Lawyers ask that Citizens Bank hold settlement funds
01:00 AM EDT on Thursday,December 17, 2010
PROVIDENCE — Lawyers representing more than 300 victims of the Station nightclub fire are asking a federal judge to approve Citizens Bank as the repository for the $176 million that has been offered to settle the plaintiffs’ personal-injury claims.
According to papers filed Wednesday by the victims’ lawyers, the $176 million would be put in a trust protected by FDIC insurance or, if that becomes unavailable, “in other high quality, low-risk investments, such as United States Treasury bills and other United States Government-backed securities, to be chosen by the trustee” Brockton, Mass., lawyer Paul A. Finn.
Citizens will hold the money — without charging a fee — in a non-interest bearing account. It is anticipated that all of the victims of the 2003 fire will have been paid their settlement money by the end of June.
“Medium risk, high risk, or speculative investments are expressly prohibited,” according to the court documents. The court would have to approve any change in investment of the funds pending their disbursal to the fire victims.
The plaintiffs’ lawyers are asking for court permission to pay Finn from the settlement proceeds an hourly rate of $550 with a maximum ceiling of $150,000. Out of this amount, Finn would pay all expenses of the trust, including the fees of accountants, attorneys and other advisors he might need to consult. They also set a ceiling of $15,000 to cover Finn’s administrative costs and bond or insurance premiums.
None of the defendants who’ve agreed to contribute to the settlement pool has paid any of the money. They will have either 30 days or 90 days — depending on the settlement agreements they struck with the victims’ lawyers — to make the payments after the federal and probate courts sign off on the settlements.
Checks to individual victims will be paid to their attorneys who will then distribute the money. If a victim opts for periodic payments instead of a lump sum, their lawyers will help set up a vehicle for that.
Lawyers for the victims had hoped that Lagueux would approve the trust and Citizens as the repository when they met with him Wednesday. But plaintiffs’ lawyer Mark Mandell told the court that one defendant — whom he did not identify — has asked that amendments be made to the trust agreement, which the victims don’t agree with. One of the proposed amendments would require that settlement proceeds be used to pay any unanticipated tax liability that might occur when that defendant pays up — something that could reduce what each victim would get.
Once the courts sign off on the settlements, 70 percent of the defendants will have 30 days to pay, and 30 percent 90 days, Mandell said. The victims will get some of their money after the first settlements are paid and a second check when the rest of the money comes in. There’s a possibility that they may get a small third check as well — if fees for Finn, a court-appointed special master and warehouse expenses are less than anticipated.