We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
The United States Supreme Court has granted certiorari to
decide whether the sale of a debtor's assets prior to plan
confirmation is exempt from state stamp or similar taxes.
Florida Dept. of Rev. v. Piccadilly Cafeterias, Inc. (In re
Piccadilly Cafeterias, Inc.), 484 F.3d 1129 (11th Cir. 2007),
petition for cert. granted, 128 S. Ct. 741 (U.S. Dec. 7,
2007).
The issue involved section 1146(a) of the Bankruptcy Code,
which was section 1146(c) prior to passage of the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)
amendments.
The Florida Department of Revenue petitioned the high court
following an adverse ruling by the U.S. Court of Appeals for
the Eleventh Circuit, which held that a pre-confirmation asset
sale would qualify for section 1146(a)'s tax exemption
provided that the sale was necessary to the consummation of the
debtor's plan of reorganization. (See Commercial
Restructuring & Bankruptcy Alert, June 2007, Vol. III, No.
2, p. 2, "Pre-Confirmation Sale Qualifies for State Stamp
Tax Exemption.")
A decision on the issue by the United States Supreme Court
will mend the split at the Circuit Court level among a number
of appeals courts.
The U.S. Courts of Appeal for the Third and Fourth Circuits
have imposed a bright line temporal restriction on the tax
exemption, holding that a sale occurring prior to plan
confirmation does not qualify for an exemption. The Eleventh
Circuit has ruled that section 1146(a) does not contain a
temporal restriction, and as a result, section 1146 (a)'s
tax exemption may apply to all pre-confirmation transfers that
are necessary to an ultimately confirmed plan.
In addition, while the Second Circuit has addressed certain
aspects of section 1146(a), it has not definitively ruled on
whether section 1146(a) imposes a temporal restriction.
If the Supreme Court rules in Florida's favor and
reverses the Eleventh Circuit's decision, debtors and
parties proposing to purchase assets may need to expedite plan
confirmation with pre-bankruptcy preparation to obtain the
benefits of the Bankruptcy Code's tax exemption in section
1146(a). For example, the debtor may organize a prepackaged
chapter 11 case in which the disclosure statement and plan of
reorganization contemplate a section 363(b) sale that already
is largely agreed upon by the debtor's major
parties-in-interest the day the chapter 11 bankruptcy case is
filed.
This article is presented for informational purposes
only and is not intended to constitute legal advice.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
If your not-for-profit organization receives Federal awards, you will need to determine whether your entity is a recipient, a subrecipient or a vendor.
On May 7, 2013, the PCAOB reproposed for comment: (1) an auditing standard on related parties; (2) proposed amendments to certain PCAOB auditing standards regarding significant unusual transactions; and (3) other proposed amendments to PCAOB auditing standards.
Economic conditions over the past year have forced an increasing number of companies to file for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Some leases impose requirements on a lessee to restore a facility to its original condition at the end of a lease or to uninstall and remove leasehold improvements.
Delaware is offering a voluntary disclosure program, touted by its secretary of state as a "good deal," to businesses that may not be in compliance with all of Delaware’s unclaimed property reporting requirements.
Is recapture of unpaid royalties worth the effort and expense involved in an audit? Is there a certain percentage of revenue at which the licensee pays for the cost of the audit? What are the areas of greatest payoff in an audit?
For several years, the FASB and the IASB have been discussing their joint revenue recognition project with the objective of developing a single comprehensive, converged revenue recognition model.
