0402010 Informal Interpretation

From: (redacted)
Sent: Friday, February 20, 2004 3:06 PM
To: Verne,B. Michael
Subject: Follow up

Mike- on the LLC formation question Tim Hester and I discussed with you onWednesday, I've gotten some more detail on the mechanics and just wanted tomake sure that would not alter the analysis, as it is different than wediscussed. In our hypothetical, Company A was contributing a business to theLLC, and would receive cash and a 10% interest in the LLC. The papers willactually reflect a purchase by the LLC from A, the consideration of which willbe cash and the 10% interest in the LLC. I don't think this alters the analysisbased on prior discussions we've had, where I think you , have said the PNO focuses on whetherthe party whose business lands in the LLC (whether "contributing" or"selling") will retain an interest in the venture. Am I right on the"contribution" vs. "sale" being a distinction without adifference from your perspective?
(Staff comment Agree)

On awholly separate deal, I have company X which owns a business, using a buildingand equipment. X intends to sell the hard assets (building and equipment) to Y,and then immediately lease it all back from Y. X will not sell the contracts,goodwill etc. to Y, and X will continue on in business, now in leasedfacilities. Y (the buyer J lessor) is not normally engaged in this type oftransaction, so 802.63 would not seem to apply. However, if the seller isselling hard assets and then immediately leasing them back, it seems that802.1(d)(3) might apply. Any thoughts on that?
(Staff comment This is not an ordinary course transaction)