Difference Between Recourse, Nonrecourse Debt Unclear in Law, Conference Panel Says

CHICAGO—Practitioners have broad flexibility in choosing whether to treat a liability in a debt-discharge transaction as a recourse debt or a nonrecourse debt given the lack of clarity in the law, panelists said at a Practising Law Institute conference in Chicago May 2.

Richard M. Lipton, a partner with Baker & McKenzie in Chicago, told the audience, “The law is just all over the place on this, offering substantial authority for both positions. You can defend each position fully, because it’s just not clear.”

But despite the lack of clarity, the Internal Revenue Service does not plan to provide guidance ...