Laidlaw Transportation, Inc. And Subsidiaries V. Commissioner Of Internal Revenue

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Laidlaw Transportation, Inc. and Subsidiaries v. Commissioner of Internal Revenue Facts Laidlaw Transportation, Inc., a holding company for school and passenger transportation businesses, was wholly owned by Laidlaw Transportation Ltd. They also owned other subsidiaries of Laidlaw Transportation, Inc., including Laidlaw Industries, Inc. and Laidlaw Waste Systems, Inc. The president and chairman of Laidlaw Transportation Ltd. was Michael DeGroote from the time of formation. He believed that the fastest way to expand was to buy small privately-held business. DeGroote was the chairman of all Laidlaw companies and those wholly owned by Laidlaw. Those petitioning received $975,153,806 from a subsidiary of Laidlaw Transportation, Inc. and…show more content…
Although there may have been foreign and partially independent directors, they were all subordinate to the president, DeGroote, and his management team. - It is required to give less impact and weight to Mixon factors relating to form and more to substance, based on the fact that the transactions were not made at arm’s length. - Non-exclusive Mixon factors that contributed to the decision: 1. Name given to certificates: Labels on documents conclude that the advances say they are debt, but labels alone cannot change equity to debt. This factor favors the advances treated as debt, but there is less weight to this factor because it is based on form rather than substance. 2. Presence or absence of a fixed maturity date: Although fixed maturity dates existed, postponing maturity suggests a lack of intent to require repayment. This factor supports the treatment of the advances as equity because the directors did not intend to request repayment and continually extended the maturity dates, never enforcing them. 3. Source of payments: The petitioners claim liquidity and the ability to pay interest or principal on amount owed, but conclusive findings show the insufficiency to pay interest or principal balance. This factor supports the treatment of the advances as equity. 4. Right to enforce payment of principal and interest: While they had the right to enforce, they did not

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