Reorganization

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Reorganization

The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent.

Reorganization is ordinarily accomplished by way of a Judicial Sale of the property of the corporation. The purchasers then often form a new corporation to which substantially all assets of the old are transferred.

Cross-references

Bankruptcy.

reorganization

n. the implementation of a business plan to restructure a corporation, which may include transfers of stock between shareholders of two corporations in a merger. In bankruptcy, a corporation in deep financial trouble may be given time to reorganize while protected from creditors by the bankruptcy court. The theory is that if the business is able to get on its feet the creditors will eventually collect. (See: corporation, merger, bankruptcy)

References in periodicals archive ?
A few years and a corporate reorganization later, the stock is sold for $300 million.
The purpose of the COI requirement is to prevent transactions that resemble sales from qualifying for nonrecognition of gain or loss available in corporate reorganizations. Regs.
Additional Final Regulations: COI Requirement for Corporate Reorganizations
368(a)(1)(a) as a "statutory merger or consolidation," is the prototypical corporate reorganization. Tax advisers are familiar with subchapter C's operational rules that apply to a so-called "tax-free" Type A reorganization.
Thus, with the exception of the ongoing dispute between the IRS and the Tax Court involving acquisitions of commonly controlled corporations, prior to Clark the amount of dividend income for corporate reorganizations was routinely limited to the transferor's E&P.
Thus, is it reasonable that additional dividend income potential should be created merely because the shareholder is involved in a corporate reorganization? A shareholder who receives boot in a reorganization should not have to recognize a greater amount of dividend income than if the distribution had been made directly from the transferor to the shareholder in the ordinary course of business.
Since the Supreme Court's decision, there has been considerable concern that IRS personnel would interpret INDOPCO as requiring the capitalization of expenditures unrelated to corporate reorganizations that have customarily been regarded by taxpayers as currently deductible.
Under the mergers directive, the EC members intend that corporate reorganizations be tax free and any capital gains arising from specified transactions be deferred in a manner similar to the reorganization provisions in the U.S.
8 (2005) (Times Mirror), the Tax Court held that a corporate reorganization was not tax flee under Sec.
MNCs considering or planning a global corporate reorganization for tax efficiency or other purposes should look into the potential customs duty opportunities from implementing a "first sale" strategy, if appropriate.
The Service disagreed, claiming the fees were corporate reorganization costs that should have been capitalized because the S election produced benefits extending beyond the tax year.
The step-transaction doctrine has been applied in a variety of corporate reorganization contexts other than C reorganizations.

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