Agenda - 09-06-1994 - VII-A - Laserfiche WebLink

Browse Search

22 instant transaction. One major factor, however, is the level of recourse that the purchaser has against the seller for losses on the obligations being sold. Applicable authority recognizes that some level of recourse against the seller is permissible in a sale transaction. In the instant transaction, there will be no recourse against MLPF&S for losses on the Securities. Based upon the foregoing and the assumptions of fact set forth herein, and applying a reasoned analysis of analogous case law (there being no precedent on point) , we are of the opinion that, under present decisional authority and statutes applicable to cases under Title 11 of the United States Code (the "Bankruptcy Code") , if MLPF&S were to become a debtor in a case under the Bankruptcy Code*, a federal bankruptcy court, exercising reasonable judgment after a full consideration of all relevant facts, including the foregoing facts, would hold that the transfer by MLPF&S to the Trust of the Securities is sufficient to remove the Securities from MLPF&S' s estate for purposes of Section 541 of the Bankruptcy Code and that, in the event that MLPF&S became a debtor under the Bankruptcy Code, the automatic stay arising pursuant to Section 362 (a) of the Bankruptcy Code would not apply to the Securities or the payments thereon to the Trust . Furthermore, we are also of the opinion that, in an adversary proceeding brought by a representative of MLPF&S' s estate in any case under the Bankruptcy Code filed by or against MLPF&S, a federal bankruptcy court, exercising reasonable judgment after a full consideration of all relevant facts, including the foregoing facts, would hold that the transfer by MLPF&S to the Trust of the Securities would not be voidable under Section 548 of the Bankruptcy Code. We express no opinion (i) with respect to how long the Trust could be denied possession of the Securities before the issues discussed herein are finally decided on appeal or other review or (ii) the availability of a preliminary injunction or temporary restraining order pursuant to the broad equitable powers granted to a bankruptcy court. We express no opinion as to the laws of any jurisdiction other than the federal laws of the United States of America and the laws of the State of New York. Very truly yours, We note that MLPF&S would probably be liquidated under the Securities Investor Protection Act of 1970, 15 U.S.C. §78aaa et seq. ("SIPA") , rather than the Bankruptcy Code. However, because SIPA incorporates by reference the relevant provisions of the Bankruptcy Code, for the purposes of this opinion the result if MLPF&S were liquidated under SIPA would be the same as if MLPF&S were liquidated under the Bankruptcy Code. 5