8305005 Informal Interpretation

Date:
Rule:
802.63
Staff:
Dana Abrahamsen

Question

(redacted)

May 26, 1983

Dana Abrahamsen, Esq.
Federal Trade Commission
Premerger Notification Office
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Re:Hart-Scott-Rodino Requirements

Dear Mr. Abrahamsen:

This is to confirm our conversation of May 23. You indicated

that (1) the formation of joint venture partnerships is not reportable

under the Hart-Scott-Rodino Act (the Act) or the Federal Trade Commis-

sions Premerger Notification Rules (the Rules) thereunder, and (2) the

formation of a joint venture partnership by a debtor and certain of its

creditors where the debtor contributes its property and the creditors

reduce the debtors loan obligations is a bona fide debt work-out exempt

from the Act and the Rules if undertaken in the ordinary course of the

creditors businesses.

The facts of the transaction to which the foregoing principles

apply are as follows: A is a limited partnership. A is indebted to

lenders B, C, D, E and F, which indebtedness is secured by non-recourse

mortgages encumbering substantially all of As property and assets (the

property). A is in default with respect to such indebtedness as follows. A new

partnership, G, will be formed by B, C, D, E and F. This partnership

will then itself from a new partnership, N, with A. A and G will be the

partners in H. a will contribute the property to H. H will service As

indebtedness to B through of out of the cash flows of the property, and B,

C, D, E and f will also grant certain concession with regard to such

indebtedness. H will also assume certain other debts of A.

Under the principles discussed above, the foregoing would not be

reportable under the Act, without regard to the size of the parties involved

or the size of the transaction, for two reasons. First, this transaction

involves the formation of a joint venture partnership. The Act only requires

reporting the formation of a joint venture partnerships. Rule 801.40.

Second, this transaction amounts to a bona fide debt work-out between

A, B, C, D, E and F. Bona fide debt work-outs are exempt under the Act if

undertaken in the ordinary course if business. Rule 802.63. Thus, if this

transaction is in the ordinary course of business for B, C, D, E and F, it

is exempt from the Acts reporting requirements for that reason, as well.

If the foregoing analysis and conclusion is not an accurate reflect-

tion of the Federal Trade Commission staffs interpretation of the Act and

Rules, please inform me in writing no later than June 3, 1983. If I do not

hear from you prior to that date, I will assume that the foregoing analysis

is accurate and will proceed accordingly.

Thank you very much for you time.

Sincerely,

(Redacted)

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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