In Re: Douglas Booth v.

Opinion

(/(&7521,&&,7$7,21)('$SS3WK&LU

)LOH1DPHES

%$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7

,QUH '28*/$6(%227+

'HEWRU

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB '28*/$6(%227+ 

$SSHOODQW

Y

1R

(/,=$%(7+$9$8*+$175867(( 

$SSHOOHH

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLR:HVWHUQ'LYLVLRQDW7ROHGR 1R

$UJXHGsDQXDU\

'HFLGHGDQG)LOHG0DUFK

%HIRUH$8*%52:1DQG5+2'(6%DQNUXSWF\$SSHOODWH3DQHOsXGJHV

BBBBBBBBBBBBBBBBBBBB

&2816(/

$5*8('  / 'RXJODVV 0F&UXU\ 8$: /(*$/ 6(59,&(6 3/$1 7ROHGR 2KLR IRU $SSHOODQW(OL]DEHWK$9DXJKDQ7ROHGR2KLRIRU$SSHOOHH21%5,()/'RXJODVV 0F&UXU\ 8$: /(*$/ 6(59,&(6 3/$1 7ROHGR 2KLR IRU $SSHOODQW  (OL]DEHWK $ 9DXJKDQ7ROHGR2KLRIRU$SSHOOHH

BBBBBBBBBBBBBBBBBBBB

23,1,21

BBBBBBBBBBBBBBBBBBBB

67(9(1:5+2'(6&KLHI%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KHEDQNUXSWF\ FRXUWJUDQWHGWKH7UXVWHHjVPRWLRQIRUWXUQRYHURIDSURUDWDSRUWLRQRIDSRVWSHWLWLRQSURILW VKDULQJ SD\PHQW WKDW WKH 'HEWRU UHFHLYHG IURP KLV HPSOR\HU  2Q DSSHDO WKH 'HEWRU DUJXHVWKDWEHFDXVHKHILOHGKLVEDQNUXSWF\SHWLWLRQEHIRUHKLVHPSOR\HUFDOFXODWHGLWV SURILWVDWWKHHQGRIWKH\HDUKHKDGQROHJDORUHTXLWDEOHLQWHUHVWLQWKHSURILWVKDULQJ ZKHQKHILOHGDQGWKHUHIRUHQRSDUWRIWKHSD\PHQWLVSURSHUW\RIWKHHVWDWH 7KH 3DQHO FRQFOXGHV WKDW ZKHQ WKH 'HEWRU ILOHG EDQNUXSWF\ KLV LQWHUHVW LQ KLV HPSOR\HUjVSURILWVKDULQJSODQGLGFRPHZLWKLQWKHEURDGFRQFHSWRISURSHUW\RIWKHHVWDWH IRXQGLQ86&†D  7KH3DQHOVRFRQFOXGHVEHFDXVHWKH'HEWRUjVLQWHUHVWLQ WKH SURILW VKDULQJ SD\PHQW ZDV VXIILFLHQWO\ URRWHG LQ KLV SUHSHWLWLRQ HPSOR\PHQW HYHQ WKRXJKWKDWLQWHUHVWZDVFRQWLQJHQWDQGWKHUHIRUHXQHQIRUFHDEOHZKHQKHILOHGEDQNUXSWF\ 7KH 3DQHO DOVR UHMHFWV WKH 'HEWRUjV FRQWHQWLRQ WKDW ZKDWHYHU LQWHUHVW KH KDG LQ KLV HPSOR\HUjVSURILWVKDULQJZDVKHOGLQDWUXVWDQGLVWKXVQRWSURSHUW\RIWKHHVWDWHXQGHU 86&†F  $FFRUGLQJO\WKHRUGHURIWKH%DQNUXSWF\&RXUWLV$)),50('

,,668(621$33($/

7KHILUVWLVVXHRQDSSHDOLVZKHWKHUWKH'HEWRUKDGDQ\LQWHUHVWLQKLVHPSOR\HUjV SURILWVKDULQJZKHQKHILOHGKLVEDQNUXSWF\SHWLWLRQ7KHVHFRQGLVVXHLVZKHWKHUWKDW LQWHUHVWZDVKHOGLQDEHQHILFLDOWUXVW

,,s85,6',&7,21$1'67$1'$5'2)5(9,(:

 7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQWRGHFLGHWKLV DSSHDO7KH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLRKDVDXWKRUL]HG DSSHDOVWRWKH%$3$ILQDORUGHURIDEDQNUXSWF\FRXUWPD\EHDSSHDOHGE\ULJKWXQGHU 86&†D  )RUSXUSRVHVRIDSSHDODQRUGHULVILQDOLILWmµHQGVWKHOLWLJDWLRQRQ WKHPHULWVDQGOHDYHVQRWKLQJIRUWKHFRXUWWRGREXWH[HFXWHWKHMXGJPHQWjl0LGODQG $VSKDOW&RUSY8QLWHG6WDWHV866&W FLWDWLRQV RPLWWHG 



&RQFOXVLRQV RI ODZ DUH UHYLHZHG GH QRYR  6HH 1LFKROVRQ Y ,VDDFPDQ ,Q UH ,VDDFPDQ )GWK&LU m'HQRYRUHYLHZUHTXLUHVWKH3DQHOWRUHYLHZ TXHVWLRQV RI ODZ LQGHSHQGHQW RI WKH EDQNUXSWF\ FRXUWjV GHWHUPLQDWLRQl  )LUVW 8QLRQ 0RUWJDJH&RUSY(XEDQNV,QUH(XEDQNV %5%$3WK&LU

FLWDWLRQRPLWWHG 

,,,)$&76

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m0RWLRQIRU7XUQRYHUlRImDQ\%RQXVRU 3URILW6KDULQJFKHFNUHFHLYHGIURPWKH'HEWRUjV(PSOR\HUIRUXSRQUHFHLSWl%RRWK REMHFWHG WR WKH 7UXVWHHjV PRWLRQ DUJXLQJ WKDW ZKHQ KLV SHWLWLRQ ZDV ILOHG KH KDG QR LQWHUHVWLQDQ\SURILWVKDULQJDQGWKDWLIKHKDGDQ\LQWHUHVWLWZDVLQWKHIRUPRIDEHQHILFLDO LQWHUHVWLQDWUXVW 2Q0DUFK%RRWKUHFHLYHGDSURILWVKDULQJSD\PHQWIURP'DLPOHU&KU\VOHU LQWKHDPRXQWRI 2Q sXQH   WKH EDQNUXSWF\ FRXUW HQWHUHG LWV 0HPRUDQGXP 2SLQLRQ DQG 'HFLVLRQKROGLQJWKDWWKHSURUDWDSDUWRIWKH'HEWRUjVSURILWVKDULQJWKDWUHODWHGWRKLV SUHSHWLWLRQHDUQLQJVZDVSURSHUW\RIWKHEDQNUXSWF\HVWDWH7KLVDSSHDOIROORZHG

,9',6&866,21

$7KH'HEWRUjVLQWHUHVWLQWKHSURILWVKDULQJSD\PHQWLVSURSHUW\RIWKHHVWDWHWRWKHH[WHQW WKDWLWLVEDVHGXSRQSUHSHWLWLRQHPSOR\PHQW

7KH'HEWRUILUVWDUJXHVWKDWEDVHGRQWZRIDFWRUVKHKDGQROHJDORUHTXLWDEOH LQWHUHVWLQWKHSURILWVKDULQJZKHQKHILOHGKLVEDQNUXSWF\SHWLWLRQ)LUVWKLVHPSOR\HUKDG QRW\HWGHFODUHGDSURILWIRUWKH\HDU6HFRQGKLVHPSOR\PHQWFRXOGKDYHEHHQWHUPLQDWHG EHIRUHWKHHQGRIWKH\HDU7KHLVVXHWKHUHIRUHLVZKHWKHUWKHVHFRQWLQJHQFLHVFRPSHO



WKHFRQFOXVLRQWKDWXQGHU†D  WKHEDQNUXSWF\HVWDWHKDVQRLQWHUHVWLQWKHSURILW VKDULQJ 7KHDQDO\VLVEHJLQVZLWKWKHDSSOLFDEOHVWDWXWRU\SURYLVLRQ8QLWHG6WDWHVY5RQ 3DLU(QWHUV866&W /DQGUHWK7LPEHU&RY /DQGUHWK866&W  6HFWLRQRIWKH%DQNUXSWF\&RGHGHILQHVSURSHUW\RIWKHEDQNUXSWF\HVWDWHDV IROORZV

D

7KHFRPPHQFHPHQWRIDFDVHXQGHUVHFWLRQRU RIWKLVWLWOHFUHDWHVDQHVWDWH6XFKHVWDWHLVFRPSULVHGRI DOOWKHIROORZLQJSURSHUW\ZKHUHYHUORFDWHGDQGE\ZKRPHYHU KHOG



([FHSWDVSURYLGHGLQVXEVHFWLRQVE DQGF  RI WKLV VHFWLRQ DOO OHJDO RU HTXLWDEOH LQWHUHVWV RI WKH GHEWRU LQ SURSHUW\DVRIWKHFRPPHQFHPHQWRIWKHFDVH

86&†D   $FFRUGLQJWRWKHOHJLVODWLYHKLVWRU\WKHSXUSRVHRI†D LVWRmEULQJDQ\WKLQJRI YDOXHWKDWWKHGHEWRUVKDYHLQWRWKHHVWDWHl+5 5! 1 DW UHSULQWHG LQ86&&$1 7KHGHWHUPLQDWLRQDVWRZKHWKHUDGHEWRUjVLQWHUHVWLQSURSHUW\LVSURSHUW\RIWKH EDQNUXSWF\HVWDWHLVDTXHVWLRQRIIHGHUDOODZ+RZHYHUVWDWHODZJHQHUDOO\FRQWUROVWKH TXHVWLRQRIZKHWKHUWKHGHEWRUKDVDQLQWHUHVWLQSURSHUW\6HH%XWQHUY8QLWHG6WDWHV 866&W  8QGHU2KLRODZm>D@FRQWLQJHQWLQWHUHVWLVRQHLQZKLFKWKHUHLVQRSUHVHQWIL[HGULJKW RIHLWKHUSUHVHQWRUIXWXUHHQMR\PHQWEXWLQZKLFKDIL[HGULJKWZLOODULVHLQWKHIXWXUHXQGHU FHUWDLQVSHFLILHGFRQWLQJHQFLHVl&OHYHODQG7UXVW&RY0F4XDGH1(G 2KLR$SS FLWDWLRQRPLWWHG 7KHUHIRUHLQWKLVFDVHWKH'HEWRUjVLQWHUHVWLQKLV HPSOR\HUjVSURILWVKDULQJFRQVWLWXWHGDFRQWLQJHQWLQWHUHVWDWWKHWLPHRIWKHSHWLWLRQ 6LJQLILFDQWO\XQGHU2KLRODZDFRQWLQJHQWLQWHUHVWLVIXOO\DOLHQDEOHDQGPD\EH DWWDFKHGE\FUHGLWRUV0RRUHY)RUHVPDQ1(G2KLR ,WIROORZV WKDWDFRQWLQJHQWLQWHUHVWLVDQLQWHUHVWLQSURSHUW\WKDWEHFRPHVSURSHUW\RIWKHHVWDWH XQGHU†D  ZKHQDEDQNUXSWF\SHWLWLRQLVILOHG



7KH8QLWHG6WDWHV6XSUHPH&RXUWFDPHWRWKHVDPHFRQFOXVLRQLQDFDVHGHFLGHG XQGHUWKH%DQNUXSWF\$FW7KH6XSUHPH&RXUWVWDWHGm>7@KHWHUPµSURSHUW\jKDVEHHQ FRQVWUXHGPRVWJHQHURXVO\DQGDQLQWHUHVWLVQRWRXWVLGHLWVUHDFKEHFDXVHLWLVQRYHORU FRQWLQJHQWRUEHFDXVHHQMR\PHQWPXVWEHSRVWSRQHGl6HJDOY5RFKHOOH86 6&W ,QWKDWFDVHWKH6XSUHPH&RXUWKHOGWKDWWKHGHEWRUVj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† D    ,Q HDFK RI WKH IROORZLQJ FLUFXPVWDQFHV WKH GHEWRUjVFRQWLQJHQWLQWHUHVWZDVKHOGWREHSURSHUW\RIWKHHVWDWH $GHEWRUjVFRQWLQJHQWULJKWWRDSRVWSHWLWLRQHPSOR\PHQWWHUPLQDWLRQSD\PHQWXQGHU DSUHSHWLWLRQHPSOR\PHQWDJUHHPHQW5DXY5\HUVRQ,QUH5\HUVRQ )GWK &LU  $GHEWRUjVFRQWLQJHQWLQWHUHVWLQDQHDUQHGLQFRPHWD[FUHGLWHYHQZKHQWKHSHWLWLRQ LVILOHGEHIRUHWKHHQGRIWKHWD[\HDU%DHUYsRQHV,QUH0RQWJRPHU\ )G WK&LU sRKQVWRQY+D]OHWW,QUHsRKQVWRQ )GWK&LU 7KHFRXUWVSHFLILFDOO\UHMHFWHGWKHGHEWRUjVDUJXPHQWWKDWmEHFDXVHVKHZDVQRWHQWLWOHG WRWKH(,&XQWLOWKHHQGRIWKHWD[\HDUVKHKDGQHLWKHUDOHJDOQRUDQHTXLWDEOHLQWHUHVWLQ WKH(,&DWWKHWLPHVKHILOHGKHUSHWLWLRQDQGWKHUHIRUHLWZDVQRWSDUWRIWKHEDQNUXSWF\ HVWDWHl VHHDOVRFDVHVFROOHFWHGLQ,QUHsRKQVWRQ)GDWQ $GHEWRUjVLQWHUHVWLQKHUKXVEDQGjVVHSDUDWHO\WLWOHGSURSHUW\WKDWZDVFRQWLQJHQW RQWKHRXWFRPHRIWKHLUSHQGLQJGLYRUFHFDVH,QUH*UHHU%5%DQNU1' 2KLR  $GHEWRUjVFRQWLQJHQWFODLPDJDLQVWDWKLUGSDUW\%RURFNY0DWKLV,QUH&OLSSHU,QWjO &RUS )GWK&LU m7KXVµ>P@RQH\ZKRVHRULJLQLVSDUWRIWKHSUH SHWLWLRQSHULRGEHORQJVWRWKHHVWDWHSXUVXDQWWR†jlTXRWLQJ+DUWOH\Y'HUU\EHUU\,Q



UH+DUWOH\ %5%DQNU1'2KLR DOWHUDWLRQLQRULJLQDO %DXHUY &RPPHUFH8QLRQ%DQN&ODUNVYLOOH7HQQHVVHH)GWK&LU ,Q UH<RQLNXV)GWK&LU m$GHEWRU VFRQWLQJHQWLQWHUHVWLQIXWXUH LQFRPHKDVFRQVLVWHQWO\EHHQIRXQGWREHSURSHUW\RIWKHEDQNUXSWF\HVWDWH,QIDFW HYHU\FRQFHLYDEOHLQWHUHVWRIWKHGHEWRUIXWXUHQRQSRVVHVVRU\FRQWLQJHQWVSHFXODWLYH DQGGHULYDWLYHLVZLWKLQWKHUHDFKRI†l sRKQVRQ%ODNHO\3RSH%RNRU5XSSHO %XUQV3$Y$OYDUH],QUH$OYDUH]

)GWK&LU FHUWGHQLHGBB86 BB6&W 3ROLVY*HWDZD\V,QF,QUH3ROLV )GWK&LU  .ROODUY0LOOHU)GG&LU :ROIHY*LOPRXU0IJ&R)G WK&LU 6WDWH)DUP/LIH,QV&RY6ZLIW,QUH6ZLIW )GWK&LU  6SDUWDQ7XEH 6WHHO,QFY+LPPHOVSDFK,QUH5&6(QJLQHHUHG3URGV&R ,QF )GWK&LU ,Q%XFNH\H8QLRQ,QV&RY)RXU6WDU&RQVWU&R,Q UH)RXU6WDU&RQVWU&R %5%DQNU1'2KLR WKHFRXUWVWDWHG

8QGHU WKH IRUPHU %DQNUXSWF\ $FW D FRQWLQJHQW LQWHUHVW LQ SHUVRQDO SURSHUW\ SDVVHG WR WKH FDVH WUXVWHH RQO\ LI LW ZDV FDSDEOH RI EHLQJ DVVLJQHG RU ZDV VXEMHFW WR H[HFXWLRQ VHL]XUHRUVHTXHVWUDWLRQ$&ROOLHURQ%DQNUXSWF\ˆDW WKHG 7KDWUHTXLUHPHQWQRORQJHUH[LVWVXQGHU WKH%DQNUXSWF\&RGH,Gˆ>@WKHG %\ LQFOXGLQJ DOO OHJDO LQWHUHVWV ZLWKRXW H[FHSWLRQ &RQJUHVV LQGLFDWHG LWV LQWHQWLRQ WR LQFOXGH DOO OHJDOO\ UHFRJQL]DEOH LQWHUHVWVDOWKRXJKWKH\PD\EHFRQWLQJHQWDQGQRWVXEMHFWWR SRVVHVVLRQXQWLOVRPHIXWXUHWLPH

$ GHEWRU V ULJKW WR UHFHLYH SURSHUW\ FRQWLQJHQW RQ VXUYLYLQJ RWKHUV  1HXWRQ Y 'DQQLQJ,QUH1HXWRQ )GWK&LU 6WRNHVY7UXVW&RRI*D,QUH 0F/RXJKOLQ )GWK&LU 3RWWHUY'UHZHV,QUH3RWWHU %5  %$3 WK &LU   $QGHUVRQ Y 0F*RZDQ ,Q UH $QGHUVRQ   %5  '5, 5RVHY&DUOVRQ,QUH5RVH %5:'0R ,QUH:LQVWHG 0HPjO+RVS%5%DQNU'&RQQ ,QUH.QLJKW%5%DQNU6' )OD )HGHUPDQY*DUWHQ,QUH*DUWHQ %5%DQNU:'0R  $GHEWRUjVFRQWLQJHQWLQWHUHVWLQDQHDUQHVWPRQH\GHSRVLWLQDQHVFURZDFFRXQW 7XUQHUY%XUWRQ,QUH7XUQHU %5%DQNU'0H  $QDWWRUQH\GHEWRUjVULJKWWROHJDOIHHVXQGHUDFRQWLQJHQWIHHDJUHHPHQWZLWKD FOLHQW7XUQHUY$YHU\)GWK&LU sHVVY&DUH\,QUHsHVV 



)GWK&LU &DQDWHOODY7RZHUV,QUH$OFDOD )GWK&LU  &DUOVRQY%UDQGW%51',OO :DWWVY:LOOLDPV%56'7H[  ,QUH3DXO$1HOVRQ3$%5%DQNU0')OD %DQQHUY%DJHQ ,QUH%DJHQ %5%DQNU6'1<  DII G %5 6'1<  $ GHEWRUjV FRQWUDFW ULJKW WR FRPPLVVLRQV DWWULEXWDEOH WR LQVXUDQFH SROLFLHV VROG SUHSHWLWLRQEXWSDLGSRVWSHWLWLRQZKHWKHURUQRWYHVWHGRUFRQWLQJHQWXSRQIXWXUHVHUYLFHV :LOOLDPVY7RPHU,QUH7RPHU %56',OO 0F&UDFNHQY6HOQHU,QUH 6HOQHU %5%DQNU6')OD  7KHGHEWRUjVULJKWWRDUHIXQGRIDGHSRVLWPDGHSXUVXDQWWRDUHVLGHQWLDOOLIHXVHIHH DJUHHPHQWFRQWLQJHQWRQWKHGHEWRUPRYLQJRXWRIWKHUHVLGHQFHEHIRUHDVWDWHGWLPH,Q UH7KRPSVRQ%5%DQNU1'2KLR  $GHEWRUjVLQWHUHVWLQDVWRFNRSWLRQWKDWLVFRQWLQJHQWRQSRVWSHWLWLRQHPSOR\PHQW 6WRHEQHU Y :LFN ,Q UH :LFN   %5  %DQNU ' 0LQQ   UHYjG RQ RWKHU JURXQGV%5'0LQQ $OOHQY/HYH\,QUH$OOHQ %5%DQNU 1',OO  $GHEWRUjVIXWXUHLQWHUHVWLQORWWHU\ZLQQLQJV,QUH.HLP%5%DQNU' 0G ,QUH3L]]L%5%DQNU6')OD 6LUHNY'DOWRQ,QUH'DOWRQ  %5%DQNU'$UL] :DOOLFNY5KRGH,VODQG6WDWH/RWWHU\&RPP Q,QUH 6NRJ %5%DQNU'5, ,QUH0H\HUV%5%DQNU1'2KLR  %R\QY%URZQ,QUH%URZQ %5%DQNU1',QG DII G%5 1',QG ,QUH0LOOHU%5%DQNU'0G  7KLVUHYLHZRIWKHFDVHVGHPRQVWUDWHVWZRVLJQLILFDQWSRLQWV)LUVWWKHDUUD\RI FLUFXPVWDQFHVLQZKLFKWKHFDVHVKDYHKHOGWKDWDFRQWLQJHQWLQWHUHVWLVSURSHUW\RIWKH HVWDWHLVH[WHQVLYH6HFRQGWKHXQLIRUPLW\RIWKHUHVXOWVLQWKHVHFDVHVLVFRPSHOOLQJ$V DUHVXOWWKH3DQHOPXVWFRQFOXGHWKDWWKHFRQWLQJHQFLHVXSRQZKLFKWKH'HEWRUUHOLHVLQ DUJXLQJWKDWKLVSURILWVKDULQJLVQRWSURSHUW\RIWKHHVWDWHDUHLQGLVWLQJXLVKDEOHIURPWKH FRQWLQJHQFLHVLQWKHPDQ\FDVHVLQZKLFKWKHSURSHUW\LQWHUHVWZDVKHOGWREHSURSHUW\RI WKHHVWDWH 7KH'HEWRUUHOLHVRQ'H0DUFRY2KLR'HFRUDWLYH3URGV,QF)GWK &LU XQSXEOLVKHGWDEOHGHFLVLRQ +RZHYHUDVDQXQSXEOLVKHGGHFLVLRQ'H0DUFR KDVOLPLWHGSUHFHGHQWLDOYDOXH6DODPDOHNLVY&RPP URI6RF6HF)G



WK&LU $QXQSXEOLVKHGRSLQLRQmLVQRWELQGLQJSUHFHGHQWl +RQLJPDQY&RPHULFD %DQN,QUH9DQ'UHVVHU&RUS )GWK&LU 0F0HDQVY%ULJDQR  )G   WK &LU   8QSXEOLVKHG GHFLVLRQV KDYH mOLPLWHG SUHFHGHQWLDO IRUFHl 8QLWHG6WDWHVY$EOHV)GWK&LU FHUWGHQLHG86  m>$@QXQSXEOLVKHGRSLQLRQKDVQRSUHFHGHQWLDOIRUFH>@l *LEVRQY*LEVRQ,QUH *LEVRQ %5Q%$3WK&LU m$OWKRXJKQRWELQGLQJXQSXEOLVKHG GHFLVLRQVRIWKH6L[WK&LUFXLWPD\EHFLWHGLISHUVXDVLYHDQGQRSXEOLVKHGGHFLVLRQVZLOO VHUYHDVZHOOl %HOIDQFHY%ODFN5LYHU3HWUROHXP,QF,QUH+HVV %5Q %$3WK&LU 6HHDOVR,QUH%UDGG\%5%DQNU('0LFK

FROOHFWLQJFDVHV m>$@OWKRXJKWKH&RXUWRI$SSHDOVGRHVUHFRJQL]HWKDWLWVXQSXEOLVKHG GHFLVLRQVDUHQRWELQGLQJSUHFHGHQWLQWKHVDPHVHQVHDVSXEOLVKHGGHFLVLRQVWKHFRXUW GRHVFLWHDQXQSXEOLVKHGGHFLVLRQZKHQWKHUHLVQRSXEOLVKHGGHFLVLRQRQSRLQWDQGWKH UHDVRQLQJRIWKHXQSXEOLVKHGGHFLVLRQLVIRXQGSHUVXDVLYHl  +RZHYHU GHWHUPLQLQJ ZKHWKHU 'H0DUFR LV SHUVXDVLYH LV QRW D VWUDLJKWIRUZDUG HQGHDYRU$VGHPRQVWUDWHGEHORZWKHRSLQLRQLVVXEMHFWWRLQWHUSUHWDWLRQ7KH3DQHO FRQFOXGHV WKDW WKH SURSHU LQWHUSUHWDWLRQ RI 'H0DUFR LV FRQVLVWHQW ZLWK WKH QHDUO\ XQDQLPRXVOLQHRIFDVHVKROGLQJWKDWDFRQWLQJHQWSURSHUW\LQWHUHVWLVSURSHUW\RIWKHHVWDWH DQG WKHUHIRUH WKLV LQWHUSUHWDWLRQ LV SHUVXDVLYH  2Q WKH RWKHU KDQG WKH DOWHUQDWLYH LQWHUSUHWDWLRQ SURSRVHG E\ WKH 'HEWRU LV LQFRQVLVWHQW ZLWK WKH FDVH ODZ DQG PXVW EH UHMHFWHGDVXQSHUVXDVLYH ,Q 'H0DUFR IRXU \HDUV DIWHU ILOLQJ D &KDSWHU  EDQNUXSWF\ WKH SODLQWLII ZDV WHUPLQDWHGIURPKLVSRVLWLRQDVDVDOHVUHSUHVHQWDWLYH/DWHUKHILOHGDFLYLOVXLWDJDLQVWKLV HPSOR\HUIRUSRVWWHUPLQDWLRQVDOHVFRPPLVVLRQVEDVHGRQDQDOOHJHGDJUHHPHQWZLWKKLV HPSOR\HUFDOOLQJIRUWKHSD\PHQWRImOLIHRIWKHSDUWlVDOHVFRPPLVVLRQV7KHHPSOR\HU UHVSRQGHGWKDWWKHSODLQWLIIODFNHGVWDQGLQJEHFDXVHDQ\VXFKFRPPLVVLRQVZHUHSURSHUW\ RIWKHSODLQWLIIjVEDQNUXSWF\HVWDWHDQGRQO\WKHEDQNUXSWF\WUXVWHHKDGVWDQGLQJWRVXH ,QLWLDOO\WKHFRXUWRIDSSHDOVREVHUYHGm8QGHUWKHH[SDQVLYHFRQVWUXFWLRQFRXUWV KDYH JLYHQ WKH WHUP WKHUH FDQ EH OLWWOH GRXEW WKDW ULJKWV WR SRVWWHUPLQDWLRQ IXQGV QR PDWWHUZKDWWKHLUGHVLJQDWLRQHJFRQWUDFWYDOXHFRPPLVVLRQV TXDOLI\DVµSURSHUW\jIRU SXUSRVHVRIWKHEDQNUXSWF\FRGHl'H0DUFR:/DW 7KLVREVHUYDWLRQLV HQWLUHO\FRQVLVWHQWZLWKWKHUHDVRQLQJDQGUHVXOWVRIWKHFDVHVUHYLHZHGDERYH+RZHYHU WKH FRXUW RI DSSHDOV WKHQ KHOG WKDW LQ WKH FLUFXPVWDQFHV RI WKDW FDVH WKH VDOHV



FRPPLVVLRQVDOOHJHGO\RZLQJWRWKHSODLQWLIIRQVDOHVDIWHUKLVWHUPLQDWLRQZHUHQRWSURSHUW\ RIWKHEDQNUXSWF\HVWDWH ,QWKLVFDVHWKH'HEWRUUHOLHVRQWKHIROORZLQJVWDWHPHQWLQ'H0DUFRLQVXSSRUWRI KLVSRVLWLRQ

7KHFUXFLDOLQTXLU\LQVWHDGLVZKHQWKRVHSURSHUW\LQWHUHVWV FDPHLQWRH[LVWHQFH>$@IXWXUHLQWHUHVWZLOOQRWEHFRPHD †SURSHUW\ULJKWXQWLOLWKDVLQHIIHFWYHVWHGRUSXWDQRWKHU ZD\ XQWLO WKH FRQGLWLRQV WKDW JR WR WKH FUHDWLRQ RI WKH ULJKW KDYHEHHQVDWLVILHG  >7@KHGHEWRU

VSURSHUW\ULJKWKHUHGLGQRWDFFUXHXQWLODIWHUD EDQNUXSWF\SHWLWLRQKDGEHHQILOHG2QO\DIWHUEHLQJWHUPLQDWHG ZRXOG 'H0DUFR WKHQ EHFRPH HQWLWOHG WR SRVWWHUPLQDWLRQ FRPPLVVLRQV DQG HYHQ WKHQ ZKHWKHU VXFK IXQGV ZRXOG DFWXDOO\EHIRUWKFRPLQJZDVIDUIURPDFHUWDLQW\

'H0DUFR:/DW  7KH 'HEWRU DUJXHV WKDW WKLV ODQJXDJH PHDQV WKDW RQO\ YHVWHG ULJKWV EHFRPH SURSHUW\RIWKHHVWDWH7KXVWKH'HEWRUFRQWHQGVWKDWEHFDXVHKLVULJKWWRDSURILWVKDULQJ SD\PHQWKDGQRWYHVWHGZKHQKHILOHGEDQNUXSWF\LWGLGQRWEHFRPHSURSHUW\RIWKHHVWDWH 7KHGLIILFXOW\ZLWKWKLVLQWHUSUHWDWLRQRI'H0DUFRLVWKDWLWFDQQRWEHUHFRQFLOHGZLWKWKH 6XSUHPH &RXUWjV GHFLVLRQ LQ 6HJDO Y 5RFKHOOH DQG WKH H[WHQVLYH ERG\ RI FDVH ODZ UHYLHZHG DERYH WKDW KROGV RWKHUZLVH  0RUHRYHU WKH 'HEWRUjV LQWHUSUHWDWLRQ LV DOVR LQFRQVLVWHQWZLWKWKHWZRVSHFLILFFDVHVRQZKLFK'H0DUFRUHOLHG5DXY5\HUVRQ,QUH 5\HUVRQ )GWK&LU +RIIPDQY%UXQHDX,QUH%UXQHDX %5 %DQNU'&RQQ ,QGHHG5\HUVRQDQG%UXQHDXFRPSHOWKHUHDGLQJRI'H0DUFR WKDWLVFRQVLVWHQWZLWK6HJDODQGWKHFDVHODZRQSRLQW ,Q5\HUVRQEHIRUHILOLQJIRUEDQNUXSWF\WKHGHEWRUDQGKLVHPSOR\HUHQWHUHGLQWR DQ DJUHHPHQW WKDW XSRQ WHUPLQDWLRQ WKH HPSOR\HU FRXOG DW LWV RSWLRQ SD\ WKH GHEWRU mFRQWUDFWYDOXHlEDVHGRQVDOHVFRPPLVVLRQVLIFHUWDLQFRQGLWLRQVZHUHPHW)RXU\HDUV ODWHUWKHGHEWRUILOHGEDQNUXSWF\1LQHPRQWKVDIWHUWKDWKLVHPSOR\PHQWZDVWHUPLQDWHG 7KHFRXUWGHWHUPLQHGWKDWWKHGHEWRUjVULJKWWRSD\PHQWRIWKHFRQWUDFWYDOXHZDVSURSHUW\ RIWKHEDQNUXSWF\HVWDWHDWOHDVWWRWKHH[WHQWWKDWWKHFRQWUDFWYDOXHUHODWHGWRSUHSHWLWLRQ VHUYLFHV7KHEDVLVRIWKLVUHVXOWZDVWKHDFFHSWHGSUHPLVHm%\LQFOXGLQJDOOOHJDOLQWHUHVWV ZLWKRXW H[FHSWLRQ &RQJUHVV LQGLFDWHG LWV LQWHQWLRQ WR LQFOXGH DOO OHJDOO\ UHFRJQL]DEOH



LQWHUHVWVDOWKRXJKWKH\PD\EHFRQWLQJHQWDQGQRWVXEMHFWWRSRVVHVVLRQXQWLOVRPHIXWXUH WLPHl)GDWFLWLQJ+5 5! 1 DW UHSULQWHGLQ 86&&$1  2QWKHRWKHUKDQGLQ%UXQHDXWKHFRXUWGHWHUPLQHGWKDWVHYHUDQFHSD\PHQWVWR DGHEWRUEDVHGRQKHUSRVWSHWLWLRQHOHFWLRQWRSDUWLFLSDWHLQDQHPSOR\HUjVmHQKDQFHGH[LWl SURJUDPZHUHQRWSURSHUW\RIWKHEDQNUXSWF\HVWDWHEHFDXVHXQGHUWKH6HJDOWHVWWKH SD\PHQWVZHUHQRWVXIILFLHQWO\URRWHGLQWKHGHEWRUjVSUHSHWLWLRQSDVW%HIRUHWKHGHEWRU ILOHGKHUEDQNUXSWF\SHWLWLRQKHUHPSOR\HURIIHUHGKHUDRQHWLPHRSWLRQWRWHUPLQDWHKHU HPSOR\PHQWRQDVSHFLILFGDWHDQGUHFHLYHDVHYHUDQFHSDFNDJH7KHGHEWRUH[HUFLVHG WKHRSWLRQRQHZHHNDIWHUILOLQJIRUEDQNUXSWF\7KHFRXUWGHWHUPLQHGWKDWWKHSXUSRVHRI WKHVHYHUDQFHSD\PHQWVWRWKHGHEWRUZDVWRVXEVWLWXWHIRUIXWXUHLQFRPH

7KH 3URJUDP SD\PHQWV DUH FOHDUO\ LQWHQGHG DV HQKDQFHG VHYHUDQFH EHQHILWV RIIHUHG JHQHUDOO\ WR VXVWDLQ HPSOR\HHVZKLOHWKH\VHHNRWKHUMREV7KHGHEWRUZDVIDFHG ZLWKWKHFKRLFHVRIUHPDLQLQJHPSOR\HGDWWKH+DUWIRUGDQG WUXVW WKDW WKH +DUWIRUG ZRXOG QRW WHUPLQDWH KHU DFFHSW WKH 3URJUDP

VHQKDQFHGEHQHILWVWRVXVWDLQKHUZKLOHVKHVRXJKW HPSOR\PHQWRUFKDQFHEHLQJGLVFKDUJHGZLWKLQDVKRUWSHULRG ZLWKVXEVWDQWLDOO\IHZHUEHQHILWVFRPSDUHGWRWKRVHXQGHUWKH 3URJUDP

%UXQHDX%5DW%DVHGRQWKLVSXUSRVHWKHFRXUWFRQFOXGHGWKDWWKHGHEWRUjV VHYHUDQFHEHQHILWVZHUHQRWVXIILFLHQWO\URRWHGLQKHUSUHSHWLWLRQSDVWDQGWKHUHIRUHZHUH QRWSURSHUW\RIWKHHVWDWH,QFRQWUDVWWR%UXQHDXWKHSD\PHQWLQ5\HUVRQZDVJURXQGHG LQDSUHSHWLWLRQFRQWUDFWDQGZDVEDVHGRQWKHGHEWRUjVSUHSHWLWLRQVHUYLFHV 7KXVWKHWZRFDVHVRQZKLFK'H0DUFRUHOLHG5\HUVRQDQG%UXQHDXDJUHHRQWKH WHVWIRUSURSHUW\RIWKHHVWDWHZKHQWKHSURSHUW\LVDFRQWLQJHQWULJKW%RWKDGRSWDQGDSSO\ WKHUXOHWKDWZKHQWKHFRQWLQJHQWULJKWLVEDVHGRQWKHGHEWRUjVSUHSHWLWLRQDFWLYLWLHVLWLV SURSHUW\RIWKHHVWDWH7KHNH\GLVWLQFWLRQRQZKLFK5\HUVRQDQG%UXQHDXWXUQHGZDV ZKHWKHU WKH FRQWLQJHQW ULJKW ZDV EDVHG RQ SUHSHWLWLRQ FLUFXPVWDQFHV  ,I WKH FRXUW LQ 5\HUVRQUHTXLUHGYHVWLQJIRUWKHLQWHUHVWWREHSURSHUW\RIWKHHVWDWHDVWKH'HEWRUKHUH DUJXHVWKHFRXUWZRXOGKDYHIRXQGWKDWWKHSD\PHQWVZHUHQRWSURSHUW\RIWKHHVWDWH EHFDXVHWKHGHEWRUjVHPSOR\PHQWKDGQRW\HWEHHQWHUPLQDWHGZKHQWKHEDQNUXSWF\ZDV ILOHGDQGWKHFRQWUDFWULJKWZDVQRWYHVWHG6LPLODUO\LIWKH%UXQHDXFRXUWUHTXLUHGYHVWLQJ QRQHRILWVH[WHQGHGGLVFXVVLRQUHJDUGLQJWKHSXUSRVHRIWKHVHYHUDQFHSD\PHQWVZRXOG



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jV SUHSHWLWLRQ SDVW $FFRUGLQJO\WKH3DQHOUHMHFWVWKH'HEWRUjVLQWHUSUHWDWLRQRI'H0DUFRWKDWRQO\YHVWHGULJKWV DUHSURSHUW\RIWKHHVWDWH )LQDOO\WKH'HEWRUDOVRUHOLHVRQ6KDUSY'HU\%5('0LFK  +RZHYHUEHFDXVHWKHXQLTXHDSSURDFKLQ6KDUSGRHVQRWIROORZDSSOLFDEOHSUHFHGHQWRQ WKLVLVVXHLWLVXQSHUVXDVLYH,Q6KDUSWKHGHEWRUILOHGKLVFKDSWHUEDQNUXSWF\SHWLWLRQ RQ'HFHPEHU2Q)HEUXDU\WKHGHEWRUUHFHLYHGDERQXVRI EDVHGXSRQKLVHPSOR\PHQWGXULQJ7RTXDOLI\IRUDERQXVWKHHPSOR\HUjVSODQ UHTXLUHG WKH HPSOR\HH WR EH LQ JRRG VWDQGLQJ ZKHQ WKH FRPSDQ\ PDGH WKH ERQXV SD\PHQW)XUWKHUWKHWLPLQJRIWKHERQXVSD\PHQWZDVVROHO\DWWKHHPSOR\HUjVGLVFUHWLRQ 7KHGLVWULFWFRXUWKHOGWKDWQRSDUWRIWKHERQXVSD\PHQWZDVSURSHUW\RIWKHEDQNUXSWF\ HVWDWHHYHQWKRXJKWKHERQXVZDVEDVHGDOPRVWHQWLUHO\XSRQWKHGHEWRUjVSUHSHWLWLRQ HPSOR\PHQW7KHGLVWULFWFRXUWVWDWHGm7KHGHWHUPLQDWLYHLVVXHLQWKLVFDVHWKHUHIRUHLV ZKHWKHU'HEWRUKDGDQHQIRUFHDEOHULJKWWRUHFHLYHWKHERQXVFKHFNZKHQKHILOHGKLV SHWLWLRQl6KDUS%5DW 7KHUHLVDIXQGDPHQWDOSUREOHPZLWK6KDUS)RFXVLQJRQZKHWKHUWKHGHEWRUKDG DQmHQIRUFHDEOHlFRQWUDFWULJKWZKHQWKHSHWLWLRQZDVILOHGZRXOGH[FOXGHDOOFRQWLQJHQW LQWHUHVWVIURPWKHEDQNUXSWF\HVWDWHEHFDXVHE\GHILQLWLRQDFRQWLQJHQWLQWHUHVWLVQRW mHQIRUFHDEOHlXQWLOWKHFRQWLQJHQF\LVPHW7KHDSSURDFKLQ6KDUSLVWKXVLQFRQVLVWHQWZLWK WKHEURDGFRQFHSWRISURSHUW\RIWKHHVWDWHLQ†D  DQGZLWKWKHH[WHQVLYHFDVHODZ UHYLHZHGDERYHKROGLQJWKDWDFRQWLQJHQWLQWHUHVWFDQEHSURSHUW\RIWKHHVWDWH6HFWLRQ QHLWKHUVWDWHVQRULPSOLHVDQ\UHTXLUHPHQWWKDWWKHGHEWRUPXVWKDYHDQHQIRUFHDEOH LQWHUHVW LQ SURSHUW\ IRU WKDW LQWHUHVW WR EHFRPH SURSHUW\ RI WKH EDQNUXSWF\ HVWDWH $FFRUGLQJO\WKH3DQHOUHMHFWVWKHUHDVRQLQJDQGUHVXOWRI6KDUS



7KH3DQHODJUHHVZLWKWKHEDQNUXSWF\FRXUWWKDWLQWKHSUHVHQWFDVHWKH'HEWRUjV SURILW VKDULQJ SD\PHQW ZDV VXIILFLHQWO\ URRWHG LQ KLV SUHSHWLWLRQ SDVW WR EH LQFOXGHG LQ SURSHUW\RIKLVEDQNUXSWF\HVWDWHXQGHU†D  7KHEDQNUXSWF\FRXUWSURUDWHGWKHSURILWVKDULQJVRWKDWRQO\WKDWSRUWLRQRIWKHSURILW VKDULQJWKDWUHODWHGWRWKH'HEWRUjVSUHSHWLWLRQHPSOR\PHQWEHFDPHSURSHUW\RIWKHHVWDWH 7KLV LV HQWLUHO\ DSSURSULDWH ZKHQ RQO\ SDUW RI WKH SD\PHQW LV EDVHG XSRQ SUHSHWLWLRQ FRQGXFW6HHsHVVY&DUH\,QUHsHVV %5%$3WK&LU DIIjG )GWK&LU 7RZHUVY:X,QUH:X %5%$3WK&LU  

%7KH'HEWRUjVLQWHUHVWLQWKHSURILWVKDULQJSD\PHQWZDVQRWKHOGLQDEHQHILFLDOWUXVW FRQWDLQLQJDUHVWULFWLRQRQWUDQVIHUHQIRUFHDEOHXQGHUQRQEDQNUXSWF\ODZ

7KH'HEWRUjVDOWHUQDWLYHDUJXPHQWLVWKDWKLVLQWHUHVWLQWKHSURILWVKDULQJSURJUDP LVH[FOXGHGIURPSURSHUW\RIWKHHVWDWHSXUVXDQWWR†F  7KDWVHFWLRQSURYLGHVm$ UHVWULFWLRQRQWKHWUDQVIHURIDEHQHILFLDOLQWHUHVWRIWKHGHEWRULQDWUXVWWKDWLVHQIRUFHDEOH XQGHUDSSOLFDEOHQRQEDQNUXSWF\ODZLVHQIRUFHDEOHLQDFDVHXQGHUWKLVWLWOHl86& † F    7KH 'HEWRU DUJXHV WKDW WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQW UHVWULFWV WKH WUDQVIHURISURILWVKDULQJSD\PHQWVXQWLODIWHUWKH\DUHGLVWULEXWHGE\WKHHPSOR\HUDQGWKDW LIWKHHPSOR\HUZDVKROGLQJPRQH\RQKLVEHKDOIDFRQVWUXFWLYHWUXVWZDVFUHDWHG 7KH6L[WK&LUFXLWUHFHQWO\KHOGm$QLQTXLU\XQGHU†F  QRUPDOO\KDVWKUHH SDUWV )LUVW GRHV WKH GHEWRU KDYH D EHQHILFLDO LQWHUHVW LQ D WUXVW"  6HFRQG LV WKHUH D UHVWULFWLRQ RQ WKH WUDQVIHU RI WKDW LQWHUHVW"  7KLUG LV WKH UHVWULFWLRQ HQIRUFHDEOH XQGHU QRQEDQNUXSWF\ODZ"l7DXQWY*HQHUDO5HW6\VRIWKH&LW\RI'HWURLW,QUH:LOFR[  )GWK&LU $OWKRXJKWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQWLQWKLVFDVH GRHVFRQWDLQDUHVWULFWLRQDJDLQVWWUDQVIHUWKH'HEWRUKDVQRWVKRZQWKHH[LVWHQFHRIHLWKHU DQH[SUHVVWUXVWRUDFRQVWUXFWLYHWUXVW 8QGHU2KLRODZDQH[SUHVVWUXVWUHTXLUHV mDQH[SOLFLWGHFODUDWLRQRIWUXVWRU FLUFXPVWDQFHVZKLFKVKRZEH\RQGDUHDVRQDEOHGRXEWWKDWDWUXVWZDVLQWHQGHGWREH FUHDWHGl mDQLQWHQWLRQWRFUHDWHDWUXVWlDQG mDQDFWXDOFRQYH\DQFHRISURSHUW\ WR>D@WUXVWHH>@l8OPHUY)XOWRQ1(2KLR ,QWKHSUHVHQWFDVH WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQW GRHV QRW H[SOLFLWO\ GHFODUH D WUXVW QRU GR WKH FLUFXPVWDQFHVVKRZEH\RQGDUHDVRQDEOHGRXEWDQLQWHQWWRFUHDWHDWUXVW$GGLWLRQDOO\



WKHUHZDVQRFRQYH\DQFHRIWKHSURSHUW\WRDWUXVWHH7KHUHIRUHWKH'HEWRUjVFODLPRIDQ H[SUHVVWUXVWPXVWEHUHMHFWHG )XUWKHUXQGHU2KLRODZDFRQVWUXFWLYHWUXVWLVGHILQHGDVIROORZV

$FRQVWUXFWLYHWUXVWLVDWUXVWFUHDWHGE\RSHUDWLRQRIODZ DJDLQVWWKHKROGHURIDOHJDOULJKWWRSURSHUW\ZKLFKWKDWSHUVRQ VKRXOGQRWLQHTXLW\DQGJRRGFRQVFLHQFHKROGRUHQMR\LWLV D UHODWLRQVKLS DVVRFLDWHG ZLWK SURSHUW\ VXEMHFWLQJ WKH WLWOH KROGHUWRDQHTXLWDEOHGXW\WRFRQYH\ LW WRDQRWKHUEHFDXVH RWKHUZLVHWKHWLWOHKROGHUZRXOGEHXQMXVWO\HQULFKHG

%HOIDQFHY%XVKH\,QUH%XVKH\ %5%$3WK&LU TXRWLQJ8QLRQ 6DY /RDQ$VVjQY0F'RQRXJK1(G2KLR&W$SS +HUHWKH 'HEWRUPDNHVQRDVVHUWLRQRIDQXQMXVWHQULFKPHQWZKLOHKLVHPSOR\HUKROGVWKHSURILW VKDULQJ SULRU WR LWV GLVWULEXWLRQ  ,Q DQ\ HYHQW WKH HPSOR\HU KDV VLQFH PDGH WKH SURILW VKDULQJSD\PHQWWRWKH'HEWRU7KHFLUFXPVWDQFHVRIWKHSUHVHQWFDVHGRQRWZDUUDQWWKH LPSRVLWLRQRIDFRQVWUXFWLYHWUXVW

9&21&/86,21

7KHEDQNUXSWF\FRXUWjVGHFLVLRQILQGLQJWKDWDSURUDWHGVKDUHRIWKHSURILWVKDULQJ LVSURSHUW\RIWKHEDQNUXSWF\HVWDWHLV$)),50('