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Court Finds Compelled Purchase Option in SILO Case
In the recently decided AWG Leasing Trust case, No. 1:07-CV-857 (N.D. Ohio 2008), a federal district court found against a taxpayer that engaged in a cross-border sale-leaseback of a waste-to-energy facility located in Germany. The court found, as a matter of fact, that the lessee, a consortium of German municipalities that burned its garbage and purchased electricity from the plant, was “nearly certain” to exercise its fixed price purchase option at the end of the lease term. Based on that finding of a compelled exercise of the purchase option, the court used a “substance over form” legal underpinning to hold that the leaseback was not a “true lease” ' use and possession of the asset were certain to be returned to the lessee at the end of the lease. The case is appealable to the Court of Appeals for the Sixth Circuit, and we understand at press time that the taxpayers intend to appeal.
The court disregarded the sale-leaseback and disregarded the nonrecourse debt that the taxpayer had incurred to purchase the facility. The overall transaction was recharacterized as a financing (non-true lease) of the equity portion of the purchase price that was paid by the taxpayer lessor to the lessee at closing. This deemed loan from the lessor to the lessee results in original issue discount (interest) income to the lessor. In addition all of the depreciation and interest expense deductions claimed by the taxpayer with respect to the facility and the nonrecourse debt were disallowed.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
Risks of “Baseball Arbitration” in Resolving Real Estate Disputes
“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.
Disconnect Between In-House and Outside Counsel
'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.