Recharacterization and the Nonhindrance of Creditors

Using a 1977 article by Robert Clark as the starting point, this article attempts to shed new light on the question of whether and when shareholder loans to her company should be either equitably subordinated or, as courts have done in a few recent cases, recharacterized as equity. In its emphasis on the particular issue of shareholder loans, the article has a narrower compass than Clark’s article, which uses a four-part typology to explore the relationship among fraudulent conveyance law, equitable subordination, veil piercing and dividend restrictions. But the article also expands Clark’s analysis in several respects. The most important adjustment involves the general Nonhindrance ideal, which we use to identify a crucially important form of interference with the rights of creditors that Clark does not himself consider directly. Part 1 of the article very briefly describes the 1939 Supreme Court case that served as a well-spring for equitable subordination doctrine in general, and for subordination of shareholder loans in particular. Part 2 then focuses on a series of recent decisions that have wrestled with the question whether shareholder loans should be recharacterized as equity contributions. Recharacterization doctrine is closely related to equitable subordination, but most courts view it as a separate development. Part 2 suggests that much of the confusion in the cases could be eliminated by disentangling two issues, whether the status of a loan is ambiguous (which raises issues of Truth, in terms of Clark’s typology) and whether it was likely to destroy value that would otherwise go to creditors (the Nonhindrance concern); and by distinguishing bankruptcy recharacterization from the tax characterization cases that seem to have spawned the new doctrine. Part 3 then concludes by briefly considering the German and Austrian approaches to these same issues, which focus on capitalization and creditworthiness. The most important, and initially counterintuitive, implication comes in Part 2: whereas US courts have treated security interests as a badge of legitimacy in assessing shareholder loans, secured loans are actually the most worrisome form of shareholder investment. These security interests, we argue, should be disallowed

Recharacterization and the Nonhindrance of Creditors

Using a 1977 article by Robert Clark as the starting point, this article attempts to shed new light on the question of whether and when shareholder loans to her company should be either equitably subordinated or, as courts have done in a few recent cases, recharacterized as equity. In its emphasis on the particular issue of shareholder loans, the article has a narrower compass than Clark’s article, which uses a four-part typology to explore the relationship among fraudulent conveyance law, equitable subordination, veil piercing and dividend restrictions. But the article also expands Clark’s analysis in several respects. The most important adjustment involves the general Nonhindrance ideal, which we use to identify a crucially important form of interference with the rights of creditors that Clark does not himself consider directly. Part 1 of the article very briefly describes the 1939 Supreme Court case that served as a well-spring for equitable subordination doctrine in general, and for subordination of shareholder loans in particular. Part 2 then focuses on a series of recent decisions that have wrestled with the question whether shareholder loans should be recharacterized as equity contributions. Recharacterization doctrine is closely related to equitable subordination, but most courts view it as a separate development. Part 2 suggests that much of the confusion in the cases could be eliminated by disentangling two issues, whether the status of a loan is ambiguous (which raises issues of Truth, in terms of Clark’s typology) and whether it was likely to destroy value that would otherwise go to creditors (the Nonhindrance concern); and by distinguishing bankruptcy recharacterization from the tax characterization cases that seem to have spawned the new doctrine. Part 3 then concludes by briefly considering the German and Austrian approaches to these same issues, which focus on capitalization and creditworthiness. The most important, and initially counterintuitive, implication comes in Part 2: whereas US courts have treated security interests as a badge of legitimacy in assessing shareholder loans, secured loans are actually the most worrisome form of shareholder investment. These security interests, we argue, should be disallowed

Epistomatal Wax Injury to Red Spruce Needles (Picea rubens Sarg.) Grown in Elevated Levels of Ozone and Acidified Rain

Red spruce seedlings (Picea rubens Sarg.) were exposed to charcoal-filtered air, at 0.07 ppm or 0.15 ppm ozone (O3), alone or in combination with pH 4.2 or pH 3.0 acidified rain, and examined with scanning electron microscopy (SEM) to determine if epistomatal wax fine structure was affected. Acidified rain in combination with 0.15 ppm O3 produced changes in wax tubule morphology. Changes were moderate at pH 4.2 and severe at pH 3.0. Needles collected from Whiteface Mountain, New York, displayed injured epistomatal wax structure similar to that observed on needles exposed in the laboratory to 0.15 ppm O3 plus pH 3.0 acidified rain

Out of the Vault: Developing a Wikipedia Edit-a-thon to Enhance Public Programming for University Archives and Special Collections

Academic libraries are more cognizant of their public program offerings than ever before. How does this shift impact the university archives and special collections? How does this area of the academic library meet the challenge of public programming that engages their users with their core missions? At Eastern Washington University (EWU), a regional comprehensive university, library and archives staff collaborated to develop a Wikipedia edit-a-thon that would provide an opportunity for undergraduate students to 1) expose them to archival materials, and 2) provide them with experience in collaborative knowledge creation. This article reviews the literature on the use of the Wikipedia platform and edit-a-thon events by cultural heritage institutions (libraries, archives, and museums), as well as the literature on public programming for archives and special collections. It details the steps taken to organize the event held at EWU, and reflects on the implications of this type of outreach and public programming event for archives and special collections in academic libraries

Instructional expenditures in Illinois high school districts and the relationship to student achievement during NCLB

A democratic society is dependent on a quality public education system (Alexander & Alexander, 2011). The disparity in expenditures between school districts in Illinois has fueled political and public debate related to the equitable, adequate, and efficient access to resources in order to educate students. Recent legislation has been introduced to reallocate state provided funds from districts with large property tax wealth as defined by their Equalized Assessed Valuation (EAV) to districts with less property tax wealth. In contemplating this change, it is imperative that the relationship of school expenditures to student achievement be considered given the wide range of per pupil expenditures in high schools and academic achievement that exists throughout the state. This study examined if a relationship existed between specific school budget categories related to per pupil expenditures and achievement for all Illinois high school districts as indicated on the Illinois School Report Card in the first and final year of NCLB. Achievement was measured by average ACT score. A significant relationship between student achievement and educational resources was observed, as well as for students identified as low-income. The linkage between student achievement, property values, and educational resources in Illinois was also confirmed. Unique to this study was the addition of the Gini Coefficient analysis to determine if the wealth of school districts was equitably distributed throughout the 96 school districts. The findings indicating the distribution of wealth is not equitable, confirming the need for a school funding structure that does not rely upon property wealth. The findings of this study also suggest school finance policies in Illinois have continued to advantage some districts while disadvantaging others. Specifically, those advantages and disadvantages continue to impact those students who are economically disadvantaged the most

Thirty years of SN 1980K: Evidence for light echoes

We report optical and mid-infrared photometry of SN 1980K between 2004 and 2010, which show slow monotonic fading consistent with previous spectroscopic and photometric observations made 8 to 17 years after outburst. The slow rate-of-change over two decades suggests that this evolution may result from scattered and thermal light echoes off of extended circumstellar material. We present a semi- analytic dust radiative-transfer model that uses an empirically corrected effective optical depth to provide a fast and robust alternative to full Monte-Carlo radiative transfer modeling for homogenous dust at low to intermediate optical depths. We find that unresolved echoes from a thin circumstellar shell 14-15 lt-yr from the progenitor, and containing about 0.02 Msun of carbon-rich dust, can explain the broadband spectral and temporal evolution. The size, mass and dust composition are in good agreement with the contact discontinuity observed in scattered echoes around SN 1987A. The origin of slowly-changing high-velocity [O I] and Halpha lines is also considered. We propose an origin in shocked high-velocity metal-rich clumps of ejecta, rather than arising in the impact of ejecta on slowly-moving circumstellar material, as is the case with hot spots in SN 1987A.Comment: Accepted 2/14/12 to be published in ApJ. 15 pages, 10 figure