A California Franchise Tax Board (FTB) Chief Counsel Ruling concluded that a taxpayer’s sales of assets pursuant to a plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code were not “occasional sales” within the meaning of 18 Cal. Code Regs. § 25137(c)(1)(A)2. Instead, the sales of assets were deemed to be part of the taxpayer’s normal course of business and occurred frequently. As a result, the taxpayer’s gross receipts from the asset sales were includable in its sales factor for apportionment purposes. Under 18 Cal. Code Regs.

On July 16, 2014, the Uniform Law Commission (the “Commission”) approved a series of discrete amendments to the Uniform Fraudulent Transfer Act (the “UFTA”) and renamed it the Uniform Voidable Transactions Act (the “UVTA”). The UVTA is intended to address inconsistency in the courts, better harmonize with the Bankruptcy Code and the Uniform Commercial Code (the “UCC”), and provide litigants with greater certainty in its application to a fraudulent transfer action.

On June 12, 2014, the U.S. Supreme Court unanimously held in Clark v. Ramekerthat an inherited individual retirement account (IRA) does not qualify for the “retirement funds” exemption in the Bankruptcy Code and is not excluded from a bankruptcy estate on that basis.

Lenders and their attorneys are conditioned to believe that being over-secured is as good as life gets for a creditor.  Lenders want to secure repayment with collateral that is valuable and liquid, while their attorneys ensure that the security interest is properly perfected.  But, post-closing confidence in a job well done can quickly evaporate if the borrower files a bankruptcy case intending to sell the collateral. 

As noted in a previous Sutherland Legal Alert, the American Bankruptcy Institute has formed a Commission to Study the Reform of Chapter 11 (the Commission). To further its goal of proposing changes to modernize the Bankruptcy Code, the Commission formed a number of advisory committees, including one named the Financial Contracts, Derivatives and Safe Harbors Committee (the Committee).

A recent decision out of the U.S. District Court for the Western District of Washington will be of interest to both lenders and borrowers of loans that are expected to be traded. In Meridian Sunrise Village, LLC v.

Introduction In the case of Rawlinson & Hunter Trustees SA v Akers & Another¹ the Court of Appeal considered the parameters of litigation privilege, providing a useful reminder of how narrow the protection is and the care that must be taken in relation to the production of documents by third parties where a dispute is, or may be, on the horizon.

INTRODUCTION

INTRODUCTION

In late February 2014, MtGox Co., Ltd (“MtGox”), once the largest bitcoin exchange in the world, suspended all trading on its exchange after internal investigations revealed a loss of approximately 750,000 of its customers’ bitcoins worth nearly $473 million. That loss caused MtGox to become insolvent.