Rescission – Undoing A Transaction That Seemed Like A Good Idea At The Time – Corporate/Commercial Law

United States:

Withdrawal – Undoing a transaction that seemed like a good idea at the time

December 02, 2021

Ruchelman PLLC

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introduction

How many times have we watched a movie, read a book, or listened to a coworker talk about an action that was seemingly risk-free only to turn into a nightmare? At some point the general complaint comes: “It seemed like a good idea back then, but …”

Tax plans can also be like this. A company identifies an acquisition target, proposes a merger with a supplier, or is considering an internal reorganization. Teams of lawyers, accountants, and operational staff conduct appropriate due diligence. The deal is closed. At some point, blemishes, problems, flaws surface. The same complaint comes out: “It seemed like a good idea at the time, but …”

However, compared to the personal nightmare that can linger over a long period of time, there is an opportunity in the business world to undo what happened. Also, in the tax world, there is a need for parties to act quickly. The magical elixir is embodied in the doctrine of abolition. Where this is the case, the parties can separate from each other and the transaction is treated as if it never happened.

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The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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