In Re RegO Co.

*94 OPINION

This is an action under recently enacted provisions of the Delaware General Corporation Law creating a procedure by which a dissolved Delaware corporation may achieve, after a judicial proceeding, court approval of a plan of security for corporate claimants. The effects of such approval include (1) the preclusion of liability on the part of the directors of the dissolved corporation to claimants of the dissolved corporation for matters arising out of the making of liquidation distributions, (2) the limitation of potential liability of stockholders to the lesser of a pro rata share of each claim against the corporation, or the amount distributed in dissolution, and (3) the establishment of a limitations period for actions against stockholders on claims against the corporation. See 8 Del.C. §§ 280-282 (1991).

These statutory provisions are innovative. They provide a judicial mechanism designed to afford fair treatment to foreseeable future, yet unknown claimants of a dissolved corporation, while providing corporate directors with a mechanism that will both permit distributions on corporate dissolution, and avoid risk that a future corporate claimant will, at some future time, be able to establish that such distribution was in violation of any duty owed to the corporation’s creditors on dissolution.

This petition provides the first application of these novel statutory enactments. Cf. Gans v. MDR Liquidating Corporation, Del.Ch., C.A. 9630, 1990 WL 2851, Hartnett, V.C. (Jan. 10, 1990) (dicta). Applicant, RegO Company, a Delaware corporation, filed a certificate of dissolution with the Delaware Secretary of State on February 3, 1989. On February 28, 1991, it filed its petition in this case seeking judicial approval of the security aspects of a plan of dissolution pursuant to which RegO would transfer all of its assets — approximately $36,000,000 in receivables and intangible assets (including its tradename and rights under an insurance policy) — to a trustee, to be held and administered pursuant to a Claimants Trust principally for the benefit of its present and future creditors.

The case is before the court on exceptions to the February 14,1992 Final Report of Ann E.C. Stilson, Esquire, who was appointed Master in Chancery pro hac vice. Speaking generally, the Master’s Final Report recommends the approval of the plan proposed by the Company with several modifications, to which, for the most part, the Company takes no exception. Contestants at this stage include the Company; Emerson Electric Company, who in other jurisdictions is presently asserting cross-claims and rights to contribution or indemnification against the Company in pending product liability suits; and Clark W. Fur-low, Esquire, who, pursuant to Section 280(c)(2), was appointed guardian ad litem in this proceeding to represent the interests of future unknown corporate claimants. 1

For the reasons set forth below I am unable to accept the Final Report in all respects. I conclude that, as presently constituted, the security aspects of the Company’s plan of final distribution are not sufficient to meet the statutory requirements. In what follows, this judgment is explained and particularized, and acceptable alternatives are described.

That explanation is involved, as the legal questions raised by this application are of some complexity. To address them requires, as a predicate, an understanding of the problem that the new statutory structure addresses (Part I-A, below); and an undérstanding of the new statutes’ structure (Part I-B). Next the background of the dissolution insofar as it is necessary to understand the parties positions is set forth (Parts II & III) and the terms of the Claimants Trust are outlined (Part IV). The central issues are identified (Part V). Thereafter the principal exceptions of Emerson (Part VI) and of the guardian (Part VII) will be considered. Lastly, I address a subordinate issue, concerning termination *95 of the trust. In a supplemental opinion issued today, I also address the question of the identity of the trustee and a series of administrative provisions of the proposed trust.

I.

A. The Legal Problem With Which the New Statutes Deal

The law concerning the existence and scope of director and shareholder liability for corporate obligations following the dissolution of a corporation is an evolving one of some complexity and uncertainty. 2 At an early stage of our law, that law was clear, if harsh. Dissolution of a corporation was its civil death; not only could the corporation not thereafter be sued, but pending suits against it abated. 3 Corporate dissolution thus stood as a substantial risk to corporate creditors, threatening to deprive them of a party to sue on their claims. The trust fund doctrine very early evolved, in part, to offer some protection to corporate creditors when dissolution occurred. 4 While in some of its aspects the trust fund doctrine has had a varied history, 5 its central concepts have been widely acknowledged. Those core concepts are that on dissolution corporate directors have obligations to creditors and that creditors, at least creditors of whom the corporation had reason to know, have an equitable right to follow corporate assets and to impress a constructive trust upon them in the hands of shareholders. 6

Modernly, the problem that the trust fund doctrine addresses has been ameliorated by provisions in the corporate codes of most or all jurisdictions that continue the existence of the corporation as a jural entity for limited purposes following dissolution. Now, by statute, we have a formal winding-up period in which claims can be asserted, settled or adjudicated. See, e.g., 8 Del.C. § 278 (1991). Moreover, under modern statutes, any suit against the corporation, which was filed before dissolution or during the three year statutory wind-up period, does not abate, even on the expiration of the wind-up period. 7

*96 This modern scheme still leaves open the question, what, if any, rights are afforded to persons who have no claim against a corporation at the time of its dissolution, or during the statutory wind-up period, but who do thereafter acquire such a claim. Such a person might, for example, be a tort claimant who is injured by an arguably defective product some time after, perhaps years after, the corporation has been dissolved, and its affairs finally wound-up. It would seem apparent that such a person could not sue the dissolved corporation itself. Section 278 continues the corporation’s existence beyond the statutory three year winding-up period “solely” for the purpose of concluding pending litigation. In re Citadel Industries, Inc., Del.Ch., 423 A.2d 500 (1980). 8 But has such a person a cognizable claim against others — against directors or shareholders most notably?

This I take to be an unclear and a troubling question. A number of cases in other jurisdictions have held that directors or shareholders of a dissolved corporation have no personal liability for a corporate obligation that did not exist at the termination of the corporation’s winding-up period. In both Blankenship v. Demmler Mfg. Co., Ill.App., 89 Ill.App.3d 569, 44 Ill.Dec. 787, 789-90, 411 N.E.2d 1153, 1155-56 (1980) and Pacific Scene, Inc. v. Penasquitos, Inc., Cal.Supr., 46 Cal.3d 407, 250 Cal.Rptr. 651, 758 P.2d 1182 (1988) courts rejected the contention that stockholders who received corporate distributions on dissolution were liable in equity for a claim that arose after the winding-up period had expired. Accord Levin Metals v. Parr-Richmond Terminal Co., 631 F.Supp. 303 (N.D.Cal.1986).

On the other hand in Green v. Oilwell, Okla.Supr. 767 P.2d 1348 (1989) the Oklahoma Supreme Court, without focusing finely upon whether or not the winding-up period was completed, concluded that a shareholder could be held liable on an alleged tort claim that arose after the dissolution of the firm. See also Chadwick v. Air Reduction Co., 239 F.Supp. 247 (N.D.Ohio 1965) (accord); Gonzalez v. Progressive Tool and Dye Co., 455 F.Supp. 363 (E.D.N.Y.1978) (it is “an open question” under Massachusetts law whether trust fund theory is available to hold stockholders liable on corporate claim that arose after winding-up period had concluded).

In this state of affairs, the question of a dissolving corporation’s duty, if any, to potential future claimants is problematic in at least two ways. First, the problem of compensation to persons injured by defective products or by undiscovered and actionable environmental injury, caused by dissolved corporations, is of obvious social concern. If, in the context of a corporate dissolution, the corporation law does not treat these possible contingencies responsibly, it can be expected that other legal doctrines, such as successor liability doctrines, will be stretched and shaped to address them. A default in corporation law may mean that the market for the sale of corporate assets as part of a dissolution will be chilled by the prospect of buyers being forced involuntarily to assume unknown future liabilities. 9 This is a practical problem that the law governing the creation and dissolution of corporate entities might well address. Secondly, the few adjudicated cases that hold that the trust fund doctrine is inapplicable to claims arising after the expiration of the wind-up period, may seem to corporate directors to give insufficient comfort to permit them safely to make a final distribution, if they have reason to know that future claims are quite likely to arise.

The new Delaware procedure codified at Sections 280-282 of the Delaware Corporate Law addresses both of these concerns. It structures a mechanism (alternative *97 mechanisms actually) which under certain circumstances, for the first time recognizes rights in unknown future corporate claimants and provides a level of assurance to such persons that, as part of the corporate dissolution process, reasonable provision will be made for their future claims. Equally important, the new procedure offers to directors and shareholders (and perhaps transferees) assurance that, if the Court of Chancery approves security provisions for corporate claimants, then they will be protected from potential future claims arising from the decision to distribute the corporation’s assets on dissolution.

The statutory mechanism that accomplishes this is not simple. I turn next to a summary description of it.

B. The Statutory Scheme For Voluntary Dissolution

One can best understand this statutory scheme by focusing first upon Section 281(b), which despite its location, is the base-line provision. Section 281(b) is a default provision that governs every corporation in dissolution that does not elect to pursue the elective procedure set forth in Sections 280 and 281(a).

Section 281(b) imposes upon the dissolved corporation the obligation:

to pay or make reasonable provision to pay all claims and obligations including all contingent, conditional or unmatured contractual claims known to the corporation ... (emphasis added)

In going so far the statute appears merely to codify long settled law. Section 281(b) however, goes on to require the corporation to:

make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known, or that have not arisen, but that, based on facts known to the corporation ... are likely to arise or to become known ... prior to the expiration of an applicable statute of limitation. (emphasis added)

The claims covered by this requirement, notably, are not limited to contractual claims but include all future claims that “are likely to arise ... etc.”

Subsection 281(c) provides that directors of the corporation “shall not be personally liable to the claimants of the dissolved corporation” [presumably under the common law trust fund doctrine] if the corporation has “complied with subsections (a) or (b) of this section.” But compliance with subsection (b)’s standard, “reasonably likely to be sufficient” will, in principle at least, always be litigable. Thus, reliance upon the mechanism of Section 281(b) may present a risky situation for corporate directors regardless of their good faith and due care.

It is difficult to see the utility in preserving this risk. In fact, the more elaborate part of the new statutory scheme is devoted to the creation of an elective dissolution procedure, referred to in subsection (a) of Section 281, which, if successfully completed, can eliminate this risk. That elective procedure involves a current judicial proceeding to determine “the amount and form of security which will be reasonably likely to be sufficient to provide compensation for claims that have not been made known ... or that have not arisen .. Section 280(c)(2). Following this procedure allows corporate directors to assure themselves that they have satisfied the corporation’s obligations to future claimants and that they will qualify for the protections afforded by Section 281(c).

This elective alternative is set forth in Sections 280 and 281(a). In barest outline it calls for notice for the presentation of claims to the dissolved corporation; 10 the rejection of, or the offering of security with respect to any claims presented; 11 and the furnishing of notice of rights to petition for the appointment of a receiver. 12 In its most innovative aspect, the new statute contemplates a determination by the Court of Chancery (1) of the amount and form of security that “will be sufficient” with respect to any contract claim that is *98 contingent, conditional or unmatured (excepting claims on implied warranties), 13 and (2) of the amount and type of security “which will be reasonably likely to be sufficient to provide compensation” for all other [i.e., non-contractual] future claims “that have not arisen but that based on facts known ... are likely to arise ...”. 14

Section 281(a) provides for the distribution of assets on dissolution where a corporation has followed the elective procedure:

(a) A dissolved corporation or successor entity which has followed the procedures described in § 280 of this title (1) shall pay the claims made and not rejected in accordance with § 280(a) of this title, (2) shall post the security offered and not rejected pursuant to § 280(b)(2) of this title, (3) shall post any security ordered by the Court of Chancery in any proceeding under § 280(c) of this title, and (4) shall pay or make provision for all other claims that are mature, known and uncontested or that have been finally determined to be owing by the corporation or such successor entity.

This language is followed by a requirement that:

Such claims or obligations shall be paid in full and any such provision for payment shall be made in full if there are sufficient funds. If there are insufficient funds, such claims and obligations shall be paid or provided for according to their priority, and, among claims of equal priority, ratably to the extent of funds legally available therefor.

Finally, Section 282 limits the future obligation of any stockholder of a dissolved corporation, in the aggregate, to amounts received in dissolution (subsection (c)) and, when the corporation has complied with § 281(a) or (b), to a pro rata share of corporate liability or the amount distributed, whichever is less (subsection (a)).

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RegO elected to follow the new elective provisions of Sections 280 and 281(a). I turn now to a brief description of the factual background against which that decision was made.

II.

The Factual Background of this Dissolution

RegO was incorporated in Delaware in 1976, as an indirect wholly owned subsidiary of the Marmon Corporation. RegO engaged in the business of manufacturing and marketing valves and other components for systems using liquified petroleum, anhydrous ammonia and other compressed gases.

Due to its explosive nature, systems transporting or using L.P. gas are involved from time to time in accidents resulting in property damage and/or personal injury. Victims of these incidents, of course, often bring suit against all parties associated with the LP system involved in the accident. As a result, RegO, as a component parts manufacturer, has often been required to appear as a defendant in such product liability actions.

Until 1987, RegO was insured against loss due to products liability under an umbrella policy negotiated by Marmon. The premiums for this coverage were based primarily upon the claims experience of each Marmon company in relation to the total claims experience of the Marmon group. In the mid-1980s RegO was subject to judgments of millions of dollars and, as a result, its insurance expense increased dramatically. Due in significant part to these spiralling costs, RegO terminated its participation in the Marmon liability insurance policy and became self-insured effective January 1987.

The Company continued to experience large judgments in product liability suits, some of which involved products that had been in service for 30 years. This continuing liability pattern led to a decision by Marmon in August or September of 1988 to reorganize RegO’s business in order to disassociate the manufacturing capability that *99 it owned from the claims legacy associated with it.

In connection with this decision, Marmon retained Duff & Phelps Financial Consulting Co. (“Duff & Phelps”) to assess the value of RegO and retained the Wyatt Company (“Wyatt”) to render an actuarial analysis for RegO’s potential liability risk for LP products then in the market. On November 1, 1988, Wyatt reported to Mar-mon an estimated present value, as of January 1989, of predictable product liability claims against the company. Based on the methodology, including interest rate assumptions, employed, Wyatt’s final report opined that the present value of product liability claims on already manufactured products, as of November 1988, would fall between $102,697,000 million and $115,919,-000 million. (See Px 331 at 82083). This report anticipated claims occurring until the year 2027. On October 24, 1988 Duff & Phelps reported its valuation of the RegO business, if all product liabilities were ignored, at $53,000,000 to $60,000,000 and at $24,000,000 to $27,000,000 if only product liability for products manufactured prior to the date of the Report were ignored.

On January 31, 1989, pursuant to an Asset Purchase Agreement, RegO sold substantially all of its operating assets, not including the RegO trademark, to Engineered Controls International, Inc., (“ECU”), a Delaware corporation. 15 ECII paid to RegO approximately $23,000,000, comprised of $18,405,000 in cash and the assumption by ECII of approximately $4,658,000 of RegO liabilities to trade creditors. Simultaneously with the asset sale, RegO and ECII entered into a Trademark License Agreement (“License Agreement”) under which ECII is entitled to use the RegO trademark in return for annual royalty fees which in 1990 aggregated approximately $1,200,000. Under neither the Asset Purchase Agreement nor the License Agreement, did ECII assume any liabilities of RegO for products manufactured prior to the asset transfer. Instead, RegO agreed to indemnify ECII for any losses it suffered arising from RegO equipment manufactured prior to the sale.

Three days after the asset sale, RegO filed a Certificate of Dissolution with the Delaware Secretary of State. It is asserted by certain of the respondents that “concurrently with RegO’s decision to dissolve, it declared a $38,402,725.15 dividend by a post-dated corporate resolution.” (Exceptions of Emerson Electric Company at 9). 16

RegO’s directors elected to make distributions on dissolution pursuant to the elective procedure of Section 280(a). Consequently, immediately following its dissolution, RegO mailed notice of this proceeding to all persons and entities known to have a claim or potential action against the Company and published notice of its dissolution in newspapers of appropriate local and national circulation.

As a result of its notice, RegO received widespread response by potential claimants who sought security from the Company for their anticipated claims. These claims fell into three categories. The first category represented claims from general creditors of RegO which, with the exception of those trade liabilities assumed by ECII according to the Asset Purchase Agreement, have been paid by the Company in the ordinary course of winding-up its affairs. The two remaining categories consist of notices of pending suits against the Company involving product liability claims and future claims of the same type that might be brought in the future against RegO. The Company has rejected all claims for security included in the latter two categories.

*100 III.

RegO’s Financial Ability to Provide Security for Statutory Future Claimants

Before turning to a description of the security arrangement that RegO proposes, it may be well to focus upon the critical fact, as I see it, that RegO’s present assets will most probably be inadequate to compensate all of the present and future claimants that it has reason to expect will eventually arise. 17 Actuarial studies submitted by both RegO and the guardian conclude that the present value of probable future liabilities of the trust arising from continued product liability claims far exceed the present value of the assets of the Company. RegO’s actuarial expert, The Wyatt Company, estimated in 1988 that, as of January 1, 1989, the outstanding and future claims against RegO had, based on a number of reasonable assumptions, a future liability value of between $564,376,000 million and $656,803,000 million. Discounted to present value at reasonable discounts as of 1988, these foreseeable future liabilities fall between a range of $102,697,000 to $115,919,000 in present value as of November 1988. (Wyatt Report, Section II).

The Guardian’s expert, Millman & Robertson, Inc. estimated in 1991 that as of February 1, 1992, (in a rather different interest rate environment) unpaid present and future claims against RegO had a present discounted value of $57,633,000. (Mill-man Report at 2). The Master’s Report notes that, assuming RegO’s projections are correct, if all claims were paid in full as they matured, the trust’s assets would be exhausted by 1996, while the adoption of a $500,000 interim limit, described below, would extend the life of the trust until the year 2000 approximately. (Final Report at 43 n. 48). Claims are expected, however, to continue to arise for another 20-30 years. (Millman Report Exh. 11); (Wyatt Report Exh. 11).

Once one focuses upon the fact that RegO’s present assets are unlikely to be adequate to compensate all future claimants that it can presently reasonably anticipate over an indefinite time, 18 and upon the fact that all of its present assets are proposed to be dedicated to providing security to its claimants, the principal issues that are raised by this application necessarily emerge. They will involve the relative rights of various RegO claimants, present and future. In addition, in whatever way those relative rights are seen, where the total fund appears inadequate to compensate all qualifying future claims, the innovative aspects of Sections 280-81 19 require that a mechanism be utilized to assure that some part of the fund remains for the more distant foreseeable claimants. RegO proposes an interim payment mechanism that would, initially at least, cap certain payments at a preset amount. Then upon termination of the trust, when one is in a position to know what all the claims come to, creditors who have been limited by the cap will qualify for further distributions.

This and other aspects of the proposed Claimants Trust are described in the next section of this opinion.

IV.

The Proposed Plan of Security For Claims

RegO proposes a plan for the payment and the security of its known and future unknown creditors including the establishment of a Claimants Trust and the transfer to the trust of all of RegO’s assets.

The central fact of the Claimants Trust is that it will hold all of the present assets of RegO for distribution to claimants pursuant to its terms, with RegO shareholders receiving distributions only if unexpended funds remain at the termination of the *101 trust. The trust will be under the control of a single trustee who will conduct its affairs, which will primarily involve the supervision of the litigation and settlement of claims brought against RegO or the trust, as well as the investment and preservation of the trust’s assets. 20

The Trust Agreement divides the claims which may be paid by the trust into six categories of “obligations”:

(1) Administrative Obligations; i.e., all the costs and expenses incurred in the administration of the trust and in the litigation of claims brought against, or on the behalf of, the trust.

(2) Contractual Obligations; i.e., claims determined to be properly payable pursuant to (a) the Asset Purchase Agreement between RegO and ECU or (b) the indemnification provisions of the Trust Agreement. 21

(3) Product Obligations; i.e., all valid claims arising from settlements or judgments establishing claims for personal injury and property damage caused by products manufactured by the Company, including related claims for indemnification or contribution.

(4) Pre-Existing Obligations; i.e., all claims for amounts incurred prior to the effective date of the trust in connection with winding-up the affairs of the Company and Contractual, Product, and Non-Compensatory Damage Obligations existing but unpaid as of the effective date of the trust.

(5) Non-Product Obligations; i.e., those obligations arising from claims other than Product Claims, which were asserted in lawsuits prior to the Effective Date of the trust and not settled or reduced to judgment until after the settlement date.

(6) Non-Compensatory Damage Obligations; i.e., those obligations arising from claims for punitive, exemplary or other non-compensatory damages, which are claimed in connection with a product claim.

The Trust Agreement provides for the payment of these obligations in one of three ways: (1) payment in full upon maturity; (2) payment in full subject to a $500,-000 cap; or (3) payment only after all other obligations have been paid in full.

The Trust Agreement requires the trustee to pay Administrative Obligations, 22 Pre-Existing Obligations and Contractual Obligations (other than those for indemnification, 23 ) in full, as they mature. But the trustee is directed to pay Product Obligations, Non-Product Obligations and Non-Compensatory Damage Obligations that are settled or reduced to judgment after the effective date of the trust, in full, but subject to an interim limit 24 of $500,000 occurrence. 25 That is, payment will be limited to $500,000 unless and until the trust terminates with unpaid funds, at which time amounts in excess of the interim cap may be paid. These Obligations will be paid for a proven occurrence in the order in which they arise. 26

*102 The Trust Agreement provides the following procedures with respect to the termination of the trust. After five years of operation, the trustee is to recommend to the Court whether a deadline for the assertion of all Product and Non-Compensatory Damage Claims (the “Claims Assertion Date”) should be set. If the Court establishes a Claims Assertion Date, the trust will thereafter not be authorized to pay any Product or Non-Compensatory Damage claim asserted against the trust after that date. The trust is to terminate automatically on the date (the “Termination Date”) ninety days after the first to occur of the following two events: (a) all Product, Non-Compensatory Damage and Non-Product Claims asserted against the Company or trust have been settled or reduced to final judgment and paid as provided in the Trust Agreement and the Claims Assertion Date has passed; or (b) the trustee has consented to, and the Court has approved, the termination of the trust.

Upon the termination of the trust, any remaining monies are to be distributed: (1) ratably for remaining Administrative Obligations; (2) to the extent funds remain, ratably to the holders of Contractual Obligations, Non-Product Obligations and Product Obligations who did not previously receive payment in full; (3) to the extent funds remain, ratably to all holders of Non-Compensatory Damage Obligations who did not receive full compensation; and (4) to the extent funds remain, to the stockholder of the Company as of the date of the establishment of the trust.

y.

The central issue presented by this proceeding arises under Section 280(c). It is whether the Claimants Trust provides security that will be sufficient for the claims of present claimants, and will be reasonably likely to be sufficient for claims that have not been made known or that have not yet arisen, but that based on facts known to RegO are likely to arise or become known, prior to the expiration of applicable statutes of limitation. 27

In addressing this question one must first ask the factual question whether the assets held by RegO are likely to offer security that will be adequate to reasonably assure the payment of all foreseeable future claims. As noted above, I conclude that they are not. See pp. 14-15. Next one must ask whether that fact disables RegO from proceeding to wind-up its affairs pursuant to Sections 280 and 281(a). I conclude that in the situation in which a dissolved corporation is dedicating all of its assets to the security arrangement offered under Section 280(c), that the inadequacy of those assets to offer full security ought not to deprive the directors of the corporation from proceeding under Section 280 and Section 281(a). See pp. 28-31. That is sufficiency of the security agreement may be achieved in spite of the inability to assure or secure future compensation in full to all foreseeable future claimants. Where the dissolved corporate assets are in total inadequate to secure full compensation to all foreseeable future claimants, the sufficiency of the security arrangement will inescapably involve questions of the fairness of the proposed security among various claimants or classes of claimants. In making those judgments, the Court may be guided by the policies reflected in the stat *103 utes as a whole and especially by the innovative aspects of Section 281(a) and (b).

Thus, the more difficult questions presented by the Claimants Trust are whether its terms, especially the preference that it accords to present claimants over unknown or future claimants, is appropriate. At pp. 106-08 below I conclude that, in light of the legislative intent reflected in Section 281(b), and less vividly but no less recognizably in Section 281(a), this preference is not justified in this factual context. This conclusion has implications for several important aspects of the Claimants Trust.

VI.

The Principal Exceptions of Respondent Emerson Electric

Emerson is a co-defendant with RegO in pending product liability suits and reasonably expects to be a defendant in future product liability suits involving equipment that includes RegO manufactured devices. It has made, and expects in the future to make, additional claims against RegO that if it suffers liability, then RegO is liable over to it for contribution or indemnification. Its primary objection to the plan of dissolution, and the adequacy of the security the trust offers to it for its future claims, is that the Claimants Trust is inadequately funded. It asserts that the RegO dissolution and this proceeding are a transparent effort by those who control and own RegO to deprive foreseeable future creditors of the company of the ability to hold RegO answerable for its [future] liabilities.

This scheme, it says, entails wrongs; specifically it entails the alleged fraudulent conveyance by RegO of substantial assets out of the corporation: RegO’s alleged dividend of some $38 million shortly before filing its certificate of dissolution, and the sale of the Company’s assets, allegedly for less than their true value. It is contended that, in fact, all of the corporations’ assets at dissolution cannot provide adequate security under Section 280(c). Rather, to provide adequate security it would be necessary for RegO to recover amounts of which it was wrongfully deprived, or for the recipients of those payments or assets to bind themselves to the trust to make such payments. Since this cannot be coercively accomplished in this proceeding, Emerson asks that the court decline to approve the proposed plan under Section 280(c)(1) and (2).

The Master acknowledged the apparently litigable nature of Emerson’s position in two ways. First, she recommended that language suggested by RegO in its proposed final order that would have purported to preclude the future appointment of a receiver for RegO under Section 279 of the General Corporation Law 28 be deleted from any order fixing or approving adequate security. With this recommendation, I concur. Secondly, she proposed that the order to be entered include the following language:

[n]othing contained in this Order is intended to alter existing equitable rights of legitimate claimants to pursue appropriate relief against RegO, its directors, stockholders or their transferees from any claim for fraudulent or wrongful transfer of RegO’s assets. Report at 58-59.

*104 This recommendation is made with knowledge of the fact that Emerson has initiated suit against RegO and others in the United States District Court for the Northern District of Illinois, alleging that the transactions that it now points to were fraudulent conveyances.

The parties disagree about the appropriateness of this particular language, but they agree that this proceeding is not intended to interfere with the adjudication of the fraudulent conveyance litigation. In my opinion, it would not in any event do so. The various limitations on stockholder liability reflected in Section 282 are limitations on liability that might arise under the trust fund doctrine. Where they apply, these provisions provide that shareholders will not have derivative liability for “any claim against the corporation.” In my opinion a claim of fraudulent conveyance is not “a claim against the corporation” within the meaning of Section 282. It entails a claim that the corporate entity itself has been misused; that its assets have been conveyed for less than fair value for no proper business purpose. A claim to reverse such a conveyance is obviously not a claim against the corporation in the same sense, for example, that an action by a corporate creditor against her debtor to collect the debt is a “claim against the corporation.” Thus, I conclude that, Section 282 is not intended to limit the ability of a court to recover for the benefit of creditors or for a receiver appointed under Section 279 (or in this instance for the Claimants Trust), funds fraudulently conveyed to a corporation’s stockholders prior to dissolution, the transfer of which left the corporation insolvent. 29

Thus, in approaching the issues presented by this application I put to one side the economically important question that these pre-dissolution payments may raise, and assume, but do not decide, that the assets held by RegO at the time of its dissolution, and subject to the proposed trust, comprise all of the property of the corporation to which its present and future claimants have an entitlement to look for satisfaction of their rights.

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This assumption still leaves open the question whether those assets are sufficient to support the security arrangement called for by Section 280(c). It is arguable that the benefits afforded by compliance with the elective procedure of Section 280 are only available where it is possible to offer a certain level of security to both present known claimants (ie., security that which “will be sufficient,” § 280(c)(1)) and unknown or future claimants future (ie., that “which will be reasonably likely to be sufficient”). Arguably if the circumstances do not permit that level of security, then the corporation is required to dissolve under the more risky default provisions of Section 281(b). All exceptors urge that the level of assurance mandated by Section 280(c) cannot be supplied here.

The alternative approach, urged by RegO, holds that where all of the corporation’s assets are offered as security, the issue of sufficiency of the security does not arise, since the company’s creditors will be entirely as secure upon dissolution as they were before dissolution. On this alternative reading of Section 280(c), where all of the dissolving corporation’s assets will be dedicated to providing security, issues of the structure of the security arrangement (ie., the relative treatment of different classes of claimants) will, of course exist, but the issue of sufficiency of the security will not.

This latter view is the correct one in my opinion. At least in the special case in which all of the corporation’s assets are dedicated to affording security, the sufficiency of the security must be deemed established insofar as the availability of Section 281(a) procedure is concerned. To con- *105 elude otherwise would serve no valid interest of claimants (since they, as a class, are to be the beneficiaries of all of the corporation’s assets in all events) and would deprive corporate directors of such benefits as they may draw from judicial approval of the plan of security. That benefit may be real where, as here, some future claimants may (under the plan) possibly collect a smaller proportion of their claim than others. Being forced to liquidate under Section 281(b) would leave open for possible future litigation the question whether the plan was “reasonably likely to be sufficient” to compensate future claims and the consequences of any determination that it was not. The 1987 and 1990 legislation that enacted Sections 280-82 was designed, at least in part, to provide a mechanism with which such uncertainty could be dissipated and fairness to future as well as present corporate claimants could be presently established through adjudication. No interest of the corporation’s claimants is advanced by denying to the corporation the ability to have such adjudication now under Section 280(a).

Thus, although I do conclude that all of RegO’s assets are inadequate to be reasonably likely to provide compensation for all of its future claims that are likely to arise, I conclude as well that the Court of Chancery is not prevented by that fact from approving a security arrangement under Section 280(c) if that arrangement is funded by all of the dissolving corporation’s assets and is fair to all classes of present and future claimants. I thus reject Emerson’s exception.

VII.

The Principal Objections of ■ the Guardian Ad Litem

The guardian makes several fundamental complaints about the proposed plan of dissolution. They were rejected in the Final Report. First, he complains that the Claimants Trust gives some claimants (i.ethose who claim “Pre-Existing Obligations”) (see p. 17) rights superior to those of future claimants who “based on facts known to the corporation ... are likely to become known to the corporation prior to the expiration of an applicable statute of limitation”. In this case, such claimants are statistically likely to become known from time to time until, in the opinion of the guardian’s expert, at least the year 2028. They are the “long-tail” claimants (representing the tail of the bell-shaped curve of distribution of product-related injuries). It is unfair, the guardian asserts, to favor present claimants over unknown, yet statistically certain future claimants. More pointedly the guardian asserts a security plan that does so is so inconsistent with the policy of Section 281 that it cannot be approved by the Court as appropriate under Section 280(c). The policy that the guardian infers arises from the fact that Section 281(a) and (b) both provide that where there are insufficient funds to pay or make provisions for all claimants, including foreseeable future claimants, claims of equal priority shall be paid or provided for rat-ably. 30

This objection to a perceived preference for present or near term claimants over more distant foreseeable claimants has a second aspect relating to the Aireo indemnity contract purchased by the directors following dissolution. This aspect is treated below at pp. 108-09.

The second principal exception of the guardian is that the interim limit of $500,-000 is too high. The guardian asserts that with such an interim limit the trust is quite likely to be exhausted within 8 years, leaving future injured persons with no recourse. Thus, this level of interim limit is likely to advantage claimants who sustain injury in earlier years and are able to bring their claim to judgment or settlement in the earlier years. This again is claimed to be unfair and inconsistent with the direction of Section 281 which requires, it is said, *106 equal treatment for all claimants of the same class.

The guardian proposes a $300,000 interim limit, which based upon his expert’s study, would likely be sufficient to permit the trust to pay this amount to all statistically foreseeable injured persons no matter when their claims arise and would, on this expert’s view, also be sufficient to fully compensate 95% of all such persons. This issue is addressed at pp. 109-10 below.

A related issue conce