Seoul, South Korea – In a notable development involving international law and bankruptcy claims, around 200 Korean claimants recently failed to cash their settlement checks, missing the set 180-day deadline stipulated by the $2 billion Dow Corning Settlement Trust. This misstep marked their fifth unsuccessful attempt to meet the deadline, essential for claiming their part in the settlement.
The Dow Corning Settlement Trust, affirmed by the Bankruptcy Court for the Eastern District of Michigan in 1999, includes a clause requiring the cashing of checks within a 180-day period to avoid forfeiture. Despite these clear terms, the checks issued to these claimants before December 3, 2018, were not cashed by the imposed deadline of June 3, 2019. As another deadline looms, with the final distribution of the settlement scheduled for December 1, 2023, the claimants’ outlook appears increasingly precarious.
The Korean claimants sought legal relief, advocating for the right to cash or reissue their uncashed checks post-deadline. However, the district court maintained the stance that the set timeline was a reasonable and necessary measure for the efficient management of the settlement trust, and thus, denied their request.
Faced with rejection, the claimants escalated their case to the Sixth Circuit, challenging the decision on three critical grounds: questioning the adequacy of electronic notice concerning check-cashing deadlines, alleging discriminatory impact of the uniform deadlines on international claimants, and arguing that previous communications might have implicitly created exceptions to these strict deadlines.
The Sixth Circuit delved into these issues, emphasizing that the 180-day time frame to cash settlement checks was not merely a guideline but a definitive term of the trust. The court highlighted the period between March 2019 and October 2023 during which claimants could seek judicial relief but asserted extending the deadline would compromise the settlement’s administrative structure.
Additionally, the appellate court found that electronic notification, as issued through the court’s automated system, was sufficient to meet constitutional standards for all claimants, including those abroad, thus paving the way for modernizing notification requirements in similar large-scale settlements.
This pivotal ruling necessitates a closer look at how settlement trusts are managed, specifically concerning the setting and enforcement of deadlines for cashing checks, electronic notification systems, processes for handling claims from international parties, and systems for tracking crucial payment deadlines.
For administrators managing large settlements, particularly those with international implications, this decision underscores the necessity of establishing clear, well-communicated procedures that adhere to legal standards and ensure efficient settlement administration. This guidance from the courts assures administrators that the measures they take to uphold the integrity of the settlement process will be supported, facilitating more streamlined operations.
In sum, the Sixth Circuit’s decision reaffirms the importance of adherence to the agreed-upon provisions within settlement agreements and supports the use of modern technologies to meet notification requirements, benefiting both administrators and claimants in the increasingly global context of legal settlements.
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