Bankruptcy: In re Webster Classic Auctions: is the door finally open for a practical application of section 1146(c)?
Florida Bar Journal › Vol. 79 Nbr. 11, December 2005
Linked as:
Extract
Bankruptcy: In re Webster Classic Auctions: is the door finally open for a practical application of section 1146(c)?
On average, 10,000 petitions for reorganization under Ch. 11 of the Bankruptcy Code are filed every year. (1) Of those companies filing petitions, only 25 percent are expected to have their plan for reorganization confirmed by a bankruptcy court. (2) When further analyzing a company's chance of emerging from Ch. 11 to become a thriving concern, the figure of success shrinks to about seven percent. (3) Although the reasons behind the failure to reorganize successfully vary, there is a constant theme: an insufficiency of funds necessary to achieve or carry out a plan for reorganization.
In an effort to clarify prior law and facilitate successful reorganizations, Congress enacted [section] 1146(c) as part of the Bankruptcy Reform Act of 1978 to give debtors tax relief by exempting post-petition transactions from taxes associated with the disposition or refinancing of real property interests. The objective of the exemption is simple: By limiting the financial obligations of transfers occurring under a reorganization plan, a greater portion of proceeds from the transactions are available to debtors, thereby increasing the likelihood tha...See the full content of this document
Sponsored links
