SCOTUS Reports

Tag: Shareholder Sale

  • Merkra Holding Co. v. Commissioner, 27 T.C. 82 (1956): Corporate Liquidation and Attribution of Sale to Shareholders

    27 T.C. 82 (1956)

    When a corporation distributes its assets to shareholders in liquidation, the gain from a subsequent sale of those assets is taxable to the shareholders, not the corporation, unless the corporation actively negotiated the sale before liquidation.

    Summary

    Merkra Holding Co. leased property with an option to purchase. Before the option was exercised, Merkra liquidated, distributing the property to its shareholders. The lessee then exercised the purchase option. The Commissioner sought to tax the gain from the sale to the corporation, arguing the shareholders were merely a conduit. The Tax Court held that the gain was taxable to the shareholders, as Merkra did not negotiate the sale before liquidation. The court distinguished this from cases where the corporation conducted sales negotiations before liquidation. The timing of the liquidation to take advantage of the tax laws did not change the holding.

    Facts

    Merkra Holding Co. (Merkra) owned a parcel of land. In 1929, Merkra leased the parcel to Marex Realty Corporation (Marex) for 21 years, with renewal options and an option for Marex to purchase the property for $1,000,000 before January 31, 1951. In May 1950, Merkra learned that Marex was considering exercising the purchase option. Merkra’s stockholders and directors then decided to liquidate Merkra and distribute its assets to the stockholders. On January 30, 1951, Marex exercised the purchase option. The Commissioner of Internal Revenue determined a tax deficiency against Merkra for the gain on the sale, arguing that the sale was made by the corporation.

    Procedural History

    The Commissioner assessed a deficiency against Merkra. Merkra and its shareholders (as transferees) contested this in the United States Tax Court. The Tax Court consolidated the cases and ruled in favor of the taxpayers, holding that the gain was taxable to the shareholders, not the corporation. The Court’s ruling allowed for the use of a Rule 50 computation.

    Issue(s)

    1. Whether the gain on the sale of real property after corporate liquidation and distribution of the property to shareholders is taxable to the corporation or the shareholders when the sale was pursuant to an option to purchase that was included in the original lease.

    Holding

    1. No, because the corporation did not negotiate the sale before liquidation, the sale was considered to be made by the shareholders.

    Court’s Reasoning

    The court applied the principle established in Commissioner v. Court Holding Co., 324 U.S. 331 (1945), which stated that a sale negotiated by a corporation, but consummated by its shareholders after liquidation, could be attributed to the corporation for tax purposes. The court distinguished Court Holding Co. from the current case. The court emphasized that for a sale to be attributed to the corporation, the corporation must have engaged in sale negotiations. In this case, the option to purchase was part of the lease agreement, and the court found that this did not constitute negotiations by Merkra to sell the property. Furthermore, Merkra did not conduct any negotiations for the sale of the property before its liquidation.

    Practical Implications

    This case emphasizes the importance of carefully structuring corporate liquidations, especially when an asset sale is anticipated. To avoid the corporation being taxed on the gain, the corporation itself cannot engage in the sale negotiations. The shareholders can take over the sale after the liquidation is complete, but there must be a break between the corporate activity and the shareholder’s action, and the corporation’s action prior to the sale must not constitute “negotiations” for the sale. Also, the fact that a corporation planned its liquidation in the midst of knowing the option would be used and with the goal of lowering its tax burden does not change the result where the corporation did not partake in the sale negotiations.

  • United States v. Cumberland Public Service Co., 338 U.S. 451 (1950): Corporate Liquidation vs. Corporate Sale

    338 U.S. 451 (1950)

    A corporation is not taxed on a sale of assets by its shareholders after a genuine liquidation, even if a major motivation for the liquidation was to avoid corporate-level tax on the sale.

    Summary

    Cumberland Public Service Co. involved a dispute over whether a sale of assets was made by the corporation (taxable) or by its shareholders after liquidation (not taxable at the corporate level). The Supreme Court held that because the shareholders genuinely negotiated and completed the sale after a bona fide liquidation, the sale was attributed to them, not the corporation. The key factor was that the corporation itself did not participate in negotiations or agreements before liquidation. This case distinguishes itself from *Commissioner v. Court Holding Co.*, which involved a corporation that had essentially completed a sale before liquidation.

    Facts

    The shareholders of Cumberland Public Service Co. wanted to sell certain assets. The potential buyer initially wanted to purchase the stock, but the shareholders refused. The buyer then offered to purchase the assets directly from the shareholders after a corporate liquidation. The corporation then liquidated, distributing the assets to its shareholders, who subsequently sold the assets to the buyer.

    Procedural History

    The Commissioner of Internal Revenue argued that the sale was in substance a sale by the corporation, and thus taxable to the corporation. The Tax Court ruled in favor of the taxpayer (Cumberland Public Service Co.), finding that the sale was made by the shareholders after liquidation. The Court of Appeals affirmed. The Supreme Court granted certiorari and affirmed the Court of Appeals’ decision.

    Issue(s)

    Whether the sale of assets was in substance a sale by the corporation, thus taxable to the corporation, or a sale by the shareholders after a genuine liquidation, and thus not taxable to the corporation?

    Holding

    No, because the sale was made by the shareholders after a genuine liquidation, and the corporation did not participate in the sale negotiations before liquidation.

    Court’s Reasoning

    The Supreme Court emphasized that the question of whether a sale is attributable to the corporation or the shareholders is a question of fact. The Court distinguished this case from *Commissioner v. Court Holding Co.*, where the corporation had negotiated and substantially completed the sale before liquidation. Here, the corporation refused to sell the assets initially. The shareholders negotiated the sale terms and only then liquidated the corporation. The Court stated, “The Court Holding Co. case does not mean that a corporation can be taxed even when the sale has been made by its stockholders following a genuine liquidation and dissolution.” The critical factor was that the corporation never agreed to the sale before liquidation. The Court deferred to the Tax Court’s finding that the shareholders, not the corporation, conducted the sale.

    Practical Implications

    This case provides a roadmap for structuring corporate liquidations to avoid corporate-level tax on asset sales. It emphasizes the importance of ensuring that the corporation does not engage in significant sale negotiations or agreements before liquidation. It highlights the factual nature of these inquiries and gives significant deference to the Tax Court’s factual findings. Attorneys advising on corporate liquidations must carefully document the sequence of events and ensure that the shareholders, not the corporation, are the true sellers of the assets following liquidation. Subsequent cases distinguish *Cumberland* when the corporation is too involved in pre-liquidation sale activities. The case clarifies that tax avoidance, in itself, does not invalidate a transaction if the proper legal form is followed.

  • Doyle Hosiery Corp. v. Commissioner, 17 T.C. 641 (1951): Corporate vs. Shareholder Sale After Liquidation

    17 T.C. 641 (1951)

    A sale of assets negotiated and consummated wholly by the stockholders of a corporation after a genuine liquidation cannot be imputed to the corporation for tax purposes.

    Summary

    Doyle Hosiery Corporation liquidated and distributed its assets to its shareholders, who then sold those assets to a third party. The Commissioner of Internal Revenue argued that the sale was effectively made by the corporation before liquidation, making the corporation liable for capital gains taxes. The Tax Court, however, found that the sale was negotiated and completed by the shareholders after a genuine liquidation, following United States v. Cumberland Public Service Co., and thus the corporation was not liable for the tax. This case clarifies the distinction between corporate sales and shareholder sales after liquidation for tax purposes.

    Facts

    Doyle Hosiery Corporation (Hosiery) was owned entirely by John J. Doyle, his wife, and daughter. Early in May 1945, a broker inquired about purchasing Hosiery’s plant. Doyle initially considered selling the Hosiery stock. On June 7, Doyle sought legal advice on the tax consequences of selling the business. After being advised to liquidate Hosiery, Doyle indicated to Miller Hosiery Co. (Miller) that he would sell the assets after liquidation. On June 18, 1945, the corporation adopted a resolution to dissolve, and its assets were distributed to the shareholders in complete liquidation.

    Procedural History

    The Commissioner determined deficiencies against Doyle Hosiery Corporation, arguing that the sale of assets was made by the corporation, resulting in a capital gain. John J. Doyle also faced a deficiency assessment related to his individual income tax. The cases were consolidated in the Tax Court. The Tax Court ruled in favor of the petitioners, holding that the sale was made by the shareholders after liquidation, not by the corporation.

    Issue(s)

    Whether the sale of land, buildings, and machinery should be attributed to Doyle Hosiery Corporation, resulting in a capital gain to the corporation, or whether the sale was made by the former stockholders following a complete liquidation of the corporation.

    Holding

    No, the sale is not attributed to the corporation because the sale was negotiated and consummated by the stockholders after a genuine liquidation of the corporation. The Court distinguished this case from Commissioner v. Court Holding Co., finding it more aligned with United States v. Cumberland Public Service Co.

    Court’s Reasoning

    The Court emphasized that the key factual determination is whether the corporation actively participated in the sale before liquidation. The Court found that “prior to the adoption of the resolution to dissolve the Doyle Hosiery Corporation and the distribution of its assets to its stockholders, in liquidation, on June 18, 1945, that corporation did not consider, authorize, negotiate, or enter into any agreement for a sale of its assets.” The Court distinguished this case from Commissioner v. Court Holding Co., where the corporation had already negotiated a sale before liquidation. The Court relied on United States v. Cumberland Public Service Co., which held that a corporation is not taxed when the sale is made by its stockholders after a genuine liquidation and dissolution. Judge Turner dissented, arguing that the stockholders were merely engaging in “carefully clocked ritualistic formalities” and that the sale was, in substance, made by the corporation.

    Practical Implications

    This case provides a clear example of how to structure a corporate liquidation and subsequent sale of assets to avoid corporate-level capital gains tax. It highlights the importance of ensuring that the corporation does not actively negotiate or agree to a sale before the liquidation process is complete. Legal practitioners should advise clients to meticulously document the liquidation process and ensure that all negotiations and agreements are conducted by the shareholders in their individual capacities after the liquidation. This case is frequently cited in cases involving similar liquidations and sales, emphasizing the factual nature of the inquiry and the need to distinguish the circumstances from those in Court Holding Co.

  • West Coast Securities Co. v. Commissioner, 14 T.C. 947 (1950): Corporate Tax Liability After Liquidation and Asset Distribution

    14 T.C. 947 (1950)

    A corporation is not taxed on the sale of assets distributed to its shareholders in liquidation if the shareholders genuinely negotiate and execute the sale independently, and the corporation does not control the proceeds.

    Summary

    West Coast Securities Co. distributed stock to its shareholders during liquidation. The shareholders then sold the stock to pay off corporate debts secured by the stock. West Coast also settled notes receivable at a discount to generate cash. The Tax Court addressed whether the stock sale was taxable to the corporation and whether the note settlement resulted in a deductible loss. The court held the stock sale was taxable to the shareholders, not the corporation, and the corporation could deduct the loss from the note settlement as a business loss.

    Facts

    West Coast Securities Co. was dissolving and distributed 47,000 shares of Transamerica stock to its shareholders. The stock was pledged as collateral for West Coast’s debts to Transamerica and Bank of America. The shareholders then sold the stock to Transamerica, with the proceeds going directly to pay off West Coast’s debts. West Coast also held two promissory notes from J.L. Stewart, secured by second mortgages. To generate cash for liquidation, West Coast settled the notes with Stewart for 60% of their face value after failing to find a third-party buyer. The company sought to deduct the loss from this settlement.

    Procedural History

    The Commissioner of Internal Revenue determined deficiencies in West Coast’s income tax, arguing the stock sale was taxable to the corporation and disallowing the bad debt deduction. West Coast appealed to the Tax Court. The Tax Court consolidated the proceedings involving transferee liability asserted against individual shareholders.

    Issue(s)

    1. Whether West Coast realized taxable income from the sale of Transamerica stock after distributing the stock to its shareholders in liquidation.
    2. Whether West Coast was entitled to a bad debt, capital loss, or ordinary loss deduction for the compromise settlement of the notes.

    Holding

    1. No, because the sale was made by the shareholders, who independently negotiated and executed the sale after the stock was distributed to them.
    2. Yes, because West Coast is entitled to a deduction for a business loss under Section 23(f) of the Internal Revenue Code arising from the compromise settlement.

    Court’s Reasoning

    Regarding the stock sale, the court distinguished Commissioner v. Court Holding Co., 324 U.S. 331 (1945), emphasizing that the shareholders, not the corporation, conducted the sale. The court noted that West Coast did not participate in negotiations, and the shareholders acted independently. The court stated that “sales of physical properties by shareholders following a genuine liquidation distribution cannot be attributed to the corporation for tax purposes.” The court found a “striking absence” of facts suggesting corporate control over the sale. The court emphasized that the shareholders received a bill of sale transferring title to them. “In substance, what the stockholders did was to sell the stock to Transamerica and direct that the proceeds be applied directly to the obligations of the petitioner… for which the stockholders as transferees were liable.”

    Regarding the note settlement, the court held that the loss was deductible as a business loss under Section 23(f), not as a bad debt. The court distinguished Spring City Foundry Co. v. Commissioner, 292 U.S. 182 (1934). The compromise did not stem from a determination of worthlessness, but as a necessary incident of the liquidation. The notes had not matured, and the settlement extinguished all obligations. “By the same token, it is our opinion petitioner has suffered a bona fide loss in the amount of $43,577.50 in its transaction with Stewart. As we have pointed out, the dealings were at arm’s length and genuine.”

    Practical Implications

    This case clarifies the circumstances under which a corporation can avoid tax liability on the sale of assets during liquidation. It reinforces that a genuine distribution to shareholders followed by independent shareholder action insulates the corporation from tax. Attorneys advising corporations undergoing liquidation should ensure that shareholders have real control over asset sales and that the corporation avoids direct involvement in negotiations. The case also illustrates that losses from debt settlements during liquidation can be deducted as business losses if the compromise is part of the liquidation plan and not solely based on collectibility.

  • Howell Turpentine Co. v. Commissioner, 162 F.2d 319 (5th Cir. 1947): Tax Consequences of Corporate Liquidation Sales

    Howell Turpentine Co. v. Commissioner, 162 F.2d 319 (5th Cir. 1947)

    A corporation can avoid tax liability on the sale of its assets if it distributes those assets to its shareholders in a genuine liquidation, and the shareholders, acting independently, subsequently sell the assets, even if the corporation had considered selling the assets itself.

    Summary

    Howell Turpentine Co. dissolved and distributed its assets to its shareholders, who then sold the assets. The Commissioner argued the sale was effectively made by the corporation and thus taxable to it. The Fifth Circuit held that because the corporation demonstrably ceased its own sales efforts and the shareholders negotiated the sale independently after receiving the assets in liquidation, the sale was attributable to the shareholders, not the corporation, thus avoiding corporate-level tax. The key was that the corporation demonstrably ceased its own sales efforts and the shareholders negotiated the sale independently after receiving the assets in liquidation.

    Facts

    Howell Turpentine Co. considered dissolving as early as 1939. In 1941, the president recommended dissolution when the assets reached a value allowing shareholders to recoup their investments. Prior to formal dissolution, there were some preliminary, unsatisfactory sales negotiations. After adopting resolutions to dissolve, the corporation ceased sales efforts, referring inquiries to a major stockholder (Burch). Burch then negotiated a sale with a buyer independently from the corporation.

    Procedural History

    The Commissioner determined a deficiency, arguing the sale was attributable to the corporation. The Tax Court initially ruled in favor of the Commissioner. The Fifth Circuit reversed, holding that the sale was made by the shareholders and not the corporation. This case represents the Fifth Circuit’s review and reversal of the Tax Court’s initial determination.

    Issue(s)

    1. Whether the gain from the sale of assets distributed to shareholders in liquidation should be taxed to the corporation, or to the shareholders.

    Holding

    1. No, because the corporation demonstrably ceased its own sales efforts and the shareholders negotiated the sale independently after receiving the assets in liquidation, the sale was attributable to the shareholders, not the corporation.

    Court’s Reasoning

    The court distinguished this case from Commissioner v. Court Holding Co., 324 U.S. 331 (1945), where the corporation had substantially agreed to the sale terms before liquidation. Here, the corporation stopped its own sales attempts and referred potential buyers to the shareholders. The Fifth Circuit emphasized the taxpayers’ right to choose liquidation to avoid corporate-level tax, citing Gregory v. Helvering, 293 U.S. 465 (1935). The court emphasized the fact that all negotiations leading up to the sale were conducted by a stockholder acting as agent or trustee for other stockholders after steps had been made to dissolve. As a result, the stockholders acted at all times on their own responsibility and for their own account. The court stated “In this proceeding the dissolution of the petitioner cannot be regarded as unreal or a sham.”

    Practical Implications

    This case illustrates that a corporation can avoid tax on the sale of its assets by liquidating and distributing those assets to shareholders, provided the shareholders genuinely negotiate and complete the sale independently. The key is that the corporation must demonstrably cease its own sales efforts. This decision reinforces the principle that taxpayers can arrange their affairs to minimize taxes, but the form of the transaction must match its substance. Later cases distinguish Howell Turpentine based on the level of corporate involvement in pre-liquidation sales negotiations. Attorneys structuring corporate liquidations need to advise clients to avoid corporate involvement in sales post-liquidation decision to ensure the sale is attributed to shareholders.

  • Steubenville Bridge Co. v. Commissioner, 11 T.C. 789 (1948): Corporate Liquidation vs. Tax Avoidance

    Steubenville Bridge Co. v. Commissioner, 11 T.C. 789 (1948)

    A sale of corporate assets is attributed to the shareholders, not the corporation, for tax purposes when the corporation liquidates and distributes its assets to shareholders who then independently sell those assets, provided the corporation did not engage in prior negotiations or agreements regarding the sale.

    Summary

    Steubenville Bridge Co. was liquidated after a syndicate purchased all its stock. The syndicate then sold the bridge to West Virginia. The Commissioner argued the sale was effectively by the corporation before liquidation, making the corporation liable for the capital gains tax. The Tax Court held the sale was by the shareholders post-liquidation, thus the corporation was not liable. The court emphasized that the syndicate had no prior connection to the corporation or its assets and the liquidation was a distinct step after the stock purchase.

    Facts

    Baron & Hastings obtained options to purchase Steubenville Bridge Co. stock. They then contracted with a syndicate, agreeing to pay the syndicate $25,000 if they renewed the options and successfully sold the bridge. The syndicate contracted to sell the bridge to West Virginia before even securing the assignment of the stock options. On December 29, 1941, the syndicate purchased all Steubenville stock, held a special meeting to elect new directors, and then promptly voted to liquidate the corporation, distributing the assets (the bridge) to the syndicate as the sole shareholder.

    Procedural History

    The Commissioner determined a deficiency in Steubenville Bridge Co.’s income tax, arguing that the sale of the bridge was attributable to the corporation, resulting in capital gains tax liability. The Tax Court reviewed the Commissioner’s determination. The Tax Court also addressed an overpayment claim by Steubenville Bridge Co. for a tax payment made after the statute of limitations had expired.

    Issue(s)

    Whether the sale of the Steubenville Bridge should be attributed to the corporation (Steubenville Bridge Co.) or to its shareholders (the syndicate) for federal income tax purposes.

    Holding

    No, the sale of the Steubenville Bridge is attributable to the shareholders, not the corporation because the corporation had not taken any steps toward the sale prior to the liquidation resolution and distribution of assets.

    Court’s Reasoning

    The Court distinguished this case from others where a corporation was taxed on a sale of assets, emphasizing that Steubenville Bridge Co. had not engaged in any negotiations or agreements related to the sale of the bridge before the liquidation process began. The court highlighted that “[t]here is not one act set forth in the record which was performed by the syndicate, the stockholders, the newly elected officers, the directors, or Steubenville after the syndicate procured the stock on December 29, 1941, that could be remotely construed, in our opinion, as an act or a step in the sale of the bridge prior to the approval of the resolution of liquidation.” The Court acknowledged the principle that a corporation undergoing liquidation can choose the method that results in the least tax liability. The court contrasted this case with Court Holding Co. v. Commissioner, 324 U.S. 331, where the corporation had already negotiated a sale before liquidation. The key factor was timing and the absence of corporate action towards a sale before liquidation was initiated.

    Practical Implications

    This case provides a clear illustration of the distinction between a corporate sale of assets followed by liquidation and a liquidation followed by a shareholder sale of assets. It emphasizes that for a sale to be attributed to the shareholders, the corporation must genuinely liquidate and distribute assets without prior commitments or negotiations for sale. Attorneys advising corporations undergoing liquidation must carefully structure the transaction to avoid pre-liquidation sale negotiations or agreements, ensuring the shareholders’ sale is independent to avoid corporate-level tax. This case highlights the importance of meticulous timing and documentation to demonstrate that the liquidation and sale are distinct steps. Later cases have cited Steubenville Bridge Co. to support the principle that a sale is taxable to the shareholders when the corporation liquidates in kind before any binding agreement of sale is entered into by the corporation.

  • Howell Turpentine Co. v. Commissioner, 6 T.C. 364 (1946): Corporate vs. Shareholder Sale of Assets During Liquidation

    Howell Turpentine Co. v. Commissioner, 6 T.C. 364 (1946)

    A sale of corporate assets is attributed to the corporation, not the shareholders, when the corporation actively negotiates the sale before a formal, complete liquidation and the distribution to shareholders is merely a formality to facilitate the sale.

    Summary

    Howell Turpentine Co. sought to avoid corporate tax on the sale of its land by liquidating and having its shareholders sell the land. The Tax Court ruled that the sale was, in substance, a corporate sale because the corporation’s president negotiated the sale terms prior to formal liquidation. The court emphasized that the liquidation was designed to facilitate the sale, not a genuine distribution of assets. This decision illustrates the principle that tax consequences are determined by the substance of a transaction, not merely its form, and that a corporation cannot avoid taxes by merely using shareholders as conduits for a sale already negotiated by the corporation.

    Facts

    1. Howell Turpentine Co. (the “Corporation”) was engaged in the naval stores business and owned a substantial amount of land.
    2. D.F. Howell, president of the Corporation, began negotiations with National Co. for the sale of a large tract of land. An agreement was reached on price and terms.
    3. Subsequently, the Corporation’s shareholders, the Howells, adopted a plan of liquidation, intending to distribute the land to themselves and then sell it to National Co. as individuals.
    4. The formal liquidation occurred, and the land was transferred to the Howells. Simultaneously, the Howells sold the land to National Co.
    5. The Corporation argued that the sale was made by the shareholders individually after liquidation, thus avoiding corporate tax liability on the sale.

    Procedural History

    1. The Commissioner of Internal Revenue determined that the sale was, in substance, a sale by the Corporation, resulting in a tax deficiency.
    2. Howell Turpentine Co. petitioned the Tax Court for a redetermination of the deficiency.

    Issue(s)

    1. Whether the sale of land to National Co. was a sale by the Corporation or a sale by its shareholders after a bona fide liquidation.

    Holding

    1. No, because the corporation actively negotiated the sale before the formal liquidation, indicating the liquidation was a step in a pre-arranged corporate sale.

    Court’s Reasoning

    1. The court applied the principle that the substance of a transaction controls its tax consequences, not merely its form. It cited the Supreme Court’s approval of this principle in Griffiths v. Helvering, 308 U.S. 355: “Taxes cannot be escaped ‘by anticipatory arrangements and contracts however skillfully devised…’”
    2. The court noted that D.F. Howell, as president of the Corporation, negotiated the key terms of the sale (price, etc.) with National Co. before any formal agreement to liquidate.
    3. The court emphasized that the liquidation appeared to be a step designed to facilitate the sale that the Corporation had already initiated, rather than a genuine distribution of assets.
    4. The court found that the corporation was kept in a secure position of having its mortgage obligations paid and discharged. The transaction appeared largely for the benefit of the corporation.
    5. The court distinguished the case from those where shareholders genuinely decide to liquidate before any sale negotiations occur, noting that in those cases, the shareholders bear the risks and rewards of the sale individually. Here, the shareholders were merely conduits for a sale already agreed upon by the corporation.
    6. The court emphasized that at the end of the transaction, a substantial portion of the corporate assets had reached the principal shareholder, D.F. Howell, including a grazing lease rent-free for seven years, a turpentining naval-stores lease for seven years, and a still site lease for thirty years. This did not represent a liquidation distribution of all the corporate assets in kind pro rata to stockholders.

    Practical Implications

    1. This case reinforces the importance of carefully structuring corporate liquidations to ensure they are respected for tax purposes.
    2. It serves as a warning that the IRS and courts will scrutinize transactions where a corporation attempts to avoid tax on the sale of appreciated assets by distributing them to shareholders who then complete the sale.
    3. To avoid corporate-level tax, a corporation should avoid initiating or conducting sale negotiations before adopting a formal plan of liquidation and making a genuine distribution of assets to shareholders.
    4. The shareholders should then independently negotiate and conduct the sale, bearing the risks and rewards of the transaction individually.
    5. Later cases apply this principle when analyzing similar liquidation-sale scenarios, focusing on the timing of negotiations, the formalities of liquidation, and the extent to which the corporation controls the sale process.