There are numerous reasons why a company might use more than one entity for its operations or organization: to silo liabilities, for tax advantages, to accommodate a lender, or for general organizational purposes. Simply forming a separate entity, however, is not enough. Corporate formalities must be followed or a court could effectively collapse the separate entities into one. A recent opinion by the United States Bankruptcy Court for the District of Massachusetts, Lassman v.

On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the characterization of underlying partnership debt as recourse vs. nonrecourse under Section 752 of the Internal Revenue Code.

A draft of the U.S. Treasury’s proposed debt restructuring legislation began circulating earlier today.  The draft legislation would give Puerto Rico, as well as other U.S. territories, and their municipalities access to U.S. bankruptcy court under a new chapter of the U.S. Bankruptcy Code (so-called “Super Chapter 9”) as well as making Puerto Rico’s instrumentalities (but not Puerto Rico itself) potentially eligible to file for bankruptcy under existing Chapter 9.

In the aftermath of recent municipal bankruptcies in which issuers proposed and/or implemented bankruptcy plans involving partial discharges of the issuer’s payment obligation on insured bonds, there has been increased focus on whether municipal bond interest paid by a bond insurer after the bankruptcy plan’s effective date continues to be tax-exempt.

Leading the Past Week

On June 16, 2008, Justice Clarence Thomas delivered the opinion of the court in Florida Department of Revenue v. Piccadilly Cafeterias, Inc. In a 7-2 decision, the Supreme Court reversed the decision of the U.S. Court of Appeals for the Eleventh Circuit and held that § 1146(a) provides an exemption to state stamp taxes only where a sale occurs pursuant to a plan that has been confirmed, and did not properly apply to a case where the plan was confirmed several months after the bankruptcy court approved the sale.

On March 26, 2008, the United States Supreme Court heard oral argument in the case of State of Florida Department of Revenue v. Piccadilly Cafeterias, Inc. to consider the United States Court of Appeals for the Eleventh Circuit's ruling that a bankruptcy court may exempt certain state and local taxes in a sale approved prior to confirmation of a chapter 11 plan under § 1146(c) of the Bankruptcy Code.

Introduction

Section 1146(a) (formerly, and for the purposes of this case § 1146(c)) of the Bankruptcy Code provides:

Introduction

This Court of Appeal decision in (1)TopBrandsLtd(2) LemioneServicesLtdv (1) Gagen Dulari Sharma (2) Barry John Ward (as former liquidators of Mama Milla Ltd) (2015) is noteworthy as it underlines that the “illegality defence” is still in a state of flux and in need of clarification by the Supreme Court.

The Court of Appeal recently handed down its much-anticipated judgment in (1) Jetivia S.A. (2) URS Brunschweiler v Bilta (UK) Limited (in liquidation) (2013).