Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 8

                                        - 8 -                                         
                       MEMORANDUM FINDINGS OF FACT AND OPINION                        


               THORNTON, Judge:  These consolidated cases stem from                   
          transactions that occurred in the wake of the 1996 sale of the              
          legendary motion picture company Metro-Goldwyn-Mayer (MGM) by the           
          French banking giant Credit Lyonnais.                                       
               Peter Ackerman, his business partner Perry Lerner, and their           
          related entities (collectively, the Ackerman group) had helped              
          organize a consortium which made a bid to purchase MGM from                 
          Credit Lyonnais.  The consortium lost out to Kirk Kerkorian’s               
          winning bid.  The Ackerman group then set out to acquire MGM’s              
          parent company, Santa Monica Holdings Corp. (SMHC), which Credit            
          Lyonnais still owned.                                                       
               SMHC was largely devoid of assets; it owed about $1 billion            
          to Credit Lyonnais and its cluster of subsidiaries, adjuncts, and           
          associated companies (the Credit Lyonnais group).1  There were,             
          however, tantalizing tax attributes:  Credit Lyonnais’s purported           
          tax basis in the SMHC indebtedness was about $1 billion; its                
          purported tax basis in the SMHC stock was about $665 million.               


               1 This debt represented part of the approximately $2 billion           
          that the Credit Lyonnais group had previously lent or advanced to           
          MGM during its brief, unprofitable relationship with MGM, first             
          as lenders to MGM and then, after foreclosing, as owners of MGM.            
          Credit Lyonnais had transferred the approximately $1 billion of             
          debt from the MGM operating company to Santa Monica Holdings                
          Corp. (SMHC) (or more precisely to its predecessor, MGM Group               
          Holdings Corp.) partly to facilitate the 1996 sale of the MGM               
          operating company to Kirk Kerkorian.                                        




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011