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position confirms our understanding of the value of the Carolco
securities on December 11, 1996.
Petitioner nonetheless claims that there was some chance of
recovery on that date, and that the Carolco securities had value.
Petitioner first contends that the holders of the Carolco
securities had the right to object to confirmation of the plan of
reorganization on any grounds that might cause it not to be
confirmed. See 11 U.S.C. sec. 1128(b) (2000) (a party in
interest may object to confirmation of a plan of reorganization).
According to petitioner, “An objection could be made on ‘any
ground,’ and it is possible that a creditor or interest holder
could negotiate a better return or distribution from the plan in
return for dropping its objection, even if it were a nuisance
settlement.” Petitioner’s assertions appear to be nothing more
than speculation. We cannot agree that SMHC’s right to object to
any plan of reorganization necessarily equates with some element
of “real value” in the Carolco securities.
Petitioner also points to a report from Harch Capital
Management, Inc. (Harch Capital), dated December 3, 1996, which
concluded that the Carolco subordinated notes could have a value
between $4 million and $6 million, and the Carolco preferred
159(...continued)
Schedule L. On SMHC’s corporate income tax return for the year
ended Dec. 31, 1998, the Carolco securities are shown in both the
beginning and ending balance columns of Schedule L.
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