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Simple English definitions for legal terms

recharacterization

Read a random definition: tenantable repair

A quick definition of recharacterization:

Recharacterization is when a court decides that a loan from someone who is part of a company that is being liquidated should actually be considered a capital contribution. This means that the insider will only get part of the money left over after all the company's debts have been paid. The court looks at things like how much money was available at the beginning, if the company could have gotten loans from other sources, and how the loan was recorded in the company's records.

A more thorough explanation:

Definition: Recharacterization is a court's decision that an insider's loan to a business in liquidation should be treated as a capital contribution instead of a loan. This means that the insider will only receive a portion of the liquidation proceeds after all the business's debts have been paid off. The court considers factors such as the amount of initial capital, the entity's ability to obtain loans from outside sources, and past treatment of similar transactions by the insider.

Example: John is a shareholder in a company that is going through liquidation. He had given the company a loan of $100,000, which he expected to be repaid in full. However, the court recharacterized the loan as a capital contribution, meaning that John would only receive a portion of the liquidation proceeds after all the company's debts had been paid off. This decision was based on the fact that the company had little initial capital, had difficulty obtaining loans from outside sources, and had a history of receiving similar transactions from John.

This example illustrates how recharacterization can affect an insider's expectations of repayment and highlights the factors that a court considers when making this decision.

recessus maris | recidivate

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every damn opportunity
13:47
do schools straight reject people from ed or to they always ed-rd if its a no for ED?
HopefullyInLawSchool
13:48
Some schools rject
13:49
Thanks! I couldn't find any reddit thread about it lol
13:49
but just means now I have to wait for the rejection from Davis
glovediedthisishismom
13:53
i just wanna rock
glovediedthisishismom
13:53
bodyadaya
13:53
let it rock
14:17
How are the vibes heading into thanksgiving yall?
HopefullyInLawSchool
14:17
@Law-Guy Im feeling kinda happy I applied YM to UCI hoping it helps (:
Wanna give some head
soap
14:18
Cornell
14:19
@HopefullyinLawSchool What's YM?
14:19
oh no
HopefullyInLawSchool
14:19
you mom
WorthlessAttractiveZombie
14:19
Ouch
HopefullyInLawSchool
14:19
your*
14:19
I fear I realized too late
babycat
14:20
another victim claimed
concorde
14:22
pwned
14:22
Might have to send in addendums for that
Dkk
14:26
No wave, so sad.
WorthlessAttractiveZombie
14:28
What are the odds that berk releases later today?
babycat
14:28
@Dkk: And here I thought you were a prophet. Smh.
14:33
@WorthlessAttractiveZombie: 4
WorthlessAttractiveZombie
14:35
@EvolBunny: I will take the odds of 4, very promising
14:38
I'm too drunk to taste this chicken
Dkk
14:38
Lol, I suck I guess. @babycat
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