Am Base did not seek to bring the Trust into the case or to sue the Trust.A little over three-and-a-half years then passed, during which time Am Base did not claim that the Trust was primarily responsible for the withholding taxes. Delaware Action On August 14, 2000, Am Base filed a two-count complaint against the Trust and the Trustee Defendants for declaratory and injunctive relief in the Delaware Chancery Court, contending that the potential withholding tax obligation that it had been apprised of fourteen years earlier was not its primary responsibility under the Assignment Agreement.In particular, Am Base alleged that, when the IRS dispute arose during the 1980s, the Trustee Defendantsapparently taking the position that Am Base was primarily responsible for the alleged withholding obligation, caused Am Base to effectively assume the costs and expenses of defending against the alleged withholding obligation without obtaining independent professional advice or guidance concerning whether the alleged withholding obligation was the primary obligation of Ambase, or the Trust, as successor to [City].
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Unfortunately for investors, North Star shareholders reportedly lost one-third of their original value of their investment overnight after the newly formed company Colony North Star became publicly listed under the symbol “CLNC.” Investors may not have understood the need to exit their position before the merger took place resulting in a much more volatile publicly traded company.
According to Central Trade & Transfer, a secondary market for non-traded REITs, shares of N1 Liquidating Trust were recently listed for just $.30/per share.
Schedule I listed among the liabilities assumed “any cost, expense or liability associated with any claim asserted against City with respect to any act or omission attributable to its operations or affairs which has not been discharged in full or adequately provided for.” In addition, Schedule I included, as a liability of the Trust, the costs and liabilities incurred in the defense of any litigation arising after September 25, 1985, in which City Investing was a defendant. During this time, American companies looking to raise money in the Eurobond market often formed a wholly-owned subsidiary in the Netherlands Antilles, which would issue debt securities in the Eurobond market that were guaranteed by the American parent corporation. The Netherlands Antilles subsidiary would then lend the Eurobond offering proceeds to the U. In 1974, City formed a wholly-owned subsidiary in the Netherlands Antilles. “The payment of principal and interest on these notes was unconditionally guaranteed by City.” Id. The IRS later extended that claim to the period covering tax years 1981 through 1985.
Tax liabilities were not expressly mentioned in Schedule I. Tax Dispute During the latter half of the 1970s, City sought access to the Eurobond market to obtain long-term financing at a fixed rate of interest and to reduce the amount of indebtedness it had borrowed from its American bankers under a revolving credit agreement. In 19, City raised $30 million and $50 million, respectively, from the Eurobond market through its Netherlands Antilles subsidiary. Furthermore, the notes provided that the issuer would indemnify the holders with respect to any American withholding taxes that might be imposed. City's Netherlands Antilles subsidiary immediately lent the proceeds from the Eurobond offering to City. The amount of the withholding at issue was almost $21 million.
Bolden, Wiggin & Dana, LLP, New Haven, CT, Philip Halpern, Collier, Halpern, Newberg, Nolletti & Bock, LLP, White Plains, NY, on the briefs), for Plaintiff-Appellant. Dodyk, Cravath, Swaine & Moore, New York, NY, for Defendants-Appellees. Am Base owned several operating subsidiaries, including the Home Insurance Company, and in the mid 1980s held assets in excess of $5 billion. City's shareholders were the beneficiaries of the Trust and received ownership units in it.