- 5 -
On January 5, February 5, and May 30, 1990, petitioner used
his personal credit cards to obtain cash advances on WIS’s behalf
totaling $19,500. On August 24, petitioner deposited a personal
check in the amount of $15,000 into WIS’s account at Palmetto
Federal. The deposit slip identifies the amount as “Loan”.
At some point in 1991, WIS filed a petition for
reorganization under chapter 11 of the Bankruptcy Code.
Petitioner continued to operate the corporation in bankruptcy
while it endeavored to pay its debts. By the end of the year
petitioner had formulated a plan of reorganization (the business
reincorporation transaction). The insurance investigation
business would be continued through a newly formed entity called
Southeast Professional Services, Inc. (SPS), and the security
services business discontinued. WIS would transfer assets to SPS
to provide the new company’s initial capital and would also lease
to SPS its equipment and furniture. As an inducement to help him
manage the business, petitioner would share ownership of SPS with
two associates named Lewis and Tate. Each would hold an equal
one-third share of SPS’s newly issued stock, but only petitioner
among the three holders would be responsible for an initial
contribution of property, which would be supplied by WIS.3
3 Petitioner’s uncorroborated testimony is the source of
most of the evidence in the record concerning the terms of the
business reincorporation transaction outlined above. Under the
Bankruptcy Code, in general any transfer of an interest in
property of the bankruptcy estate after the filing of the
(continued...)
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