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Revocation of QSUB Status of Chapter 11 Debtor Violates Automatic Stay by Michael R. Harris
Berger Singerman LLP - Boca Raton Office
Nick Jovanovich
Berger Singerman LLP - Fort Lauderdale Office
Daniel D. Mielnicki
Berger Singerman LLP - Boca Raton Office
Marian Pearlman Nease
Berger Singerman LLP - Boca Raton Office
Sheldon S. Polish
Berger Singerman LLP - Fort Lauderdale Office
William M. Shaheen
Berger Singerman LLP - Boca Raton Office
Alfredo R. Tamayo
Berger Singerman LLP - Boca Raton Office
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February 24, 2012
Previously published on February 2012
This Tax Alert discusses a recent Delaware Bankruptcy Court case, In Re: The Majestic Star Casino, LLC, 2012 WL 204088 (Bktcy Ct. DE 1/24/2012), involving a non-debtor S corporation (“Parent Corporation”) which revoked its S corporation status, thereby causing the automatic revocation of the “qualified Subchapter S corporation” (“QSUB”) status of its wholly-owned subsidiary (“Subsidiary”) which was a debtor in a Chapter 11 bankruptcy case. The principal issue in that case is whether the Parent Corporation’s revocation of its S corporation status, which by operation of tax law caused the revocation of its Subsidiary’s QSUB status, constitutes an avoidable transfer of property of the bankruptcy estate under Section 549 the Bankruptcy Code, as well as a violation of the Bankruptcy Code’s automatic stay under Section 362 of the Bankruptcy Code.
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The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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