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17 Bull. Sec. Corp. Banking & Bus. L. 1 (1979-1980)

handle is hein.journals/txjbus17 and id is 1 raw text is: K...BUO IJLEETIN .. OF THE SECTION ON CORPORATION, BANKING & BUSINESS LAW Vol. 17 September, 1979 No. 1 Of Current Interest ... Section Dues: Please pay your 1979-80 Section dues as soon as pos- sible. A notice already should have been received by you. If you are aware of any attorneys who have not become and should be members of our Section or who may have failed to renew their membership in the Section, for your con- venience, a Membership Application is included on the last page of the Bulletin. It would be of great assistance to the Section if members would encourage their associates who practice in the areas of the Section's interest to become members and participate on one of the Section's Committees. The Council Poli- cies Governing Committees of the Sec- tion are reproduced in this issue at page 3. Bankruptcy Institute Series will be held around the state during the coming months concerning the new bankruptcy code. Currently scheduled are institutes in Corpus Christi, December 6, 1979; San Antonio, December 7, 1979; Tyler, December 13, 1979; Midland, December 14, 1979; McAllen, February 8, 1980; Houston, March 7, 1980; Fort Worth, March 27, 1980; and Dallas, March 28, 1980. Watch for notices in the Texas Bar Journal for details. The Bankruptcy Tax Act of 1979 (H.R. 5043) was introduced on August 1, 1979. This bill amends the Internal Revenue Code and the Bankruptcy Code and was designed to become effective for transactions in bankruptcy proceed- ings begun after October 1, 1979 (the effective date of the Bankruptcy Code). The Bankruptcy Tax Act also was intended to become effective as to nonbankruptcy receivership or foreclosure transactions after September 30, 1979. It is important to consider that the Bankruptcy Tax Act proposes signifi- cant amendments to corporate reor- ganization provisions relating to tax-free reorganizations pursuant to TT 371-374 of the Internal Revenue Code. Actually, substantial tax revision is disguised in the title The Bankruptcy Tax Act of 1979. Tax treatment of debt discharged in bankruptcy and nonbankruptcy cases is affected. Under most circumstances the amount of gross income that would ordinarily be realized from debt dis- charge is applied to reduce a debtor's tax attributes. A schedule of attuibute credits is set forth. A reduction of tax attributes would first be applicable to the net operating loss and eventually reduc- tion would apply to the basis in the debtor's assets, with a proviso that such basis would not be reduced below remaining undischarged liabilities. If a taxpayer-debtor is solvent, however, reduction in net operating loss must first occur rather than a voluntary election in the debtor's behalf to reduce basis in assets. Transactions involving the swap- ping of stock for debt are materially affected. Special limitations on loss car- ryovers are proposed. Rules concerning the obligation of a bankruptcy trustee to file tax returns in behalf of an individual debtor are suggested. A number of amendments of a technical nature are also proposed. In brief, the Bankruptcy Tax Act of 1979 has an important impact on business transactions whether in a bankruptcy or nonbankruptcy context. Hearings were held on September 27, 1979 before the Subcommittee on Select Revenue Measures of the House Com- mittee on Ways and Means. Attorneys: The SEC Giveth and the SEC Taketh Away. In Release No. 34-16045, the Securities and Exchange Commission has requested public com- ment on proposed disclosure rules relat- ing to the relationship between an issuer and its counsel, particularly disclosure about a resignation or dismissal of an issuer's securities or general counsel. The Commission apparently does not feel that it is on sound legal footing, however, as it has also requested com- ment on the Commission's legal authority to adopt rules in this area. See CCH Fed. Sec. L. Rep. ¶ 82,144. In another action, two lawyers were suspended from appearing and practicing before the Commission due to their failure to insure that adequate disclosures were made by their corporate client in filings with the SEC, in press releases, and in letters to shareholders. In Administrative Procedure File No. 3-5464, an Adminis- trative Law Judge determined that once the attorneys became aware of manage- ments' disregard for complying with securities regulations and indifference to the attorneys' advice, they should have taken some additional action to prevent continued violations of the securities laws, and the failure to do so represented unethical and improper con- duct. For those attorneys regularly involved in representing clients before the Commission, or in connection with their filings with the Commission, a read- ing of In re Carter is strongly recom- mended. See CCH Fed. Sec. L. Rep. 1 82,175. Rule 144 and Resales of Restricted Securities Revisited. On August 2, 1979, the Securities and Exchange Commission published Release No. 33-6099, an interpretation of Rules 144, 145(d), 148 and 237. Of primary interest to securities law practi- tioners will be the question and answer interpretations relating to Rule 144. Many of these interpretations represent a significant departure from past interpre- tive positions, or a liberalization and codification of other positions. See CCH Fed. Sec. L. Rep. 1 2,787. Projections are the subject of a recent SEC safe-harbour rule. Forward- looking statements made in documents filed with the SEC or in annual reports to stockholders after July 30, 1979 con- cerning (i) projection of revenue, income, earnings per share, capital expenditures, dividends, capital structure, or other financial items, (ii) management's plans In This Issue Council Policies Governing Committees of the Section Recent Developments in Corporate, Partnership and Securities Law ......... Recent Developments in Banking Law .......... Recent Developments in Bankruptcy Law ......... page 3 page 5 page 15 page 20

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