- 24 -
same time, which did not happen as evidenced by the few
debentures still unaccounted for. We disagree. All that was
required in order for the converted debentures to be redeemable
was that all the outstanding debentures be called for redemption
at the same time, a requirement that was satisfied. In this
connection, we note the debentures ceased to accrue interest as
of the redemption date. The fact that some holders, for reasons
of their own and over whom neither Metals nor RMECC had any
control, did not seek to be paid or to exchange their debentures
is and should be irrelevant. A contrary conclusion would produce
a totally unworkable situation.
In sum, we hold that the converted debentures survived as
obligations of RMECC. This being the case, we must now determine
the extent of the loss, if any, to Metals upon their subsequent
redemption by RMECC.
Did Metals have a capital loss upon the redemption of the
debentures?
Resolution of this question involves a determination of
Metals' basis in the debentures and whether there was an excess
of that basis over the principal amount of the debentures
received by Metals upon the redemption of RMECC which constitutes
a deductible capital loss. We turn first to the question of
basis.
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011