Law Commons^™

The Zen Of Corporate Capital Structure Neutrality, Herwig J. Schlunk

Michigan Law Review

It is well understood that corporate capital structure affects tax collections. Most basically, corporate interest expense is deductible. With each interest accrual, the corporate tax base shrinks. Thus, there is a broad range of circumstances in which corporate managers are encouraged by the Internal Revenue Code (the "Code") to load their corporate capital structures with debt. But there is little support for the proposition that Conpress desires corporations to adopt such debt-laden capital structures. Indeed, much tax legislation suggests congressional displeasure with the achievable degree of corporate self- integration. On the other hand, corporate equity has its charms: shareholders are …

To Know A Veil, Douglas C. Michael

Law Faculty Scholarly Articles

Lawyers, judges, law students, and law professors have a love-hate relationship with the doctrine of “piercing the corporate veil”—the idea that shareholders might sometimes be personally liable for the debts of the corporation. It is the subject covered more than all others in courses on corporation law. It is widely litigated, being the subject of thousands of opinions. Yet, for all this attention, it is routinely vilified by the experts. Most commentators recognize that it is jurisprudence without substance.

This Article is an attempt to form a basis for rigorous analysis of virtually every veil-piercing case and to rid the …

The Anticompetitive Effect Of Passive Investment, David Gilo

Michigan Law Review

There are many cases in which a firm passively invests in its competitor. For example, Microsoft passively invested in $150 million worth of the nonvoting stock of Apple, its historic rival in the operating systems market. Also, in November 1998, Northwest Airlines, the nation's fourth-largest airline, purchased 14% of the common stock of Continental Airlines Inc., the nation's fifth-largest (and fastest growing) airline. Northwest competes with Continental on seven routes, serving 3.6 million passengers per year. In another example, TCI, the nation's largest cable operator, became a passive investor with a 9% stake (which can be increased, under the terms …

Beyond Bond Markets 2000: The Electronic Frontier And Regulation Of The Capital Markets For Debt Securities, Stephen Wallenstein

Law and Contemporary Problems

On Oct 18-19, 1999, more than fifty securities lawyers, representatives of ratings agencies, regulators and academics gathered in Washington DC for a conference on the regulation of capital markets for debt securities. Some of the recurrent themes and conclusions arising from deliberations by conference participants are discussed.

International Debt Forgiveness And Global Poverty Reduction, Chantal Thomas

Fordham Urban Law Journal

This article discusses the relationship between the international debt crisis and global poverty. The author argues for an expansion of coordinated international effort, bolstered by fundamental principles of public international law, to address global poverty by substantially reducing the foreign-denominated debt owed by developing countries to modernized countries and financial institutions.

International Debt Forgiveness And Global Poverty Reduction, Chantal Thomas

Fordham Urban Law Journal

This article discusses the relationship between the international debt crisis and global poverty. The author argues for an expansion of coordinated international effort, bolstered by fundamental principles of public international law, to address global poverty by substantially reducing the foreign-denominated debt owed by developing countries to modernized countries and financial institutions.

Preslar V. Commissioner: Debt-Discharge Income And Its Rationale, Chad J. Pomeroy

Faculty Articles

In Preslar v. Commissioner, the Tenth Circuit examined the “disputed debt” exception and concluded that the result was at odds with similar holdings from the Third Circuit. The Third and Tenth Circuits interpret the underlying logic of debt discharge income differently. The Third Circuit invokes the disputed-debt exception when the original debt is either unenforceable or unliquidated, while the Tenth Circuit invokes the exception only when the original amount is unliquidated.

The Tenth Circuit stated that the exception “rests on the premise that if a taxpayer disputes the original amount of a debt . . ., a subsequent settlement of …

Will Exploding Guaranties Bomb?, Marshall E. Tracht

Articles & Chapters

Springing and exploding guaranties - insider guaranties that will become due ifand when a borrower files for bankruptcy - have become popular as "bankruptcy-proofing" devices, yet there is little case law or literature on their enforceability. This article reviews the limited existing law on these bankruptcy-contingent guaranties and examines some of the arguments against their enforceabiltiy that can be expected to be made in the future.