1107013 Informal Interpretation

15 USC 18a(c)(2) 7A(c)(2)
Michael Verne

– It’s not because the auto loans company substantially all of the remaining
assets of the seller that disqualifies the acquisition from 7A(c)(2) - 
although it does disqualify it from 7A(c)(1) – it’s because we have taken the
position that only loans that are secured by real property qualify for 7A(c)(2).





Wednesday, July 13, 2011 11:42 AM


Verne, B. Michael




Hart-Scott-Rodino Exemption Guidance

Mr. Verne:

My name is (redacted), and my law firm represents theprospective purchaser of a loan portfolio of approximately $250 million inautomobile loans. It is our understanding that the loans representsubstantially all of the remaining assets of the seller, which is in theprocess of a voluntary liquidation. The seller and purchaser are not affiliatedand neither the seller nor the purchaser is a "bank" under the BankerMerger Act.

It appears to us that thetransaction falls under an exemption from the filing and waiting periodrequirements of 15 USC 18a by virtue of 15 USC 18a(c)(2), which exempts fromthe requirements of Section 18a "acquisitions of bonds, mortgages, deedsof trust, or other obligations which are not voting securities." However,several informal FTC opinions seem to provide that the FTC has taken theposition that if the acquisition of loans is a bulk transfer not in theordinary course of business or is made in connection with the exit by theseller from a line of business, then it is not "in the ordinary course ofbusiness," and, therefore, the exemption of subsection (c)(2) does notapply.

These informal opinionsseem to confuse the exemption in subsection (c)(2) with the exemption set forthin subsection (c)(1), which exempts the "acquisitions of goods or realtytransferred in the ordinary course of business." Subsection (c)(2) doesnot contain the "ordinary course of business" qualification andappears to cover all acquisitions of "obligations which are not votingsecurities," which would include automobile loans, whether or not the saleis in the ordinary course of the seller's business.

Several sources directedus to you as someone who would be able to give us guidance as to the positionof the FTC on this issue. If you require more information, or if we shouldcontact someone else at the FTC for guidance, please contact the undersigned.

Thank you for yourassistance.

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