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Schnader Wins Notable Victory in Cy Pres Litigation

On April 25, 2019 by Schnader in Finance

On April 16, 2019, the Philadelphia Orphans’ Court awarded $1.2 million in cy pres funds to the Philadelphia Chinatown Development Corporation (PCDC). Schnader represented PCDC in this matter, which involved the distribution of funds remaining from the dissolution of the former Chinatown Building and Education Foundation (CBEF).

CBEF’s main asset was a building in Chinatown known as the Chinese Cultural and Community Center. Social services and cultural programing were provided in the building until 2007, at which point the building became vacant and fell into disrepair.

In 2016, Scioli Turco, Inc. became conservator of the building and sold it to a developer. Scioli Turco then became trustee for the purposes of distributing the net funds (approximately $1.3 million) consistent with the law of cy pres.

The Orphans’ Court Division of the Court of Common Pleas of Philadelphia held a two-day trial to determine the best way to distribute the cy pres funds. The trial took place in December 2018 and in February 2019, during which the Court heard the testimony of six witnesses from four different nonprofit organizations vying for the funds. The trustee had proposed equally dividing the cy pres funds, but PCDC argued that this division was inconsistent with the purpose of CBEF and the intent of its founders.

In its final decision issued on April 16, 2019, the Orphans’ Court found that PCDC was an appropriate beneficiary of the funds. The Court issued a 17-page decision awarding PCDC $1,230,000 (or 96%) of the cy pres funds.

The Schnader team working on this matter included Edward Sholinsky, Stephenie Yeung, and Ralph Wellington.

Click here to read the decision of the Orphans’ Court.

Click here for PCDC’s press release and the Chinese translation.