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M. Jensen (1991)
Corporate Control and the Politics of FinanceOrganizations & Markets eJournal
Footnotes 1 . United States v. Gleneagles Investment Company, 565 F. Supp. 556 (M.D.Pa. 1983). 2 . In Re Roco Corp., 701 F.2d 978, 982 (1983). 3 . Credit Managers Association of Southern California v. Federal Co., 629 F. Supp. 175, 182 (C.D.Cal. 1985). 4 . Such narrow interpretations of value and debtor have prompted the suggestion that an LBO could pass the reasonably equivalent value test if it were structured as a series of intermediate transactions, each one of which passed the test. However, courts appear willing to collapse complicated structures and look at who ultimately got what from whom. The court in Wieboldt Stores v. Schottenstein asserted that “the formal structure of the transaction alone cannot shield the LBO lenders or the controlling and inside shareholders from Wieboldt's fraudulent conveyance claim.” Wieboldt Stores v. Schottenstein , 94 B.R. 488, 503 (N.D. Ill. 1988). 5 . There is another test as well, to determine whether the debtor intended or believed that it would incur subsequent debts beyond its ability to pay. In practice, however, this requires the court to determine the subjective state of mind of the participants at the time of the buyout, which is very
Journal of Applied Corporate Finance – Wiley
Published: Mar 1, 1993
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