This appeal in a California court involved a dispute over an appraisal of the plaintiffs’ 15% interest in a grocery store the defendant operated. The plaintiffs alleged that the award of the superior court was obtained by fraud and that the arbitrator prejudiced their rights.
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Technical Advice Memorandum 9736004
PRIVATE RULING 9736004 INTERNAL REVENUE SERVICE NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM "This document may not be used or cited as precedent. Section 6110(j)(3) of the ...
Plan Confirmation Hinges on Property Valuation
The Bankruptcy Court finds the debtor’s reorganization plan is not feasible because it fails to provide enough funds to pay in full the primary creditor’s secured claim; the plan rested on an improperly low valuation of the property that makes up the majo ...
Connecticut (Dissenter's Rights)
Sec. 33-855. Definitions. As used in sections 33-855 to 33-872, inclusive: (1) "Corporation" means the issuer of the shares held by a dissenter before the corporate action or the surviving or acqu ...
Wisconsin (Dissenter's Rights)
Wisconsin Statute Chapter 180 . Dissenter's Rights can be found in § 1301 through § 1331. You will need Acrobat Reader.
Wisconsin (Judicial Dissolution)
Wisconsin Statute Chapter 180 . Judicial Dissolution can be found in § 1430 through § 1440. You will need Acrobat Reader.
Bankruptcy Appeals Panel Affirms Confirmation of Chapter 11 Plan Despite Objection of Largest Unsecured Creditor
The debtor was a manufacturer of wet wipe cleaning products. It contracted with a new customer to manufacture wipes for the customer in the U.S. and to sell such wipes to the new customer. The customer failed to obtain EPA and state-level product registrations and refused to purchase manufactured wipes or to honor its commitments regarding loans to the debtor for new equipment leases and other costs to expand the debtor’s facilities to meet the demands of the contracts. The debtor ultimately filed for bankruptcy and delivered a Chapter 11 plan that included selling its assets. The Bankruptcy Court approved the plan. The creditor appealed the approval of the plan, but the appeals panel affirmed.
Court Credits Debtor’s Asset Valuations but Rejects Chapter 11 Plan
Court finds debtor is hopelessly insolvent; court values two types of oil and gas assets under NAV and precedent transaction analyses, respectively, finding, in terms of NAV analysis, debtor’s expert is more credible on issues of pricing, forecasting, risking, and predicting costs.
Bankruptcy Court Calls Choice of Comparables ‘Key Value Driver’ in Expert Valuations
Ruling on plan confirmation, Bankruptcy Court finds debtor expert’s determination of total enterprise value of reorganized debtor more credible than committee for unsecured creditors’ expert; in adopting debtor expert’s comparable company analysis, court calls choice of comparables set a “key value driver.”
Bankruptcy Court Uses the ‘Replacement Value Standard’ as It Determines That Debtor ‘Enterprise Value’ Is Lower and Inappropriate
The debtor, S-Tek 1 LLC, submitted a motion to value to the Bankruptcy Court to determine the value of the collateral of Surv-Tek Inc. as to debt owed it by the debtor pledged as collateral for debt owed by S-Tek to Surv-Tek. The valuation was to be used in the confirmation of a Chapter 11 reorganization of S-Tek. The court used the replacement value standard of value instead of the “ongoing concern” value since the replacement value provided a value greater than the “enterprise value” (i.e., ongoing concern value).
Court Finds Valuation of Debtor Entity Must Account for COVID-19 Effect on Industry
Court finds creditor’s interest in debtor’s property is “inconsequential” and says a valuation of debtor’s fitness club must account for dismal state of fitness industry due to COVID-19 shutdown; debtor’s projections related to reorganization plan are too optimistic given economic uncertainty.
Petitioners Not Allowed a Charitable Contribution—Did Not Use a Qualified Appraiser
The taxpayers made a valid gift of stock, but they realized and recognized gain because their right to the proceeds from the sale occurred before the gift was made. They also were not entitled to a charitable contribution deduction because they did not procure a qualified appraisal. The taxpayers were not liable for an underpayment penalty.
Plan of Reorganization Cannot Be Approved Because Essentially Only the Debtor Would Benefit
The Bankruptcy Court turned down a plan and amended plan of reorganization primarily because only the debtor would benefit from the plan and creditors would be left with little or no return. The court ordered a new plan be delivered to the court as soon as possible because time was of the essence.
Daubert Flexible as to Solvency Determination for Multiple Debtor Entities
Court finds Daubert centers on reliability, not persuasiveness, and can accommodate experts’ different approaches to determining solvency in case with multiple debtor entities; court rejects exclusion of expert opinion relying on GAAP-based financials.
SEC’s Daubert Challenge to Securities Valuation Testimony Fizzles
In an SEC case requiring valuation of restricted securities, court admits most of the testimony of parties’ experts; experts need not be specialists in given field and need not demonstrate familiarity with USPAP or SSVS to qualify under Daubert, court fin ...
Misunderstanding of Facts Results in Overvaluation of Fuel Supply Rights
Debtor’s fuel supply rights had value either in form of an implied contract, customer relationship, or simply an income stream, court says; court does not assign specific value but finds appraiser overstated its value due to misunderstanding of key facts.
In Misappropriation Case, Expert’s ‘Head Start’ Damages Calculation Survives Appeal
In breach of fiduciary duty and misappropriation case, appeals court upholds arbitration award of “head start” damages; expert for employer calculated value to the employee from owing equity in competing company whose valuation was higher because of employee’s misconduct toward former employer.
U.S. District Court Decides Some Issues for Government and Some for Defendants But Very Little in Damages in an ERISA ESOP Case
In this ESOP ERISA case, the government (plaintiffs) (Secretary of Labor) alleged claims against the defendants, Robert N. Preston and TPP Holdings Inc. (and nominally against its ESOP) for: (1) breach of fiduciary duties; (2) engaging in prohibited transactions; and (3) co-liability of defendants. In a lengthy opinion, the court determined that the defendants did breach fiduciary duties and did engage in prohibited transactions. It further decided that there was no co-liability among the defendants, but it did not allow an offset of payments on debt of TPP Preston personally made. In determining FMV, the court did not allow a minority interest discount. In so doing, the resulting damages determined were minimal.
Post-Confirmation Comm. for Small Loans, Inc. v. Martin
Court finds Daubert centers on reliability, not persuasiveness, and can accommodate experts’ different approaches to determining solvency in case with multiple debtor entities; court rejects exclusion of expert opinion relying on GAAP-based financials.
Why Divorce Valuation Does Not Accord With Chapter 7 Liquidation Analysis
Bankruptcy Court says differing standard of value in divorce and bankruptcy proceedings precludes use of divorce valuation of husband’s interest in dental practice; but valuation based on shareholder agreement accords with Chapter 7 liquidation analysis.
Largest Creditor Holds Up Debtor's Reorganization Plan a Year After Filing
Debtor is in a conflict with its largest creditor over confirmation of a plan of reorganization a year after filing. The Court states: "While we are not prepared to conclude t ...
Proper Due Diligence Required for Reorganization Plan Confirmation
The U.S Court of Appeals for the Second Circuit reviewed a district court's order to reinstate the automatic stay in a Chapter 11 bankruptcy proceeding. The court found that the debtor's reorganization plan did not have a reasonable possibility of succes ...
Discovered Emails Plus a Contingent Fee Discredit Appraiser’s DCF Analysis
In reorganization confirmation, Bankruptcy Court rejects DCF analysis for cost of debt based on comparable companies rather than actual exit facility.
Court Determines Feasibility Requirements Not Met
The charge of the Bankruptcy Court was to determine whether the requirements for confirmation of a Chapter 13 personal bankruptcy reorganization were met, or whether the Chapter 7 liquidation case should be reopened.
Management Projections, DCF Discount Rate, and More Are Key to Bankruptcy Valuation
Bankruptcy court finds billion-dollar total enterprise valuation of flash memory manufacturer supports finding that proposed reorganization plan is fair but declines confirmation pending amendments to equity incentives for management.
Debtor’s Challenges Justify Bankruptcy Court’s Emergence Risk Premium
District court finds unique risks facing debtor in bankruptcy and emerging from it justify Bankruptcy Court’s increase of proposed discount rate and record supports confirmation of reorganization plan.