0711012 Informal Interpretation

From: (redacted)

Sent: Tuesday, November 13, 2007 5:32 PM

To: Verne, B. Michael

Subject: General Question

Mike:We've had an issue that's come up from time to time for which I'd like to get someadditional confirmation on. With some frequency we represent the IndentureTrustee on behalf of bondholders who finance significant assets--a commonexample is airplanes that are leased to an airline. In a bankruptcy situationthe debtor/airline can reject the lease, and the outcome is often that thecollateral/airplane is returned/foreclosed upon. In some cases the IndentureTrustee negotiates a re-sale or re-lease of the plane. In others, however, oneof the creditors essentially buys out the other creditors, and ends up owningthe collateral/plane and re-leasing or selling it.

Myinterpretation is that such acquisitions are exempt under 802.63, and the factthat the collateral ends up in the hands of one of several creditors in a2-step transaction does not alter this outcome. Do you agree?