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Judge Walrath Determines that $69 Million in Rabbi Trusts for Top Hat Plans Are Property of Washington Mutual

|Includes: WAHUQ, WAMKQ, Washington Mutual (WAMQ), WMIH

In a June 1, 2011 opinion, Judge Mary Walrath (U.S. Bankruptcy Court for the District of Delaware) considered whether assets held in a "rabbi trust" created in connection with "top hat" deferred employee compensation plans were property of a debtor's bankruptcy estate and, if so, whether to impose a constructive trust in favor of the participants in the plans.  The plans at issue were established by a predecessor of Washington Mutual, Inc. (specifically, H.F. Ahmanson & Company, which is a predecessor of Home Savings of America, FSB, which was acquired by Washington Mutual). 

Judge Walrath held that the funds in the rabbi trusts were the property of Washington Mutual.  In addition, she held that the plan participants' claim for a constructive trust "must fail" because "there is no nexus or property identifiably belonging to the Plan Participants on which a constructive trust can be placed to remedy the refusal of the Debtors to pay their benefits."

Visit our blog to read Judge Walrath's opinion or download a copy of it: