Opinion
No. 77-2240.
June 19, 1979.
Benjamin D. Frantz, Sacramento, Cal., in pro. per.
Loren S. Dahl, Richard Park, Dahl, Hefner, Stark Marois, Sacramento, Cal., for defendants-appellees.
Appeal from the United States District Court for the Eastern District of California.
In February 1972, the bankrupt established a qualified profit sharing plan ( see I.R.C. § 401), and later that year made its one and only contribution of approximately $18,754. In 1973 the bankrupt began to experience financial difficulty, and by August of that year could no longer meet its payroll. All employees had been terminated by the end of August. On September 9, 1973, the bankrupt made an assignment for the benefit of creditors. On September 26, 1973, an involuntary petition in bankruptcy was filed.
The bankruptcy court ordered the trustees of the profit sharing plan to turn over 80% of the assets to the trustee in bankruptcy. The district court reversed. The trustee in bankruptcy appeals.
The profit sharing plan provided that upon termination of employment, each participant was entitled to a stipulated "Severance Benefit percentage" (in this case 20%) of the value of the participant's profit sharing account. (R. at 20.) On termination of the plan or trust, on the other hand, each participant was entitled to the full value of his account. (R. at 30.) The trustee contends the plan terminated when the employer made the assignment for the benefit of creditors and, since the employment of all employees was terminated before that date, the employees were entitled only to the benefits provided for on termination of employment. Because these benefits exhausted only 20% of the plan's assets, the trustee argues the balance of the fund reverted to the bankrupt and is now an asset of the bankruptcy estate.
It is clear from the plan itself that the bankrupt was not entitled to the remaining assets. The plan expressly provided that "under no circumstances shall any funds contributed to the Trust or any assets of the Trust ever revert to or be used and enjoyed by the Employer. . . ." (R. at 32.) The trustee acknowledges he acquired no greater right than the bankrupt had, (Reply Brief at 2-3), see 11 U.S.C. § 110(a) (1953); 4A Collier on Bankruptcy § 70.04 (14th ed. 1978). The balance of the fund, therefore, is not an asset of the bankruptcy estate.
Affirmed.