Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to email@example.com and we will try to answer it.
Who can be liable for a chapter 11 debtor’s unpaid taxes?
One or more persons, including a fiduciary, may be subject to personal liability for a debtor’s unpaid federal, state and/or local tax liability. As David Alger explains in greater detail here, personal liability can arise from the application of:
(1) Federal or state corporate, LLC or partnership laws including insolvency distribution or payment laws, preference laws, fraudulent conveyance laws, business or reassignment or succession laws;
(2) Federal or state tax laws imposing responsible person, assignee, or successor liability;
(3) Federal or state debt (including tax debt) priority laws, such as the federal priority status, 31 U.S.C.A. § 3713; or
(4) A combination of these laws.
Note: This 90 Second Lesson is based, in substantial part, in material reprinted from Commercial Bankruptcy Litigation 2d and Strategic Alternatives for and Against Distressed Businesses, with permission of Thomson Reuters. For more information about these publications, please visit www.legalsolutions.com.
The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts and similar topics.
90 Second Lesson: What is an “Exchange Offer?”
90 Second Lesson: What is a “composition agreement?”
When Your Tenant Files for Bankruptcy
90 Second Lesson: I’ve been asked to sign an involuntary bankruptcy petition. Should I?
A Chapter 11 Debtor Need Not Be Broke
90 Second Lesson: How to assess whether a distressed business can be turned around?
Please log in again. The login page will open in a new window. After logging in you can close it and return to this page.
Our weekly newsletter, sent every Tuesday at 9am, includes: