- 28 -
possibility, petitioner was seriously concerned about the effect
that this development would have on its reputation among owners
and potential owners of Foretravel coaches. Petitioner's
original acquisition of 51 percent of the stock of Northwest from
Fishfader was made in order to keep Northwest in existence. The
51-percent ownership was not intended to be permanent; it was
expected that the stock would be sold to Nicholson and that
petitioner would be out of the picture in terms of stock
ownership. As the facts set forth above indicate, this did not
happen. In fact, the situation went the other way, and Nicholson
began to develop financial problems. Petitioner's officers
believed in their best business judgment that petitioner should
advance cash to Northwest to help Northwest stay viable. As the
situation developed, matters went from bad to worse, all as
outlined above. Petitioner continued to respond to each new
crisis with more cash for the reasons already set forth.
Petitioner got into the Northwest situation deeper and deeper as
problems developed. Petitioner argues that the advances made
were for the purpose of bailing out and salvaging Northwest, all
for the business purposes and best interests of petitioner.
Petitioner also argues that the amounts advanced to Northwest
should be deductible either as bad debts or as uncollectible
accounts receivable, or some combination thereof, without regard
to the usual criteria for creating a debt.
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011