Definition of Property Limited Under Bankruptcy Code [Delaware Business Court Insider]

On March 28, 2012, we wrote about a bankruptcy court decision voiding a nondebtor parent company's revocation of its own S corporation status, which had the effect of terminating its debtor subsidiary's "qualified Subchapter S subsidiary" (QSub) status, as an unlawful transfer of the debtor subsidiary's property in violation of Sections 362 and 549 of the Bankruptcy Code. The decision in The Majestic Star Casino LLC v. Barden Development (In re The Majestic Star Casino LLC), Adv. No. 10-56238 (Bankr. D. Del. Jan. 24, 2012), was noteworthy for its expansive view of what constituted property of the debtor's estate and its holding that the debtor's QSub status was a property interest of the estate since it afforded the debtor the right to be free of a tax burden that would diminish estate funds.

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Mark E. Felger

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