In the recent decision of Paragon Offshore, No. 16-10386 (CSS), 2021 (Bankr. D. Del. June 28, 2021), the U.S. Bankruptcy Court for the District of Delaware addressed the issue of whether the Office of the United States Trustee (OUST) could collect its quarterly fees against assets that were previously transferred to a litigation trust free and clear of any and all claims, liens and other encumbrances pursuant to a confirmed plan of liquidation.
Paragon Offshore plc and certain of its affiliates (collectively, the debtors) filed for bankruptcy Feb. 24, 2016. On June 7, 2017, the court confirmed the debtors’ fifth joint Chapter 11 plan (the plan). Pursuant to the terms and conditions of the plan, the litigation trust was established to pursue claims against Noble Corp. plc and other third parties. In addition, the language of the plan provided that these claims were to be transferred to the litigation trust “free and clear of all liens, charges, claims, encumbrances and interests.” Furthermore, the litigation trust was established to pursue these claims “for the benefit of the holders of the litigation trust Interests.” Following confirmation of the plan, it became effective July 18, 2017, and the claims against Noble and others were transferred to the litigation trust.