A partial liquidating trust takes place when the Board of Directors of a company approve a certain financial restructuring plan in which the some of the assets of the organization are sold to another organization.
In order to document such process and business transactions a legal document is prepared known as a partial liquidating trust agreement. In such cases the company going for financial restructuring plan establishes a partial liquidating trust. The funds received from the other organization is collected in the trust and then distributed to the creditors on a pro rata basis until the creditors are paid in full.
The details usually required to be mentioned in the agreement are as follows:
The name of the partial liquidating trust
The nature of the trust or the purpose of establishing the trust
The conveyance made by the organization to the trustee and the process in which it will be made
Partial Liquidating Trust Agreement
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