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continuing challenge as to whether acceptable workout
arrangements could be made with these creditors. By
the end of the summer of 1991 at about the time of the
* * * discharge of indebtedness there was a real
possibility that SLC and/or the guarantors would file
for bankruptcy protection or that creditors would file
for them. * * * [Emphasis added.]
Petitioners support that proposed finding of fact with the
testimony of Robert Kennedy, an attorney who represented SLC in a
general business capacity and who represented David Hepburn and
Dudley Merkel in connection with certain guarantees of
obligations of SLC. Based, in part, on his memory that SLC,
David Hepburn, and Dudley Merkel owed a substantial amount (“I
think it was $800,000”), he testified that there was “a real
possibility that they could file bankruptcy at that time [by the
end of the summer of 1991]”. Petitioners also point to the
testimony of David Hepburn, who testified that, by the end of the
summer of 1991, the possibility of bankruptcy for SLC or
petitioners was not “insignificant”. Petitioners imply that the
State tax assessment was a significant factor giving rise to the
possibility of bankruptcy.
The uncertain variable on the measurement date was the
probability of a bankruptcy event; the bankruptcy of either SLC
or petitioners (or certain others) was a condition precedent to
any demand for payment by the bank. None of the petitioners,
however, provided sufficient details of their personal financial
situations from which we could draw a conclusion as to the
likelihood on the measurement date of a bankruptcy event.
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