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Solv-Ex’s plan of reorganization was approved by both the
U.S. and Canadian bankruptcy courts in 1998, whereupon Solv-Ex
emerged from the joint bankruptcies and, thereafter, continued to
operate. Moreover, under the plan, Mr. Rendall received
5,728,767 shares of new Solv-Ex common stock in discharge of the
$2 million loan (plus interest). Because the number of shares
Mr. Rendall received was based upon the actual bid price for
Solv-Ex common stock on the date immediately prior to the date of
receipt (50 cents a share), those shares obviously had a value
greater than zero upon receipt by Mr. Rendall.
Lastly, Mr. Rendall testified at trial that the lawsuits
commenced in 1998 against Deutsche Bank and others, after Solv-
Ex’s discharge from bankruptcy, entailed the potential recovery
of $100 million for Solv-Ex.
Although the arrangements for commercializing the Ti02S
technology in Venezuela, Solv-Ex’s emergence from bankruptcy, the
conversion to common stock of the $2 million loan, and the suits
against Deutsche Bank and others all occurred in 1998, we may
“take cognizance of subsequent events in confirming whether a
debt becomes worthless in a particular year.” Crown v.
Commissioner, 77 T.C. 582, 600 (1981).
Petitioners have not persuaded us that the joint
bankruptcies were identifiable events demonstrating the
worthlessness of the $2 million loan as of December 31, 1997.
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