Category Archives: Trust Fund

February 4, 2013

Supreme Court of Colorado: Capital Infusions Are Not Trust Funds

By Tim Gordon

Reversing a Court of Appeals’ decision, the Supreme Court of Colorado has held that capital infusions by an LLC’s manager to keep the LLC afloat are not trust funds, even when the sole purpose of the LLC is to develop a single project.  Furthermore, the Court reiterated that there is nothing wrong with a contractor having only a single bank account.

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September 3, 2010

Capital Infusions Are Now Trust Funds Too

By Tim Gordon

NOTE:  The Supreme Court of Colorado reversed the Court of Appeals’ decision in AC Excavating, Inc. v. YaleSee here.

 

In AC Excavating, Inc. v. Yale (Colo. App. Sept. 2, 2010), the Colorado Court of Appeals held that money loaned to an LLC by its manager qualifies as a disbursement, and can be the basis of a trust fund violation and theft claim against the manager if the funds are not used to pay subcontractors and suppliers.  As the dissent notes, “[a] lawyer familiar with today’s holding likely would advise the manager not to recapitalize the company if there was any doubt as to the project’s ultimate success.”

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