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Agenda - 09-06-1994 - VII-A
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Agenda - 09-06-1994 - VII-A
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BOCC
Date
9/6/1994
Meeting Type
Regular Meeting
Document Type
Agenda
Agenda Item
VII-A
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22 <br /> instant transaction. One major factor, however, is the level of <br /> recourse that the purchaser has against the seller for losses on <br /> the obligations being sold. Applicable authority recognizes that <br /> some level of recourse against the seller is permissible in a <br /> sale transaction. In the instant transaction, there will be no <br /> recourse against MLPF&S for losses on the Securities. <br /> Based upon the foregoing and the assumptions of fact set <br /> forth herein, and applying a reasoned analysis of analogous case <br /> law (there being no precedent on point) , we are of the opinion <br /> that, under present decisional authority and statutes applicable <br /> to cases under Title 11 of the United States Code (the <br /> "Bankruptcy Code") , if MLPF&S were to become a debtor in a case <br /> under the Bankruptcy Code*, a federal bankruptcy court, <br /> exercising reasonable judgment after a full consideration of all <br /> relevant facts, including the foregoing facts, would hold that <br /> the transfer by MLPF&S to the Trust of the Securities is <br /> sufficient to remove the Securities from MLPF&S' s estate for <br /> purposes of Section 541 of the Bankruptcy Code and that, in the <br /> event that MLPF&S became a debtor under the Bankruptcy Code, the <br /> automatic stay arising pursuant to Section 362 (a) of the <br /> Bankruptcy Code would not apply to the Securities or the payments <br /> thereon to the Trust . Furthermore, we are also of the opinion <br /> that, in an adversary proceeding brought by a representative of <br /> MLPF&S' s estate in any case under the Bankruptcy Code filed by or <br /> against MLPF&S, a federal bankruptcy court, exercising reasonable <br /> judgment after a full consideration of all relevant facts, <br /> including the foregoing facts, would hold that the transfer by <br /> MLPF&S to the Trust of the Securities would not be voidable under <br /> Section 548 of the Bankruptcy Code. We express no opinion (i) <br /> with respect to how long the Trust could be denied possession of <br /> the Securities before the issues discussed herein are finally <br /> decided on appeal or other review or (ii) the availability of a <br /> preliminary injunction or temporary restraining order pursuant to <br /> the broad equitable powers granted to a bankruptcy court. <br /> We express no opinion as to the laws of any jurisdiction <br /> other than the federal laws of the United States of America and <br /> the laws of the State of New York. <br /> Very truly yours, <br /> We note that MLPF&S would probably be liquidated under <br /> the Securities Investor Protection Act of 1970, 15 U.S.C. §78aaa et <br /> seq. ("SIPA") , rather than the Bankruptcy Code. However, because <br /> SIPA incorporates by reference the relevant provisions of the <br /> Bankruptcy Code, for the purposes of this opinion the result if <br /> MLPF&S were liquidated under SIPA would be the same as if MLPF&S <br /> were liquidated under the Bankruptcy Code. <br /> 5 <br />
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