In re Dittmar

Marc William Dittmar (debtor) worked for Spirit AeroSystems, Inc. (Spirit). In collective-bargaining negotiations with its employees’ union, Spirit agreed to establish an equity-participation program (EPP) for employees and to contribute stock-appreciation rights (SARs) upon the occurrence of Spirit-initiated “payment events” that created a target amount of profit for Spirit’s investors. The SARs would expire in 15 years if no payment event occurred. The collective-bargaining agreement (CBA) between Spirit and the union did not describe the EPP in detail or define who were deemed to be participating employees. However, the EPP terms were part of the CBA negotiations, and union members received information about employees’ rights under the EPP before voting on the CBA. After the union ratified the CBA, Dittmar filed for bankruptcy. Spirit subsequently memorialized the EPP in a plan document that defined participating employees and explained the SARs that eligible participating employees would receive. One month after that document was created, a payment event occurred under the plan, and participating employees, including Dittmar, received a SARs distribution of cash and stock. The bankruptcy trustee moved to compel turnover of the distribution, claiming that the distribution was the property of the bankruptcy estate. Dittmar argued that the distribution was not the bankruptcy estate’s property because any interest he had in the SARs was created when Spirit memorialized the EPP, after Dittmar had filed for bankruptcy. The bankruptcy court denied turnover of the distribution, and the bankruptcy appellate panel affirmed. The trustee appealed.