Liquidating trust agreement and indemnification
In September 2000, the Trust and the Trustees moved to dismiss the Delaware Action on the grounds that the causes of action alleged were time barred by the Delaware statute of limitations and that the complaint failed to state claims upon which relief could be granted. It is not within the scope of the agency that we took on.” Turning to the question of the timeliness of the Delaware Action, the Chancery Court stated: Giving Am Base all of its due, the claim began to run at least as early as the notice of deficiency, because if you don't act on the notice of deficiency by challenging it, it is going to be reduced to a judgment. On appeal, Am Base characterizes its indemnification claim as both an express indemnification claim and an implied indemnification claim.
In particular, Am Base alleged that, when the IRS dispute arose during the 1980s, the Trustee Defendantsapparently taking the position that Am Base was primarily responsible for the alleged withholding obligation, caused Am Base to effectively assume the costs and expenses of defending against the alleged withholding obligation without obtaining independent professional advice or guidance concerning whether the alleged withholding obligation was the primary obligation of Ambase, or the Trust, as successor to [City].
This is Am Base's second bite at the litigation apple, its first bite having been taken in an action filed in the Delaware Chancery Court, see Am Base Corp. And defendant-appellee Lester Mantell has served as a Trustee of the Trust since its creation, had been a senior City officer before the Am Base spin-off, and served in several officer positions (including Treasurer and Chief Financial Officer) at Am Base from prior to 1985 until December 1996.
The relevant detail of this transaction was that City distributed the outstanding shares of Am Base to City's common stockholders.
Among those liabilities were City's obligations for federal income taxes as the common parent of City's corporate affiliates.
In addition, Am Base assumed certain other liabilities and obligations of City, provided that Am Base would be only secondarily liable for the payment of those liabilities. At this time, “[t]he practice in the Eurobond market was for issuers of securities to provide indemnification for withholding taxes to foreign investors.” Id. In certain circumstances, the American parent company's payment of interest on its indebtedness to the Netherlands Antilles subsidiary would be exempt from American withholding taxes “by reason of the application of the U. In September 1985, City liquidated and dissolved its Netherlands Antilles subsidiary, and the remaining debt on the 1979 notes was “upstreamed” to City. In or about March 1986, the IRS issued a Revenue Agent's Report to City contending that City had failed properly to withhold taxes during tax years 19 for the interest payments it made to the foreign holders of the Eurobonds.