pursue such claims. To the extent that claims are partly derivative and partly belong to a Member, the Court shall consider such claims to be completely derivative if the alleged payment due or the damages would have been paid from or to the Limited Liability Company. Questions of doubt should be resolved in favor of a finding that claims or choses in action are derivative.
The Liquidating Trustee shall present a plan to prosecute any such claims or choses in action that he deems worthy of pursuing, considering the costs, chances of success, and the amount and collectability of such claims or choses in action. The Liquidating Trustee must obtain Court approval prior of such a plan, after notice to the parties and an opportunity to be heard.
The Liquidating Trustee shall have a fiduciary duty to the Limited Liability Company and the Court to act in the best interest of the Limited Liability Company and in a manner to preserve and maximize its assets for creditors and Members. The Liquidating Trustee shall provide the parties with advance notice of any action or intended action affecting the finances of the Limited Liability Company, including any potential settlements of any claims, and any sale or encumbrance of any assets. Any party to the litigation may propose a course of action to the Liquidating Trustee. Any party me file a motion with the Court if they disagree with the Liquidating Trustee's proposed actions or failures to act. If the Court shall enter such orders that are in the best interests of the Limited Liability Company and that do not unduly impact or prejudice one or more Members of the Limited Liability Company. The Court may order the Liquidating Trustee that any action be taken or not taken and may make such other order as justice requires.
The Liquidating Trustee will not hire any other attorney, accountant or other professional without permission of the Court. The Liquidating Trustee will disclose to the parties and the Court his relationship with such other attorney, accountant or other professional, including any previous dealings, as well as the professional's relationship and prior dealings with all parties and attorneys in the litigation. The parties in the case shall have the opportunity to question the proposed Liquidating Trustee and any proposed attorney, accountant or other professional at a hearing and to object to their appointment on the grounds of any actual or apparent conflict of interest. If any party to the litigation later learns of an actual or apparent conflict of interest that was not disclosed by the Liquidating Trustee, it shall have grounds to move the Court to remove such person.
The Liquidating Trustee will follow all applicable laws and codes pertaining to the business of the Limited Liability Company, especially if the Liquidating Trustee operates it as a going concern. The Court should give special consideration as to whether the operation of the Limited Liability Company requires a special license and whether one of the Members should continue to be involved in the operation of the business, if they so desire, with due compensation. The Liquidating Trustee shall not act in a way that violates any contractual rights of any creditor or third-party, including a Member or an entity owned or operating as a Member without specific Court approval, subject to the Parties and such creditor or third-party's right to be heard.
Within 30 days of accepting an appointment, the Liquidating Trustee shall provide notice to any creditor or potential creditor of the Limited Liability Company of the liquidation. Any person or entity who claims to be a creditor of the Limited Liability Company may file a claim in the proceeding and will be considered a Party to the action.
On motion by the Liquidating Trustee, and after notice to all Parties and all Members of the LLC and a hearing, the court may approve a compromise or settlement of claims or choses in action by the Liquidating Trustee. In deciding whether to approve any proposed settlement or compromise of controversies, the court shall consider:
(i) The probability of the Liquidating Trustee's success in the litigation to be settled,
(ii) The difficulties, if any, in collecting a judgment in favor of the Limited Liability Company,
(ii) The complexity of the litigation, including the expense, inconvenience, and delay attendant to
(iv) The paramount interests of creditors and Members, with appropriate deference to their reasonable view.
A Liquidating Trustee has the following duties in addition to those specifically conferred by this section or otherwise by statute or court rule:
(i) The duty to notify all federal and state taxing and applicable regulatory agencies of the Liquidating Trustee's appointment in accordance with any applicable laws imposing this duty, including but not limited to 26 U.S.C. Sec. 6036, or any successor statutes;
(ii) The duty to comply with state law;
(iii) Other duties as the Liquidating Trustee may be directed to perform by the court or as may be provided for by statute or rule.
A Liquidating Trustee shall file with the court a monthly report of the Liquidating Trustee's operations and financial affairs unless otherwise ordered by the court. Except as otherwise ordered by the court, each report of a Liquidating Trustee shall be due by the last day of the subsequent month and shall include the following:
(i) A balance sheet;
(ii) A statement of income and expenses;
(iii)A statement of cash receipts and disbursements;
(iv) A statement of accrued accounts receivable. The statement shall disclose amounts considered to be uncollectable;
(v) A statement of accounts payable of the Liquidating Trustee, including professional fees. The statement shall list the name of each creditor and the amounts owing and remaining unpaid over thirty days; and
(vi) A tax disclosure statement, which shall list post filing taxes due or tax deposits required, the name of the taxing agency, the amount due, the date due, and an explanation for any failure to make payments or deposits.
Except as otherwise ordered by the court, the entry of an order appointing a Liquidating Trustee shall operate for sixty days as a stay, applicable to all persons, of: (a) The commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the person over whose property the Liquidating Trustee is appointed that was or could have been commenced before the entry of the order of appointment, or to recover a claim against the person that arose before the entry of the order of appointment; (b) The enforcement, against the person over whose property the Liquidating Trustee is appointed or any estate property, of a judgment obtained before the order of appointment; (c) Any act to obtain possession of estate property from the Liquidating Trustee, or to interfere with, or exercise control over, estate property; (d) Any act to create, perfect, or enforce any lien or claim against estate property except by exercise of a right of setoff, to the extent that the lien secures a claim against the person that arose before the entry of the order of appointment; or (e) Any act to collect, assess, or recover a claim against the person that arose before the entry of the order of appointment.
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