B-223618, OCT 10, 1986

B-223618, OCT 10, 1986

APPROPRIATIONS/FINANCIAL MANAGEMENT - JUDGMENT PAYMENTS - DISTRIBUTION - CORPORATE ENTITIES - STOCKHOLDERS DIGEST: PROCEEDS OF FOREIGN CLAIMS SETTLEMENT COMMISSION AWARD TO EITINGON SCHILD CO., INC., SHOULD BE DISTRIBUTED TO THE CORPORATION'S SHAREHOLDERS IN PROPORTION TO THE INTEREST WHICH THEY HELD AT THE TIME THE CORPORATION WAS DISSOLVED.

PROPER RECIPIENT OF FOREIGN CLAIMS SETTLEMENT COMMISSION AWARD TO EITINGON SCHILD CO., INC.:

THE DEPARTMENT OF THE TREASURY ASKS WHO IS ENTITLED TO RECEIVE THE REMAINING $2,799.91 DUE EITINGON SCHILD CO., INC., OF AN AWARD OF $174,222 MADE BY THE FOREIGN CLAIMS SETTLEMENT COMMISSION (COMMISSION) IN 1967.

EITINGON SCHILD WAS A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK. DURING WORLD WAR II, CERTAIN COMMERCIAL PROPERTY IN GERMANY OWNED BY EITINGON SCHILD WAS DESTROYED, DAMAGED, OR OTHERWISE LOST. UNDER SECTION 202(A) OF THE WAR CLAIMS ACT OF 1948, AS AMENDED, 50 U.S.C. APP. SEC. 20174A, THE COMMISSION ISSUED A PROPOSED DECISION ON MARCH 1, 1967 AWARDING EITINGON SCHILD $174,222 FOR LOSS OF ITS PROPERTY. IN RE COLEMAN, NO. W-21248 (MARCH 1, 1967). DURING THE COMMISSION'S PROCEEDINGS, EITINGON SCHILD WENT INTO RECEIVERSHIP. THE AWARD, THEREFORE, WAS MADE TO SAMUEL C. COLEMAN, THE COMPANY'S RECEIVER. THE PROPOSED DECISION OF THE COMMISSION SUBSEQUENTLY BECAME FINAL AND WAS CERTIFIED TO THE SECRETARY OF THE TREASURY FOR PAYMENT OUT OF THE WAR CLAIMS FUND OF THE UNITED STATES TREASURY. 50 U.S.C. APP. SECS. 2012A, 2017H.

A TOTAL OF $121,668.09 WAS PAID ON THIS AWARD TO MR. COLEMAN AS RECEIVER THROUGH 1972, THE YEAR THE CORPORATION APPARENTLY WAS DISSOLVED. IN 1975, SHEILA L. BIRNBAUM WAS APPOINTED AS THE SUCCESSOR RECEIVER AND ANOTHER $25,302.29 WAS PAID FROM 1976 TO 1978.

A FURTHER INSTALLMENT BECAME DUE IN 1979; HOWEVER, MS. BIRNBAUM INFORMED THE TREASURY DEPARTMENT THAT SHE WAS NO LONGER ACTING AS RECEIVER AND, THAT NO RECEIVER HAD BEEN APPOINTED TO SUCCEED HER. IN MS. BIRNBAUM'S LAST CORRESPONDENCE WITH TREASURY, SHE ASKED TREASURY FOR ADVICE ABOUT APPOINTMENT OF A NEW RECEIVER. SINCE THEN, THE TREASURY DEPARTMENT HAS UNSUCCESSFULLY ATTEMPTED TO DETERMINE WHO IS ENTITLED TO RECEIVE THE REMAINING AMOUNTS DUE EITINGON SCHILD UNDER THE ORIGINAL AWARD.

IT IS EVIDENT THAT THIS MATTER COULD BE DISPOSED OF BY TREASURY'S DISTRIBUTING THE REMAINING MONIES TO A COURT-APPOINTED RECEIVER. THE RECORD SUGGESTS THAT THIS COULD BE DONE BY TREASURY ASKING MS. BIRNBAUM TO INITIATE THE NECESSARY PROCEEDING BEFORE THE NEW YORK STATE SUPREME COURT, OR, PERHAPS, BY TREASURY REQUESTING THE APPOINTMENT ITSELF. ABSENT SUCH AN APPOINTMENT, WE THINK TREASURY COULD DISTRIBUTE THE REMAINING PROCEEDS ON A PROPORTIONATE BASIS TO THOSE INDIVIDUALS AND ENTITIES WHO WERE STOCKHOLDERS OF EITINGON SCHILD AT THE TIME OF ITS DISSOLUTION.

THE COMPTROLLER GENERAL HAS AUTHORITY UNDER 22 U.S.C. SEC. 1626(C) AND 31 C.F.R. SEC. 250.4(F) TO DETERMINE WHICH PERSON OR PERSONS ARE ENTITLED TO THE PROCEEDS OF A FOREIGN CLAIMS SETTLEMENT COMMISSION AWARD WHEN A CORPORATE AWARDEE HAS BEEN TERMINATED AND NO COURT APPOINTED TRUSTEE IS EMPOWERED TO ACT ON BEHALF OF THE CORPORATION.

ALTHOUGH THE ISSUE HAS NOT OFTEN ARISEN, IN TWO INSTANCES INVOLVING TERMINATED CORPORATIONS ENTITLED TO FOREIGN CLAIMS SETTLEMENT COMMISSION AWARDS WHERE TRUSTEES APPARENTLY HAD NOT BEEN APPOINTED, WE FOUND THAT DISTRIBUTIONS SHOULD BE MADE TO THE HEIRS OF THE SOLE SHAREHOLDER, AND THE SHAREHOLDERS RESPECTIVELY. B-202723, JULY 22, 1981; B-160559, JUNE 12, 1967. IN ANOTHER INSTANCE, ALSO INVOLVING A DISSOLVED CORPORATION WITH NO TRUSTEE, WE PERMITTED A FOREIGN CLAIMS SETTLEMENT AWARD TO BE DISTRIBUTED ON A BASIS PROPORTIONATE TO AN INDIVIDUAL'S HOLDINGS IN THE CORPORATION. B-200150, MAY 13, 1981.

THIS METHOD OF DISTRIBUTION IS CONSISTENT WITH GENERAL PRINCIPLES OF CORPORATE LAW WHICH ALLOW SHAREHOLDERS TO PARTICIPATE IN DISTRIBUTION OF ASSETS OF A DISSOLVED CORPORATION ACCORDING TO THEIR PROPORTIONATE OWNERSHIP OF THE CORPORATION. 16A W. FLETCHER, SEC. 8224 (REV. VOL. 1979). ACCORDINGLY, SHOULD A RECEIVER NOT BE APPOINTED, ANY REMAINING FUNDS HELD BY THE DEPARTMENT OF THE TREASURY SHOULD BE DISTRIBUTED TO THE CORPORATION'S SHAREHOLDERS IN PROPORTION TO THE INTEREST WHICH THEY HELD AT THE TIME THE CORPORATION WAS DISSOLVED.