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Abstract: 

The first three articles in this issue examine tax and contracting issues relevant to lenders generally and in the corporate acquisition context in particular. The issue’s next three pieces examine various insurance issues relevant to banks and other financial institutions. Our first article deals with the tax treatment of a partnership that is repaying its debt to a creditor by issuing the creditor an interest in the partnership. Kevin J. Feeley and Patrick J. McCurry review the Treasury Department’s November 2011 regulations on point and, importantly, note how creditors may benefit from these regulations—despite the fact that the rules seem to be borrower friendly. Our next two articles also deal with issues related to acquisitions that are important to lenders. In our second article, on commitment letters in acquisition transactions, Eric Goodison examines the areas in which buyers and lenders making commitment letters in such transactions may diverge in the risks they are willing to undertake. Next, Angela Fontana, Jared Rusman, Benton Lewis, and Tara Lancaster analyze the use of “freeze” transactions to reduce the tax burden associated with debt-financed private equity transactions. Rena Malik and Robert M. Rosh, in our fourth article, review the considerations that hedge funds managers and directors should take into account when purchasing Professional liability insurance. This article is followed by Paul R. Koepff and Ralph P. DeSanto’s examination of the law relating to insurance binders, which are used to provide temporary coverage in a wide variety of contexts, and are also accepted by lenders as evidence of insurance in certain closing transactions. Finally, we close this issue with a State and Local column; Roy E. Crawford focuses this time around on tax issues related to insurance topics, as well as several state tax authorities’ recent administrative pronouncements.

Keywords: debt-for-equity; acquisition transactions; professional liability insurance; insurance binders; “freeze” transactions

Affiliations:  1: New York Law School.