In Uncategorized on 11/06/2017 at 16:50

The late Billy Hawk and the Hawklings have furnished me with blogfodder for more than five (count ‘em, five) years.

So it is with a heavy heart that I bid farewell to Billy F. Hawk, Jr., GST Non-Exempt Marital Trust, Trustee, Transferee, Nancy Sue Hawk and Regions Bank, Co-Trustees, et al., 2017 T. C. Memo. 217, filed 11/6/17, as Judge Goeke finds the TN Uniform Fraudulent Transfers Act (TUFTA) blows away the Hawks’ Midco deal with MidCoast, of infamous memory.

The late Billy Hawk, you remember, was a bowling alley operator while he lived, but Nancy Sue wanted no part of the operation. The Hawklings were squabbling, so at the behest of bowling alley broker Hansell (I said five years ago ya couldn’t make this up), who got a commission from MidCoast for finding these guys, the Hawklings did the roundy-round with a MidCoast sub.

The basis for the case can be found in my blogpost “Game Ends in No Score,” 5/30/12. Did MidCoast get a real loan to buy the stock in the Hawk Corp, or did they really just use the Hawk Corp’s cash from the sale of the bowling alleys to pay the Hawklings and skim some vigorish for themselves?

Well, Judge Goeke finds the “loan” from an offshore was an in-and-out (funded and paid out same day), the Hawk Corp cash wasn’t really segregated, the MidCoast DKK/USD digital option mix-and-match didn’t really generate an offsetting lost and Hawk Corp did no business after the asset sale.

Judge Goeke romps through TN law on economic substance (no law, but no substance either), collapsing transactions, and TUFTA. And the Hawklings get the worst of it on all fronts.

Nancy Sue gets spared prenotice interest under TN law, as she’s an innocent, but Judge Goeke has to hit her with postnotice.

And Nancy Sue is admittedly not a tax expert, but her advisers fell well short of the diligence of the Alterman crew (as to whom see my blogpost “It’s Not Fraud,” 12/1/15). So she gets the chops.


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