In re:Gordon Sel-Way v.
Opinion
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS
81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
,QUH *25'21 6(/:$< ; ,1& 'HEWRU 1R BBBBBBBBBBBBBBBBBBBBBBBB ! *25'21 6(/:$< ,1& $SSHOODQW Y 81,7(' 67$7(6 2) $0(5,&$ $SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW$QQ$UERU 1R n*HRUJH&6WHHK'LVWULFWsXGJH $UJXHG 'HFHPEHU 'HFLGHGDQG)LOHG 2FWREHU %HIRUH s21(6%2**6DQG6,/(5&LUFXLWsXGJHV
,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
BBBBBBBBBBBBBBBBB RIILWVFODLPIRUDSURUDWDVKDUHRIWKHGLVWULEXWLRQDJDLQVW 6HO:D\jVFODLPVIRUWD[UHIXQGVZRXOGQRWXQGHUPLQHWKH &2816(/ LQWHJULW\RIWKHSODQRIUHRUJDQL]DWLRQ,WZLOOPHUHO\DOORZ WKHJRYHUQPHQWWRREWDLQWKHVDPHWUHDWPHQWDVRWKHUFODVV $5*8(' .HYLQ0%DOO),7=*(5$/' '$.0$. FUHGLWRUV$FFRUGLQJO\ZHILQGWKDW6HO:D\jVPDQLSXODWLRQ 'HWURLW0LFKLJDQIRU$SSHOODQWsRHO/0F(OYDLQ81,7(' RIWKHSODQRIUHRUJDQL]DWLRQ ZKHWKHULQWHQWLRQDORUQRW JDYH 67$7(6'(3$570(172)s867,&(7$;',9,6,21 WKHJRYHUQPHQWDSRVWSHWLWLRQFODLPDJDLQVW6HO:D\IRUD $33(//$7( 6(&7,21 :DVKLQJWRQ '& IRU $SSHOOHH SURUDWDVKDUHRIWKHDPRXQWWKDWZDVGLVWULEXWHGWRWKHRWKHU 21 %5,() .HYLQ 0 %DOO 6WXDUW s 6QLGHU 5REHUW $ FODVVFUHGLWRUV6LQFHWKLVFODLPDURVHSRVWSHWLWLRQLWPD\ 3HXUDFK),7=*(5$/' '$.0$.'HWURLW0LFKLJDQIRU EH VHW RII DJDLQVW 6HO:D\jV SRVWSHWLWLRQ FODLP IRU WD[ $SSHOODQW sRHO / 0F(OYDLQ %UXFH 5 (OOLVHQ 81,7(' UHIXQGV 67$7(6'(3$570(172)s867,&(7$;',9,6,21 $33(//$7(6(&7,21:DVKLQJWRQ'&IRU$SSHOOHH &(TXLWLHV BBBBBBBBBBBBBBBBB 2QFHWKHSUHUHTXLVLWHVIRUHVWDEOLVKLQJDVHWRIIFODLPDUH HVWDEOLVKHGWKHFRXUWJHQHUDOO\ORRNVWRWKHHTXLWLHVLQRUGHU 23,1,21 WRGHWHUPLQHLIWKHVHWRIIVKRXOGEHDOORZHG6HH'X9RLVLQY BBBBBBBBBBBBBBBBB )RVWHU ,QUH6RXWKHUQ,QGXV%DQNLQJ&RUS )G WK&LU mZKHQMXVWLFHGLFWDWHVVHWRIIPXVWEH 1$7+$1,(/5s21(6&LUFXLWsXGJH2Q'HFHPEHU GHQLHGl $V QRWHG DERYH 6HO:D\ IDLOHG WR SURWHFW WKH &KDSWHUGHEWRU*RUGRQ6HO:D\,QF m6HO:D\l JRYHUQPHQWjVFODVVXQVHFXUHGFODLPVGHVSLWHDQLQGLFDWLRQ ILOHG D FODLP IRU D IHGHUDO WD[ UHIXQG LQ EDQNUXSWF\ FRXUW WKDW WKH EDQNUXSWF\ FRXUWjV VXERUGLQDWLRQ RUGHU PLJKW EH :KLOH WKH JRYHUQPHQW DFNQRZOHGJHG WKDW 6HO:D\ ZDV RYHUWXUQHG $W WKLV SRLQW WKH JRYHUQPHQW LV PHUHO\ HQWLWOHGWRDUHIXQGLWUHIXVHGWRSD\RQWKHJURXQGVWKDW6HO DWWHPSWLQJWRUHFHLYHLWVIDLUVKDUHRIWKHFODVVGLVWULEXWLRQ :D\RZHGLWPRQH\IRUSDVWWD[SHQDOWLHV7KHEDQNUXSWF\ 7KXV ZH ILQG WKDW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV FRXUWKHOGWKDWWKHJRYHUQPHQWZDVQRWHQWLWOHGWRVHWRIIWKH GLVFUHWLRQLQILQGLQJWKDWWKHHTXLWLHVIDYRUVHWRII WD[ UHIXQG DJDLQVW 6HO:D\jV SULRU GHEWV EHFDXVH WKH JRYHUQPHQWjVFODLPVDURVHSULRUWR6HO:D\jVILOLQJRIWKH ,9&RQFOXVLRQ EDQNUXSWF\SHWLWLRQDQG6HO:D\jVUHIXQGFODLPDURVHSRVW SHWLWLRQ7KHJRYHUQPHQWDSSHDOHGWKLVGHFLVLRQWRWKH8QLWHG )RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 WKH GLVWULFW 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ FRXUWjVMXGJPHQWLQWKLVFDVH ZKHUH LW DUJXHG WKDW WKH EDQNUXSWF\ FRXUW GLG QRW KDYH MXULVGLFWLRQRYHUWKLVFDVHDQGWKDWLWZDVHQWLWOHGWRDVHWRII 7KH GLVWULFW FRXUW KHOG WKDW WKH EDQNUXSWF\ FRXUW KDG MXULVGLFWLRQDQGWKDWWKHJRYHUQPHQWZDVHQWLWOHGWRDVHWRII )RUWKHUHDVRQVVWDWHGEHORZZH$)),50WKHGLVWULFWFRXUWjV GHFLVLRQ ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
Free access — add to your briefcase to read the full text and ask questions with AI
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS
81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
,QUH *25'21 6(/:$< ; ,1& 'HEWRU 1R BBBBBBBBBBBBBBBBBBBBBBBB ! *25'21 6(/:$< ,1& $SSHOODQW Y 81,7(' 67$7(6 2) $0(5,&$ $SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW$QQ$UERU 1R n*HRUJH&6WHHK'LVWULFWsXGJH $UJXHG 'HFHPEHU 'HFLGHGDQG)LOHG 2FWREHU %HIRUH s21(6%2**6DQG6,/(5&LUFXLWsXGJHV
,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
BBBBBBBBBBBBBBBBB RIILWVFODLPIRUDSURUDWDVKDUHRIWKHGLVWULEXWLRQDJDLQVW 6HO:D\jVFODLPVIRUWD[UHIXQGVZRXOGQRWXQGHUPLQHWKH &2816(/ LQWHJULW\RIWKHSODQRIUHRUJDQL]DWLRQ,WZLOOPHUHO\DOORZ WKHJRYHUQPHQWWRREWDLQWKHVDPHWUHDWPHQWDVRWKHUFODVV $5*8(' .HYLQ0%DOO),7=*(5$/' '$.0$. FUHGLWRUV$FFRUGLQJO\ZHILQGWKDW6HO:D\jVPDQLSXODWLRQ 'HWURLW0LFKLJDQIRU$SSHOODQWsRHO/0F(OYDLQ81,7(' RIWKHSODQRIUHRUJDQL]DWLRQ ZKHWKHULQWHQWLRQDORUQRW JDYH 67$7(6'(3$570(172)s867,&(7$;',9,6,21 WKHJRYHUQPHQWDSRVWSHWLWLRQFODLPDJDLQVW6HO:D\IRUD $33(//$7( 6(&7,21 :DVKLQJWRQ '& IRU $SSHOOHH SURUDWDVKDUHRIWKHDPRXQWWKDWZDVGLVWULEXWHGWRWKHRWKHU 21 %5,() .HYLQ 0 %DOO 6WXDUW s 6QLGHU 5REHUW $ FODVVFUHGLWRUV6LQFHWKLVFODLPDURVHSRVWSHWLWLRQLWPD\ 3HXUDFK),7=*(5$/' '$.0$.'HWURLW0LFKLJDQIRU EH VHW RII DJDLQVW 6HO:D\jV SRVWSHWLWLRQ FODLP IRU WD[ $SSHOODQW sRHO / 0F(OYDLQ %UXFH 5 (OOLVHQ 81,7(' UHIXQGV 67$7(6'(3$570(172)s867,&(7$;',9,6,21 $33(//$7(6(&7,21:DVKLQJWRQ'&IRU$SSHOOHH &(TXLWLHV BBBBBBBBBBBBBBBBB 2QFHWKHSUHUHTXLVLWHVIRUHVWDEOLVKLQJDVHWRIIFODLPDUH HVWDEOLVKHGWKHFRXUWJHQHUDOO\ORRNVWRWKHHTXLWLHVLQRUGHU 23,1,21 WRGHWHUPLQHLIWKHVHWRIIVKRXOGEHDOORZHG6HH'X9RLVLQY BBBBBBBBBBBBBBBBB )RVWHU ,QUH6RXWKHUQ,QGXV%DQNLQJ&RUS )G WK&LU mZKHQMXVWLFHGLFWDWHVVHWRIIPXVWEH 1$7+$1,(/5s21(6&LUFXLWsXGJH2Q'HFHPEHU GHQLHGl $V QRWHG DERYH 6HO:D\ IDLOHG WR SURWHFW WKH &KDSWHUGHEWRU*RUGRQ6HO:D\,QF m6HO:D\l JRYHUQPHQWjVFODVVXQVHFXUHGFODLPVGHVSLWHDQLQGLFDWLRQ ILOHG D FODLP IRU D IHGHUDO WD[ UHIXQG LQ EDQNUXSWF\ FRXUW WKDW WKH EDQNUXSWF\ FRXUWjV VXERUGLQDWLRQ RUGHU PLJKW EH :KLOH WKH JRYHUQPHQW DFNQRZOHGJHG WKDW 6HO:D\ ZDV RYHUWXUQHG $W WKLV SRLQW WKH JRYHUQPHQW LV PHUHO\ HQWLWOHGWRDUHIXQGLWUHIXVHGWRSD\RQWKHJURXQGVWKDW6HO DWWHPSWLQJWRUHFHLYHLWVIDLUVKDUHRIWKHFODVVGLVWULEXWLRQ :D\RZHGLWPRQH\IRUSDVWWD[SHQDOWLHV7KHEDQNUXSWF\ 7KXV ZH ILQG WKDW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV FRXUWKHOGWKDWWKHJRYHUQPHQWZDVQRWHQWLWOHGWRVHWRIIWKH GLVFUHWLRQLQILQGLQJWKDWWKHHTXLWLHVIDYRUVHWRII WD[ UHIXQG DJDLQVW 6HO:D\jV SULRU GHEWV EHFDXVH WKH JRYHUQPHQWjVFODLPVDURVHSULRUWR6HO:D\jVILOLQJRIWKH ,9&RQFOXVLRQ EDQNUXSWF\SHWLWLRQDQG6HO:D\jVUHIXQGFODLPDURVHSRVW SHWLWLRQ7KHJRYHUQPHQWDSSHDOHGWKLVGHFLVLRQWRWKH8QLWHG )RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 WKH GLVWULFW 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ FRXUWjVMXGJPHQWLQWKLVFDVH ZKHUH LW DUJXHG WKDW WKH EDQNUXSWF\ FRXUW GLG QRW KDYH MXULVGLFWLRQRYHUWKLVFDVHDQGWKDWLWZDVHQWLWOHGWRDVHWRII 7KH GLVWULFW FRXUW KHOG WKDW WKH EDQNUXSWF\ FRXUW KDG MXULVGLFWLRQDQGWKDWWKHJRYHUQPHQWZDVHQWLWOHGWRDVHWRII )RUWKHUHDVRQVVWDWHGEHORZZH$)),50WKHGLVWULFWFRXUWjV GHFLVLRQ ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
PDLQWDLQPXWXDOLW\,QWKLVFDVHWKLVFRQVLGHUDWLRQGRHVQRW ,)DFWV DSSO\ 7KH JRYHUQPHQWjV RULJLQDO WD[ SHQDOW\ FODLPV XQGLVSXWHGO\DURVHDJDLQVW6HO:D\DVLWVHOI EHIRUHLWEHFDPH 2Q sXO\ 6HO:D\ ZKLFK ZDV LQ WKH H[FDYDWLRQ DGHEWRULQSRVVHVVLRQ 2QWKHRWKHUKDQG6HO:D\jVFODLP EXVLQHVVILOHGDYROXQWDU\SHWLWLRQIRUUHOLHIXQGHU&KDSWHU IRUDWD[UHIXQGDURVHDIWHUWKHFRQILUPDWLRQRIWKHSODQDQG RIWKH8QLWHG6WDWHV%DQNUXSWF\&RGH7KHDSSHOODQWjVSODQ DIWHU 6HO:D\jV VWDWXV DV GHEWRULQSRVVHVVLRQ KDG DOUHDG\ RI OLTXLGDWLRQ DQG UHRUJDQL]DWLRQ ZDV FRQILUPHG E\ WKH H[SLUHG7KHUHIRUHWKHUHLVQRPXWXDOLW\SUREOHPLQWKLVFDVH EDQNUXSWF\FRXUWRQsXO\ 7KH3ODQSURYLGHGIRUWKH OLTXLGDWLRQRIDOORI6HO:D\jVDVVHWVDIWHUZKLFKLWZRXOGQRW 5HJDUGLQJWKHVHFRQGUDWLRQDOHRIPDLQWDLQLQJWKHLQWHJULW\ FRQWLQXH GRLQJ EXVLQHVV 7KH 3ODQ GLG QRW SURYLGH IRU D RIWKHSODQRIUHRUJDQL]DWLRQZHUHFRJQL]HWKDWDOORZLQJDQ\ GLVFKDUJHRI6HO:D\jVGHEW SUHSHWLWLRQGHEWVWREHFRQYHUWHGLQWRSRVWSHWLWLRQGHEWVDW FRQILUPDWLRQFUHDWHVWKHGDQJHUWKDWSUHSHWLWLRQFUHGLWRUVZLOO 6HO:D\jV SUHSHWLWLRQ GHEWV LQFOXGHG XQSDLG XVH VHWRII WR JDLQ SULRULW\ RYHU RWKHU SUHSHWLWLRQ FUHGLWRUV XQHPSOR\PHQW WD[ m)87$l SHQDOWLHV RZHG WR WKH ,56 ZLWKVXSHULRUFODLPV+RZHYHUZHDUHQRWFRQYLQFHGWKDW 8QGHU WKH 3ODQ WKH JRYHUQPHQWjV WD[ SHQDOW\ FODLPV ZHUH DOORZLQJDFUHGLWRUWRDVVHUWDSRVWSHWLWLRQFODLPEDVHGRQWKH WUHDWHGDVFODVVJHQHUDOXQVHFXUHGFODLPV$VVXFKWKHVH GHEWRUj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jVWD[SHQDOW\FODLPVDJDLQVW6HO:D\+RZHYHU EDQNUXSWF\FRXUWIRXQGWKDW6HO:D\ZDVHQWLWOHGWR)87$ LQGRLQJVRWKHEDQNUXSWF\FRXUWVSHFLILFDOO\QRWHGWKDWWKH WD[UHIXQGVIRUWKH\HDUV DQG LQWKHDPRXQWVRI 6XSUHPH &RXUW KDG JUDQWHG FHUWLRUDUL WR UHYLHZ 1RODQG D DQG UHVSHFWLYHO\ LQ FDVH ZKRVH RXWFRPH PLJKW UHTXLUH WKH UHYHUVDO RI WKH WRWDO ,Q WKH PHDQWLPH 6HO:D\ DOVR ILOHG DQ DGYHUVDU\ EDQNUXSWF\ FRXUWjV VXERUGLQDWLRQ GHFLVLRQ 'HVSLWH WKLV FRPSODLQWDJDLQVWWKH,56WRVXERUGLQDWHWKHJRYHUQPHQWjV ZDUQLQJ6HO:D\TXLFNO\GLVWULEXWHGLWVOLTXLGDWHGDVVHWVWR FODVVXQVHFXUHGWD[SHQDOW\FODLPVPHQWLRQHGDERYH&LWLQJ RWKHUFODVVFUHGLWRUVZLWKRXWVHWWLQJDVLGHDQ\DVVHWVWRSD\ WKH6L[WK&LUFXLWj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jVKDVW\GLVWULEXWLRQ EDQNUXSWF\FRXUWjVRUGHUDOORZLQJ6HO:D\WRVXERUGLQDWHWKH RI WKH DVVHWV XQGHUPLQHG WKH SODQ RI UHRUJDQL]DWLRQ E\ JRYHUQPHQWjVWD[SHQDOW\FODLPV FUHDWLQJ D VLWXDWLRQ LQ ZKLFK WKH JRYHUQPHQW ZDV WUHDWHG ZRUVHWKDQRWKHUFUHGLWRUVRIWKHVDPHVWDWXUH*LYHQWKHVH 2Q0D\ WKH6XSUHPH&RXUWLVVXHGLWVRSLQLRQLQ IDFWVZHDUHFRQYLQFHGWKDWDOORZLQJWKHJRYHUQPHQWWRVHW 8QLWHG6WDWHVY1RODQG86 RYHUUXOLQJWKH 6L[WK&LUFXLWjVGLVSRVLWLRQ%DVHGRQWKH6XSUHPH&RXUWjV ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
RSLQLRQ WKH GLVWULFW FRXUW UHPDQGHG WKLV FDVH WR WKH 7KH ILUVW UDWLRQDOH IRU WKH SURKLELWLRQ RQ VHWRII RI SUH EDQNUXSWF\ FRXUW IRU IXUWKHU UHYLHZ $IWHU FRQVLGHULQJ SHWLWLRQ DQG SRVWSHWLWLRQ GHEWV LV WR HQVXUH PXWXDOLW\ ,Q 1RODQGWKHEDQNUXSWF\FRXUWUHYHUVHGLWVSULRURUGHUJUDQWLQJ &KDSWHU EDQNUXSWF\ WKH GHEWRU ILOHV D SHWLWLRQ IRU VXERUGLQDWLRQRIWKHJRYHUQPHQWj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jV PXWXDOLW\ EHWZHHQ D FUHGLWRUjV SUHSHWLWLRQ FODLP DJDLQVW D LQLWLDO GHFLVLRQ WR VXERUGLQDWH FHUWDLQ JRYHUQPHQW FODLPV GHEWRU DQG D GHEWRULQSRVVHVVLRQjV SRVWSHWLWLRQ FODLP &RQVHTXHQWO\ WKH ,56 WD[ SHQDOW\ FODLPV WKDW KDG EHHQ DJDLQVW D FUHGLWRU 6HH )RUGVRQ (QJjJ &RUS Y *HQHUDO WHPSRUDULO\ VXERUGLQDWHG ZHUH QRW SDLG $OVR OHIW XQSDLG 0RWRUV&RUS ,QUH)RUGVRQ(QJjJ&RUS %5 ZHUHDGPLQLVWUDWLYHH[SHQVHVLQWKHIRUPRIDWWRUQH\jVDQG (' 0LFK mIRU WKH UHDVRQ WKDW WKH GHEWRU LQ DFFRXQWDQWjVIHHVWRWDOLQJDSSUR[LPDWHO\ZKLFKZHUH SRVVHVVLRQLVDQHQWLW\GLIIHUHQWDQGGLVWLQFWIURPWKHGHEWRU HQWLWOHGWRILUVWSULRULW\RIGLVWULEXWLRQXQGHUWKH3ODQ LWVHOIDSRVWSHWLWLRQGHEWFDQQRWEHVHWRII DJDLQVWDSUH SHWLWLRQFODLPl VHHDOVR9LUJLQLD%ORFN&RY9LUJLQLD0XW 2QFHWKHVXERUGLQDWLRQLVVXHZDVUHVROYHGLQIDYRURIWKH ,QV$JHQF\,QF ,QUH9LUJLQLD%ORFN&R %5 ,56 WKHEDQNUXSWF\FRXUWSURFHHGHGWRDGGUHVV6HO:D\jV %DQNU:'9D FODLPIRULWV)87$WD[UHIXQGDQGWKHJRYHUQPHQWjVFODLP WKDWLWVKRXOGEHDEOHWRVHWRIIWKLVUHIXQGDJDLQVWWKHDPRXQW $VHFRQGH[SODQDWLRQIRUZK\SUHSHWLWLRQFODLPVPD\QRW RIPRQH\WKDWLWZRXOGKDYHUHFHLYHGKDGLWEHHQJLYHQDSUR EHVHWRIIDJDLQVWSRVWSHWLWLRQFODLPVLVWKDWGRLQJVRPLJKW UDWD VKDUH RI WKH PRQLHV GLVWULEXWHG WR DOO RWKHU XQVHFXUHG IUXVWUDWHWKHSODQRIUHRUJDQL]DWLRQ)RUH[DPSOHDOORZLQJD FODLPV2Q6HSWHPEHU WKHEDQNUXSWF\FRXUWIRXQG FUHGLWRUWRVHWRIILWVGLVFKDUJHGSUHSHWLWLRQFODLPDJDLQVWWKH WKDWWKHJRYHUQPHQWjVFODLPDURVHSULRUWR6HO:D\jVSHWLWLRQ GHEWRUjV SRVWSHWLWLRQ FODLP ZRXOG HIIHFWLYHO\ UHYLYH IRUEDQNUXSWF\DQGWKDW6HO:D\jV)87$WD[UHIXQGFODLPV GLVFKDUJHGGHEWVDQGSUHYHQWWKHGHEWRUIURPPDNLQJDIUHVK DURVH LQ DIWHU WKH SHWLWLRQ 7KH EDQNUXSWF\ FRXUW VWDUW ,Q DGGLWLRQ DOORZLQJ FUHGLWRUV WR VHW RII WKHLU SUH FRQFOXGHGWKDWWKHVLQFHWKHJRYHUQPHQWjVFODLPDURVHSUH SHWLWLRQFODLPVDJDLQVWWKHGHEWRUjVSRVWSHWLWLRQFODLPPLJKW SHWLWLRQLWFRXOGQRWEHVHWRIIDJDLQVW6HO:D\jVSRVWSHWLWLRQ HQDEOHFUHGLWRUVWRFLUFXPYHQWWKHSODQRIUHRUJDQL]DWLRQE\ FODLP FROOHFWLQJ DKHDG RI FUHGLWRUV ZKR ZHUH DVVLJQHG D KLJKHU SULRULW\LQWKHSODQRIUHRUJDQL]DWLRQ6HH8QLWHG6WDWHVY 7KHJRYHUQPHQWDSSHDOHGWKLVGHFLVLRQWRWKH8QLWHG6WDWHV 1RUWRQ)G UG&LU m7RDOORZWKH,56 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ 2Q WR UHWDLQ WKHLU RYHUSD\PHQW DV H[WUD VHFXULW\ RQ WKH GHEW DSSHDO WKH JRYHUQPHQW DVVHUWHG WKDW WKH EDQNUXSWF\ FRXUW ZRXOGVHULRXVO\FRPSURPLVHWKHSRZHUVRIWKH%DQNUXSWF\ ODFNHGMXULVGLFWLRQRYHUWKLVFDVH6SHFLILFDOO\LWDUJXHGWKDW &RXUWWKHFDSDFLW\RIGHEWRUVWRUHKDELOLWDWHDQGWKHHTXLWDEOH 6HO:D\jV UHIXQG FODLP ZDV EDUUHG E\ WKH GRFWULQH RI GLVWULEXWLRQWKDWWKH%DQNUXSWF\&RGHLVGHVLJQHGWRIRVWHUl VRYHUHLJQ LPPXQLW\ DQG WKDW WKH EDQNUXSWF\ FRXUW ODFNHG VXEMHFWPDWWHUMXULVGLFWLRQRYHUWKLVSRVWSHWLWLRQPDWWHU,Q %$QDO\VLV DGGLWLRQ WKH JRYHUQPHQW DUJXHG WKDW WKH EDQNUXSWF\ FRXUW HUUHGE\UHIXVLQJWRJUDQWLWDVHWRII $VQRWHGDERYHWKHILUVWUDWLRQDOHIRUEDUULQJWKHVHWRIIRI SUHSHWLWLRQFODLPVDJDLQVWSRVWSHWLWLRQFODLPVLVWKHQHHGWR ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
LQWHJUDWHG LQWR WKH SRVWSHWLWLRQ SODQ RI UHRUJDQL]DWLRQ 2Q $XJXVW WKH GLVWULFW FRXUW KHOG WKDW WKH $OWHUQDWLYHO\ WKH JRYHUQPHQW DUJXHV WKDW LWV SUHSHWLWLRQ EDQNUXSWF\ FRXUW SURSHUO\ H[HUFLVHG MXULVGLFWLRQ RYHU 6HO FODLPZDVFRQYHUWHGLQWRDSRVWSHWLWLRQFODLPZKHQ6HO:D\ :D\jVFODLP+RZHYHULWUHYHUVHGWKHEDQNUXSWF\FRXUWjV EUHDFKHGLWVREOLJDWLRQVXQGHUWKHSODQE\GLVWULEXWLQJDOORI GHFLVLRQ UHJDUGLQJ VHWRII 7KH FRXUW IRXQG WKDW XSRQ LWVOLTXLGDWHGDVVHWVDQGIDLOLQJWRHQVXUHWKDWWKHJRYHUQPHQW FRQILUPDWLRQ RI WKH DSSHOODQWjV SODQ RI OLTXLGDWLRQ DQG UHFHLYHGLWVIDLUVKDUHRIWKHFODVVGLVWULEXWLRQ UHRUJDQL]DWLRQ WKH JRYHUQPHQWjV SUHSHWLWLRQ FODLP ZDV FRQYHUWHGWRDSRVWSHWLWLRQFODLP7KHFRXUWUHDVRQHGWKDW *LYHQWKHSDXFLW\RIFDVHODZDGGUHVVLQJWKHJRYHUQPHQWjV VLQFH 6HO:D\jV )87$ WD[ UHIXQG FODLP DOVR DURVH SRVW DUJXPHQWVZHWXUQWRWKHUDWLRQDOHXQGHUO\LQJWKHSURKLELWLRQ SHWLWLRQ WKH SDUWLHVj FODLPV FRXOG EH VHW RII DJDLQVW RQH DJDLQVW VHWRII RI SUHSHWLWLRQ FODLPV DJDLQVW SRVWSHWLWLRQ DQRWKHU6HO:D\QRZDSSHDOVWKHGLVWULFWFRXUWjVGHFLVLRQWR FODLPVWRGHWHUPLQHZKHWKHUWKHJRYHUQPHQWKDVDYDOLGSRVW WKLV&RXUW SHWLWLRQFODLP ,,sXULVGLFWLRQRIWKH%DQNUXSWF\&RXUW $%DFNJURXQG 2Q DSSHDO WKH JRYHUQPHQW DUJXHV WKDW WKH GLVWULFW FRXUW 7KHULJKWWRVHWRIILVDZLGHO\UHFRJQL]HGFRPPRQODZULJKW HUUHGZKHQLWKHOGWKDWWKHEDQNUXSWF\FRXUWKDGMXULVGLFWLRQ ZKLFK DOORZV HQWLWLHV WKDW RZH HDFK RWKHU PRQH\ WR DSSO\ RYHUWKLVFDVH6LQFHWKHMXULVGLFWLRQDOLVVXHLVQHFHVVDULO\ WKHLUPXWXDOGHEWVDJDLQVWHDFKRWKHUWKHUHE\DYRLGLQJmWKH DQWHFHGHQWWRDQ\GHWHUPLQDWLRQRIWKHPHULWVZHZLOODGGUHVV DEVXUGLW\RIPDNLQJ$SD\%ZKHQ%RZHV$l&LWL]HQV%DQN LW ILUVW ,Q GRLQJ VR ZH UHYLHZ WKH GLVWULFW FRXUWjV RI0GY6WUXPSI86 LQWHUQDOTXRWDWLRQ MXULVGLFWLRQDOGHWHUPLQDWLRQVGHQRYR0LFKLJDQ(PSOR\PHQW RPLWWHG $OWKRXJKWKH%DQNUXSWF\&RGHGRHVQRWSURYLGHDQ 6HF&RPPj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
86& VWDWHV D 1RWZLWKVWDQGLQJ DQ DVVHUWLRQ RI VRYHUHLJQ LPPXQLW\ VRYHUHLJQ ,Q VXSSRUW RI WKLV DUJXPHQW WKH JRYHUQPHQW FLWHV ,Q UH 6HDO LPPXQLW\ LV DEURJDWHG DV WR D JRYHUQPHQWDO XQLW WR WKH H[WHQW VHW IRUWK LQ %5 %DQNU :' 0LFK ,Q 6HDO D &KDSWHU GHEWRU ZKR WKLV VHFWLRQ ZLWK UHVSHFW WR WKH IROORZLQJ RZHG D FUHGLWRU IRU D GHEW WKDW DURVH SUHSHWLWLRQ PRYHG WR FROOHFW 6HFWLRQV GDPDJHV WKDW DURVH DV D UHVXOW RI WKH FUHGLWRUjV ZLOOIXO YLRODWLRQ RI DQ DXWRPDWLF VWD\ 7KH FRXUW KHOG WKDW DOWKRXJK WKH GHEWRUjV REOLJDWLRQ WR WKH FUHGLWRU RULJLQDOO\ DURVH SUHSHWLWLRQ LW ZDV FRQYHUWHG LQWR D VHSDUDWH SRVW SHWLWLRQ GHEW XSRQ WKH FRQILUPDWLRQ RI WKH &KDSWHU SODQ 7KH FRXUW DQG RI WKLV WLWOH FRQFOXGHG VLQFH WKLV GHEW ZDV SRVWSHWLWLRQ LW FRXOG EH VHW RII DJDLQVW WKH E $ JRYHUQPHQWDO XQLW WKDW KDV ILOHG D SURRI RI FODLP LQ WKH FDVH LV GDPDJHV WKDW DURVH IURP WKH FUHGLWRUjV YLRODWLRQ RI WKH DXWRPDWLF VWD\ GHHPHG WR KDYH ZDLYHG VRYHUHLJQ LPPXQLW\ ZLWK UHVSHFW WR D FODLP ZKLFK DURVH SRVWSHWLWLRQ ,G DW DJDLQVW VXFK JRYHUQPHQWDO XQLW WKDW LV SURSHUW\ RI WKH HVWDWH DQG WKDW DURVH ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
6HFWLRQ D SRVWFRQILUPDWLRQ MXULVGLFWLRQ RYHU WKLV PDWWHU 7KXV ZH WXUQWRWKHPHULWVRIWKHFDVH 6HFWLRQ D ZDLYHV WKH JRYHUQPHQWj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jVGHEWRULQSRVVHVVLRQVWDWXVKDG DGPLQLVWUDWLRQRIWKHFDVHE\VXEPLWWLQJDWD[UHWXUQIRU H[SLUHG 6HO:D\ SDLG LWV 0LFKLJDQ WD[HV DQG DFTXLUHG D VXFKWD[DQGDUHTXHVWIRUVXFKDGHWHUPLQDWLRQWRWKH FODLP IRU UHIXQG RI RYHUSDLG )87$ WD[HV IURP WKH JRYHUQPHQWDO XQLW FKDUJHG ZLWK UHVSRQVLELOLW\ IRU JRYHUQPHQW7KHGLVWULFWFRXUWKHOGWKDWWKHJRYHUQPHQWZDV FROOHFWLRQRUGHWHUPLQDWLRQRIVXFKWD[ HQWLWOHGWRVHWRIILWVREOLJDWLRQWRUHIXQG6HO:D\jVRYHUSDLG WD[HVDJDLQVW6HO:D\jVREOLJDWLRQVWRLWXQGHUWKHFRQILUPHG 86& E $VQRWHGDERYHWKHGLVWULFWFRXUWIRXQG SODQ:HUHYLHZWKHGLVWULFWFRXUWjVOHJDOGHFLVLRQVGHQRYR WKDWVLQFH6HO:D\SURSHUO\EURXJKWLWVUHIXQGFODLPXQGHU &DQDGLDQ 3DF )RUHVW 3URGXFWV /WG Y ,UYLQJ /WG ,Q UH WKLVVHFWLRQWKHJRYHUQPHQWKDGZDLYHGVRYHUHLJQLPPXQLW\ *LEVRQ*URXS,QF )G WK&LU 7KH FRXUWjV HTXLWDEOH GHWHUPLQDWLRQV DUH UHYLHZHG IRU DEXVH RI 2QDSSHDOWKHJRYHUQPHQWHPSKDVL]HVWKDWWKHODQJXDJHRI GLVFUHWLRQ2IILFLDO&RPPRI8QVHFXUHG&UHGLWRUVY0IUV VHFWLRQ VWDWHV WKDW D mWUXVWHHl DFWLQJ RQ EHKDOI RI WKH 7UDGHUV7UXVW&R ,QUH%HQQHWW)XQGLQJ*URXS,QF HVWDWH PD\ REWDLQ D WD[ UHIXQG LQ EDQNUXSWF\ FRXUW 7KH )G G&LU JRYHUQPHQW FRQFOXGHV WKDW VLQFH 6HO:D\ LV QRW D WUXVWHH DFWLQJ RQ EHKDOI RI WKH HVWDWH 6HO:D\ GLG QRW HVWDEOLVK 2Q DSSHDO 6HO:D\ DUJXHV WKDW WKH JRYHUQPHQW LV QRW MXULVGLFWLRQLQWKHEDQNUXSWF\FRXUWXQGHU:HDUHQRW HQWLWOHG WR VHWRII EHFDXVH 6HO:D\jV SRVWSHWLWLRQ FODLP HQWLUHO\SHUVXDGHGE\WKLVDUJXPHQW FDQQRWEHVHWRIIDJDLQVWWKHJRYHUQPHQWjVSUHSHWLWLRQFODLP ,Q FRQWUDVW WKH JRYHUQPHQW DUJXHV WKDW WKH VHWRII ZDV )LUVW WKH JRYHUQPHQWjV DUJXPHQW WKDW VHFWLRQ E LV SHUPLVVLEOHEHFDXVHERWKLWVFODLPDJDLQVW6HO:D\DQG6HO UHVWULFWHG WR WUXVWHHV VHHPV LQFRQVLVWHQW ZLWK WKH EURDG :D\j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jJ &RUS Y *HQHUDO 0RWRUV &RUS ,Q UH JRYHUQPHQWDO XQLW WKHUH VKDOO EH RIIVHW DJDLQVW D FODLP RU LQWHUHVW RI D )RUGVRQ (QJjJ &RUS %5 %DQNU (' 0LFK JRYHUQPHQWDO XQLW DQ\ FODLP DJDLQVW VXFK JRYHUQPHQWDO XQLW WKDW LV )UDPLQJKDP :LQHU\ ,QF Y s$* ,QF ,Q UH s$* ,QF %5 SURSHUW\ RI WKH HVWDWH %DQNU ' 0DVV ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
,Q IDFW VHYHUDO FRXUWV KDYH KHOG WKDW 86& SUHYLRXVO\DVVHVVHGZKHWKHURUQRWSDLGDQGZKHWKHURU SURYLGHVEDQNUXSWF\FRXUWVZLWKEURDGSRZHUWRHQIRUFHWKH QRW FRQWHVWHG EHIRUH DQG DGMXGLFDWHG E\ D MXGLFLDO RU WHUPVRIDFRQILUPHGSODQ6HHHJ,QUH7HUUDFRU%5 DGPLQLVWUDWLYHWULEXQDORIFRPSHWHQWMXULVGLFWLRQ '8WDK ,QUH%HWD,QWjO,QF%5 ('0LFK 6HFWLRQ E VWDWHV 86& D ,Q DGGLWLRQ WKH OHJLVODWLYH KLVWRU\ LQGLFDWHV WKDW ZDV QRW LQWHQGHG WR UHVWULFW WKH 7KHFRXUWPD\GLUHFWWKHGHEWRUDQGDQ\RWKHUQHFHVVDU\ EDQNUXSWF\ FRXUW MXULVGLFWLRQ WR FODLPV RI WUXVWHHV RYHU SDUW\WRH[HFXWHRUGHOLYHURUWRMRLQLQWKHH[HFXWLRQRI SURSHUW\RIWKHHVWDWH5DWKHULWmDXWKRUL]HVWKHEDQNUXSWF\ GHOLYHU\RIDQ\LQVWUXPHQWUHTXLUHGWRHIIHFWDWUDQVIHURI FRXUW WR UXOH RQ WKH PHULWV RI DQ\ WD[ FODLP LQYROYLQJ DQ SURSHUW\GHDOWZLWKE\DFRQILUPHGSODQDQGWRSHUIRUP XQSDLGWD[ILQHRUSHQDOW\UHODWLQJWRDWD[RUDQ\DGGLWLRQWR DQ\RWKHUDFWLQFOXGLQJWKHVDWLVIDFWLRQRIDQ\OLHQWKDW DWD[RIWKHGHEWRURUWKHHVWDWHl&RQJ5HF+ LVQHFHVVDU\IRUWKHFRQVXPPDWLRQRIWKHSODQ GDLO\ HG 6HSW UHPDUNV RI 5HS (GZDUGV LQWURGXFLQJ WKH +RXVH DPHQGPHQWV HPSKDVLV DGGHG 86& E UHSULQWHGLQ 86&&$1 8QGHUWKLVOLQHRIFDVHVWKHEDQNUXSWF\FRXUWZRXOGFOHDUO\ 0RUHRYHU DW OHDVW RQH FLUFXLW KDV KHOG WKDW LV QRW KDYHMXULVGLFWLRQRYHUWKLVFDVHVLQFHWKHEDQNUXSWF\FRXUWjV UHVWULFWHG VROHO\ WR FODLPV EURXJKW E\ WUXVWHHV 6HH ,56 Y UHVROXWLRQRI6HO:D\jVWD[FODLPDQGWKHJRYHUQPHQWjVULJKW /XRQJR ,QUH&RQVWDQFH/XRQJR )G WK WRVHWRIILVQHFHVVDU\WRKDVWHQWKHFRQVXPPDWLRQRIWKHSODQ &LU 6LPLODUO\ VHYHUDO RWKHU FRXUWV KDYH UHMHFWHG $VWKHGLVWULFWFRXUWKDVSRLQWHGRXWWKHUHVROXWLRQRI6HO DWWHPSWVWRUHVWULFWWKHXVHRIRWKHUEDQNUXSWF\SURYLVLRQVWR :D\jVWD[UHIXQGFODLPDJDLQVWWKHJRYHUQPHQWZRXOGHLWKHU WUXVWHHV)RUH[DPSOHLQ)OHHW%DQNRI0DVVDFKXVHWWV1$ DOORZ WKH GHEWRU WR IXOILOO LWV REOLJDWLRQV WR SD\ IRU Y7LHUQH\.DOLV /XFDV ,QUH3DWULRW,OOLQRLV&RUS DGPLQLVWUDWLYHH[SHQVHVRUWRSD\WKHJRYHUQPHQWjVFODVV %5 %DQNU&',OO DQG:LQVWRQ 6WUDZQY XQVHFXUHGFODLPV .HOO\ ,QUH&KXUFKILOHOG0JPW ,QY&RUS %5 %DQNU 1' ,OO EDQNUXSWF\ FRXUWV DOORZHG 6HFRQG DVVXPLQJ WKDW WKH EDQNUXSWF\ FRXUWjV SRVW VXFFHVVRUVLQLQWHUHVW DQG DVVLJQHHV WR EULQJ DFWLRQV XQGHU FRQILUPDWLRQ MXULVGLFWLRQ LV OLPLWHG WR WKH SODQ RI HYHQ WKRXJK WKHVH SURYLVLRQV RQO\ PHQWLRQ UHRUJDQL]DWLRQZHEHOLHYHWKDW6HO:D\jVSODQSURYLGHVIRU WUXVWHHV 7KXV WKH OHJLVODWLYH KLVWRU\ DQG FRXUW SUHFHGHQW SRVWFRQILUPDWLRQMXULVGLFWLRQLQWKLVFDVH:KLOHLWLVWUXH VWURQJO\ VXJJHVWV WKDW VHFWLRQ E LV QRW UHVWULFWHG WR WKDW 6HO:D\jV SODQ RI UHRUJDQL]DWLRQ SURYLGHV WKDW WKH WUXVWHHVDQGWKDWWKHJRYHUQPHQWZDLYHGVRYHUHLJQLPPXQLW\ EDQNUXSWF\ FRXUW mVKDOO UHWDLQ MXULVGLFWLRQ WR KHDU DQG LQWKLVFDVH GHWHUPLQH DQ\ FRQWURYHUV\ SHQGLQJ DV RI WKH GDWH RI FRQILUPDWLRQlWKLVSURYLVLRQLVQRWH[FOXVLYH7KHSODQDOVR 6HFWLRQ E VWLSXODWHVWKDWmWKH>F@RXUWVKDOOIXUWKHUUHWDLQMXULVGLFWLRQWR KHDU DQG GHWHUPLQH DOO FRQWURYHUVLHV UHODWLQJ WR )XUWKHUPRUHDVVXPLQJDUJXHQGRWKDW&RQJUHVVjDEURJDWLRQ REOLJDWLRQVRIWKH'HEWRULQFXUUHGLQWKHFRQGXFWRI6HO:D\ RIVRYHUHLJQLPPXQLW\ LQVHFWLRQ D GRHVQRWDSSO\WR SULRU WRFRQILUPDWLRQls$DW*LYHQWKDWWKHSUHVHQW VHFWLRQ E FODLPVEURXJKWE\QRQWUXVWHHVZHILQGWKDW FRQWURYHUV\FOHDUO\UHODWHVWR6HO:D\jVIHGHUDOWD[SHQDOWLHV WKHJRYHUQPHQWZDLYHGVRYHUHLJQLPPXQLW\SXUVXDQWWR WKDWDURVHSULRUWRFRQILUPDWLRQDQGSD\PHQWZHEHOLHYHWKDW 86& E WKHSODQRIUHRUJDQL]DWLRQSURYLGHVWKHEDQNUXSWF\FRXUWZLWK ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
6HFWLRQ E VWDWHVWKDW WKDW WKH EDQNUXSWF\ FRXUW GLG KDYH FRUH VXEMHFW PDWWHU MXULVGLFWLRQRYHUWKLVFDVH $JRYHUQPHQWDOXQLWWKDWKDVILOHGDSURRIRIFODLPLQWKH FDVHLVGHHPHGWRKDYHZDLYHGVRYHUHLJQLPPXQLW\ZLWK E 3RVW&RQILUPDWLRQsXULVGLFWLRQ UHVSHFWWRDFODLPDJDLQVWVXFKJRYHUQPHQWDOXQLWWKDWLV SURSHUW\ RI WKH HVWDWH DQG WKDW DURVH RXW RI WKH VDPH 1RQHWKHOHVVWKHJRYHUQPHQWFRQWHQGVWKDWLQD&KDSWHU WUDQVDFWLRQRURFFXUUHQFHRXWRIZKLFKWKHFODLPRIVXFK SURFHHGLQJ WKH EDQNUXSWF\ FRXUW PD\ QRW H[HUFLVH SRVW JRYHUQPHQWDOXQLWDURVH FRQILUPDWLRQMXULVGLFWLRQXQOHVVVXFKMXULVGLFWLRQLVmSURYLGHG >IRU@ LQ WKH SODQ RI UHRUJDQL]DWLRQl 6HH +RVS 8QLY 86& E $FFRUGLQJO\ZKHQWKHJRYHUQPHQWILOHV 3URSHUW\'DPDJH&ODLPDQWVYsRKQV0DQYLOOH&RUS ,QUH DSURRIRIFODLPDJDLQVWWKHGHEWRUWKHGHEWRUPD\EULQJD sRKQV0DQYLOOH&RUS )G G&LU 7KH FRXQWHUFODLPDJDLQVWWKHJRYHUQPHQWLI WKHSURSHUW\WKDW JRYHUQPHQW DUJXHV WKDW VLQFH 6HO:D\jV SODQ RI WKH GHEWRU FODLPV LV WKH SURSHUW\ RI WKH HVWDWH DQG WKH UHRUJDQL]DWLRQRQO\SURYLGHVMXULVGLFWLRQRYHUFRQWURYHUVLHV GHEWRUjV FODLP DULVHV RXW RI WKH VDPH WUDQVDFWLRQ RU mSHQGLQJ DV RI WKH GDWH RI FRQILUPDWLRQl LW GRHV QRW KDYH RFFXUUHQFHDVWKHJRYHUQPHQWjVFODLP,G MXULVGLFWLRQ RYHU 6HO:D\jV WD[ UHIXQG FODLP ZKLFK DURVH DIWHU FRQILUPDWLRQ 7KLV DUJXPHQW KDV WZR LPSRUWDQW ,QWKLVFDVHWKHJRYHUQPHQWILOHGDSURRIRIFODLPDJDLQVW ZHDNQHVVHV 6HO:D\DVGHEWRULQSRVVHVVLRQWRUHFRYHUXQHPSOR\PHQW WD[SHQDOWLHVIRUWKH\HDUV DQG 7KH )LUVWDOWKRXJKLWLVWUXHWKDWVRPHFRXUWVKDYHUHVWULFWHGWKH JRYHUQPHQWDFTXLUHGDQXQVHFXUHGFODLPIRUWD[SHQDOWLHVLQ EDQNUXSWF\FRXUWjVMXULVGLFWLRQWRWKHSODQRIUHRUJDQL]DWLRQ WKHDPRXQWRI 2Q6HSWHPEHU 6HO WKLV SUDFWLFH KDV EHHQ H[SOLFLWO\ UHMHFWHG E\ RWKHUV 6HH :D\SDLGLWV0LFKLJDQXQHPSOR\PHQWWD[HVIRUWKH DQG 5HIULJHUDQW 5HFODPDWLRQ &RUS RI $P Y 7RGDFN ,Q UH WD[\HDUV7KLVSD\PHQWGHFUHDVHG6HO:D\jVIHGHUDO 5HIULJHUDQW 5HFODPDWLRQ &RUS RI $P %5 WD[OLDELOLW\IRU DQG DQGPDGH6HO:D\HOLJLEOH %DQNU0'7HQQ FLWLQJ)UDQN5.HQQHG\ *HUDOG IRUDUHIXQGIRU DQGDUHIXQGIRU . 6PLWK 3RVWFRQILUPDWLRQ ,VVXHV 7KH (IIHFWV RI *LYHQWKHVHIDFWVWKHJRYHUQPHQWjVFODLPIRUXQSDLGWD[HV &RQILUPDWLRQDQG3RVWFRQILUPDWLRQ3URFHHGLQJV6&/ FRQVWLWXWHV D ZDLYHU RI VRYHUHLJQ LPPXQLW\ ZLWK UHJDUG WR 5HY m>6@LQFHWKHFRQILUPDWLRQRIDSODQ 6HO:D\jVFODLPIRU)87$WD[HVLI WKH)87$UHIXQGVDUH LQD&KDSWHUFDVHGRHVQRWWHUPLQDWHDFDVHWKHUHVKRXOG SURSHUW\RIWKHHVWDWHDQG 6HO:D\jV)87$UHIXQGFODLP EHQRFKDQJHLQEDVLFMXULVGLFWLRQRIWKHFRXUWl DULVHV RXW RI WKH VDPH WUDQVDFWLRQ RU RFFXUUHQFH DV WKH JRYHUQPHQWjVWD[SHQDOW\FODLP D 3URSHUW\RIWKH(VWDWH )XUWKHUPRUH HYHQ LI WKH EDQNUXSWF\ FRXUW GRHV QRW KDYH VXEMHFW PDWWHU MXULVGLFWLRQ RYHU WKLV FDVH DV D mFRUH SURFHHGLQJl ZH EHOLHYH WKDW $VQRWHGDERYHWKHILUVWVWHSLQGHWHUPLQLQJZKHWKHUWKH LW KDV mUHODWHG WRl MXULVGLFWLRQ RYHU 6HO:D\jV FODLP SXUVXDQW WR 86& JRYHUQPHQWjV FODLP FRQVWLWXWHV D ZDLYHU RI VRYHUHLJQ E 86& E JUDQWV GLVWULFW FRXUWV FRQFXUUHQW DQG LPPXQLW\ZLWKUHJDUGWRDGHEWRUjVFRXQWHUFODLPLVZKHWKHU RULJLQDO MXULVGLFWLRQ RYHU mDOO FLYLO SURFHHGLQJV DULVLQJ XQGHU WLWOH RU WKHGHEWRUjVFODLPLVSURSHUW\RIWKHHVWDWH,QLWVEULHIVWKH DULVLQJ LQ RU UHODWHG WR FDVHV XQGHU WLWOH l ,Q WXUQ 86& D JRYHUQPHQWSRLQWVRXWWKDW6HO:D\jVSODQRIUHRUJDQL]DWLRQ DOORZV WKDW mHDFK >G@LVWULFW >F@RXUW PD\ SURYLGH WKDW DQ\ DQG DOO FDVHV XQGHU WLWOH DQG DQ\ DQG DOO SURFHHGLQJV DULVLQJ XQGHU WLWOH RU DULVLQJ VWLSXODWHVWKDWWKHSURSHUW\RIWKHHVWDWHUHYHUWVWR6HO:D\ LQ D UHODWHG FDVH XQGHU WLWOH VKDOO EH UHIHUUHG WR WKH EDQNUXSWF\ MXGJHV XSRQFRQILUPDWLRQs$DW$FFRUGLQJWRWKHJRYHUQPHQW IRU WKH >G@LVWULFW ,QUH*RUGRQ6HO:D\ 1R 1R ,QUH*RUGRQ6HO:D\
86& E m%DQNUXSWF\ sXGJHV PD\ KHDU DQG 6HO:D\jV WD[ UHIXQG FDQQRW EH WKH SURSHUW\ RI WKH HVWDWH GHWHUPLQHDOOFRUHSURFHHGLQJVDULVLQJXQGHUWLWOHl VLQFHWKHUHIXQGFODLPDURVHDIWHUFRQILUPDWLRQDWDSRLQWLQ 7KH%DQNUXSWF\&RGHVHWVIRUWKDQRQH[FOXVLYHOLVWRIFRUH WLPHZKHQWKHHVWDWHKDGFHDVHGWRH[LVW SURFHHGLQJV7KLVOLVWLQFOXGHVSURFHHGLQJVZKLFKDIIHFWWKH DGMXVWPHQW RI WKH GHEWRUFUHGLWRU UHODWLRQVKLS 86& $OWKRXJK WKH JRYHUQPHQWjV DSSURDFK KDV D FHUWDLQ E 2 OLQJXLVWLFDSSHDOLWKDVEHHQFULWLFL]HGIRUFUHDWLQJDUELWUDU\ GLVWLQFWLRQVEHWZHHQSUHFRQILUPDWLRQDQGSRVWFRQILUPDWLRQ 7KH UHVROXWLRQ RI WKLV SURFHHGLQJ FOHDUO\ DIIHFWV WKH SURSHUW\ )RU H[DPSOH LQ 3ULFH Y 8QLWHG 6WDWHV ,Q UH DGMXVWPHQW RI WKH GHEWRUFUHGLWRU UHODWLRQVKLS $V QRWHG 7KHRGRUH53ULFH %5 1',OO D DERYHWKHDGMXGLFDWLRQRI6HO:D\jVWD[UHIXQGFODLPDQGWKH &KDSWHU GHEWRU ILOHG D FODLP IRU DWWRUQH\jV IHHV WKDW KH JRYHUQPHQWjVULJKWWRVHWRIIZLOOGHWHUPLQH6HO:D\DQGWKH LQFXUUHGZKLOHGHIHQGLQJDJDLQVWWKHJRYHUQPHQWjVVXLWIRU JRYHUQPHQWjVULJKWVYLVDYLVRQHDQRWKHU7KXVLWLVFOHDU EDFNWD[HVLQDIHGHUDOFRXUW$VLQWKLVFDVHWKHJRYHUQPHQW DUJXHGWKDWVLQFHWKHFODLPIRUDWWRUQH\j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m>S@ODLQO\WKHUHLVQRILUP SXUSRVHV RI FRQILUPLQJ D SODQ XQGHU FKDSWHU RU RI WLWOH EXW OLQHZKLFKGLYLGHVWKHSURSHUW\RIWKHGHEWRUDQGSURSHUW\RI QRW WKH OLTXLGDWLRQ RU HVWLPDWLRQ RI FRQWLQJHQW RU XQOLTXLGDWHG SHUVRQDO WKHHVWDWHRQFHD&KDSWHUSODQKDVEHHQFRQILUPHG5DWKHU LQMXU\ WRUW RU ZURQJIXO GHDWK FODLPV DJDLQVW WKH HVWDWH IRU SXUSRVHV RI WKHWZRPXVWEHWUHDWHGDVRQHDQGWKHVDPHDWOHDVWWRWKH GLVWULEXWLRQ LQ D FDVH XQGHU WLWOH H[WHQW WKDW WKH GHEWRUjV SRVWFRQILUPDWLRQ LQFRPH RU RWKHU & FRXQWHUFODLPV E\ WKH HVWDWH DJDLQVW SHUVRQV ILOLQJ FODLPV DJDLQVW WKH SURSHUW\LVFRPPLWWHGWRLPSOHPHQWDWLRQRIWKHSODQl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s REMHFWLRQV WR GLVFKDUJHV . GHWHUPLQDWLRQV RI WKH YDOLGLW\ H[WHQW RU SULRULW\ RI OLHQV HVWDWH PLJKW KHOS PDLQWDLQ WKH LQWHJULW\ RI WKH SODQ RI / FRQILUPDWLRQV RI SODQV UHRUJDQL]DWLRQ ZH DJUHH ZLWK 3ULFH FRXUWj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
SURSHUW\IURPWKHSURSHUW\RIWKHHVWDWH*LYHQWKDW6HO )G WK&LU UHYjGLQSDUWRQRWKHUJURXQGV :D\jV&KDSWHUOLTXLGDWLRQDQGUHRUJDQL]DWLRQSODQGRHV 86 LQWHUQDOTXRWDWLRQRPLWWHG QRWSURYLGHIRUDGLVFKDUJHDQGWKH3ODQREOLJDWHV6HO:D\WR XVH SRVWFRQILUPDWLRQ SURSHUW\ WR IXOILOO WKH SODQ RI ,Q WKLV FDVH WKH SDUWLHVj FODLPV ERWK DULVH RXW RI WKH UHRUJDQL]DWLRQZHILQGWKDWWKHWD[UHIXQGFODLPDOWKRXJK GHEWRUjV WD[ OLDELOLW\ 7KH JRYHUQPHQWjV FODLP IRU WD[ SRVSHWLWLRQSURSHUW\VKRXOGEHFRQVLGHUHGDVSURSHUW\RIWKH SHQDOWLHVDULVHVRXWRI6HO:D\jVIDLOXUHWRSD\WD[HVLQ HVWDWH$FFRUGLQJO\ZHKROGWKDW6HO:D\jVFODLPIRU)87$ DQG 6HO:D\jVFODLPIRUD)87$UHIXQGDULVHVRXWRI WD[ UHIXQGV LV SURSHUW\ RI WKH HVWDWH IRU WKH SXUSRVHV RI LWVHYHQWXDOSD\PHQWRIKLV DQG IHGHUDOWD[HVDQG GHWHUPLQLQJMXULVGLFWLRQXQGHUVHFWLRQ E LWVVXEVHTXHQWSD\PHQWRI0LFKLJDQXQHPSOR\PHQWWD[HVIRU DQG $OWKRXJKLWLVWUXHWKDWWKHSDUWLHVjFODLPV E 6DPH7UDQVDFWLRQRU2FFXUUHQFH GLGQRWDULVHDWWKHVDPHPRPHQWWKHUHLVFOHDUO\DORJLFDO UHODWLRQVKLSEHWZHHQWKHFODLPVVLQFHWKH\DUHERWKSURFHHG 3XUVXDQWWRVHFWLRQ E WKHVHFRQGWHVWIRUZDLYHURI IURP6HO:D\jVWD[OLDELOLW\IRU DQG VRYHUHLJQLPPXQLW\LVZKHWKHUWKHGHEWRUjVFODLPDULVHVRXW RIWKHmVDPHWUDQVDFWLRQRURFFXUUHQFHlDVWKHJRYHUQPHQWjV $VVXFKZHILQGWKDW6HO:D\KDVPHWERWKWHVWVIRUWKH FODLP6LQFHWKHmVDPHWUDQVDFWLRQlODQJXDJHZDVERUURZHG ZDLYHURIVRYHUHLJQLPPXQLW\XQGHUVHFWLRQ E DQGWKDW IURP5XOHRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHFRXUWV WKHUHIRUHWKHJRYHUQPHQWjVFODLPDJDLQVW6HO:D\FRQVWLWXWHG KDYHURXWLQHO\UHOLHGRQ5XOHMXULVSUXGHQFHLQLQWHUSUHWLQJ DZDLYHURIVRYHUHLJQLPPXQLW\ZLWKUHJDUGWR6HO:D\jVWD[ E %DVHGRQWKLVUHOLDQFHVHYHUDOFRXUWVKDYHKHOGWKDW UHIXQGFODLP OLNH 5XOH VHFWLRQ E jV mWUDQVDFWLRQ RU RFFXUUHQFHl ODQJXDJHVKRXOGEHLQWHUSUHWHGOLEHUDOO\6HHHJ%XUOLQJWRQ 6XEMHFW0DWWHUsXULVGLFWLRQ 155Y6WURQJ )G WK&LU m>:@H KDYH VWUHVVHG WKDW RXU LQTXLU\ FDQQRW EH D µZRRGHQ 7KH JRYHUQPHQW DOVR DUJXHV WKDW WKH EDQNUXSWF\ FRXUW DSSOLFDWLRQ RI WKH FRPPRQ WUDQVDFWLRQ ODEHOjl FLWDWLRQV VKRXOGQRWKDYHDGMXGLFDWHGWKLVFDVHEHFDXVHLWGLGQRWKDYH RPLWWHG 5DWKHUDWUDQVDFWLRQmPD\FRPSUHKHQGDVHULHVRI VXEMHFWPDWWHUMXULVGLFWLRQ PDQ\ RFFXUUHQFHV GHSHQGLQJ QRW VR PXFK XSRQ WKH LPPHGLDWHQHVV RI WKHLU FRQQHFWLRQ DV XSRQ WKHLU ORJLFDO D &RUHsXULVGLFWLRQ UHODWLRQVKLSl 8QLWHG 6WDWHV Y 6RXWKHUQ &RQVWU &R 6HFWLRQ E FRQIHUVMXULVGLFWLRQRQEDQNUXSWF\MXGJHV WR KHDU DOO mFRUH SURFHHGLQJVl DULVLQJ XQGHU 7LWOH )RU H[DPSOH ZKHQ WKH SODQ RI UHRUJDQL]DWLRQ SURYLGHV IRU D GLVFKDUJH RI GHEW D GLVWLQFWLRQ EHWZHHQ WKH SURSHUW\ RI WKH HVWDWH ZKLFK LV VXEMHFW WR D SODQ RI UHRUJDQL]DWLRQ DQG SRVWFRQILUPDWLRQ SURSHUW\ ,Q 3ULFH Y 8QLWHG 6WDWHV ,Q UH 7KHRGRUH 5 3ULFH )G ZKLFK LV QRW PD\ EH QHFHVVDU\ WR DOORZ WKH GHEWRU WR PDNH D IUHVK VWDUW WK &LU WKH 6HYHQWK &LUFXLW DGGUHVVHG WKH TXHVWLRQ RI ZKHWKHU WKH ,56jV FODLP IRU XQSDLG WD[HV DQG WKH GHEWRUjV FODLP IRU DWWRUQH\jV IHHV 5XOH D SURYLGHV LQ UHOHYDQW SDUW LQFXUUHG LQ DQ DWWHPSW WR GHIHQG DJDLQVW WKH JRYHUQPHQWjV FODLP DURVH RXW $ SOHDGLQJ VKDOO VWDWH DV D FRXQWHUFODLP DQ\ FODLP ZKLFK DW WKH WLPH RI RI WKH VDPH mWUDQVDFWLRQ DQG RFFXUUHQFHl XQGHU VHFWLRQ $OWKRXJK VHUYLQJ WKH SOHDGLQJ WKH SOHDGHU KDV DJDLQVW DQ\ RSSRVLQJ SDUW\ LI LW WKH JRYHUQPHQWjV FODLP DURVH RXW RI WKH GHEWRUjV WD[ OLDELOLW\ DQG WKH DULVHV RXW RI WKH WUDQVDFWLRQ RU RFFXUUHQFH WKDW LV WKH VXEMHFW PDWWHU RI WKH GHEWRUjV FODLP DURVH PXFK ODWHU DV D UHVXOW RI WKH JRYHUQPHQWjV DWWHPSW WR RSSRVLQJ SDUW\jV FODLP DQG GRHV QRW UHTXLUH IRU LWV DGMXGLFDWLRQ WKH FROOHFW WD[HV WKH FRXUW KHOG WKDW WKHVH FODLPV DURVH RXW RI WKH mVDPH SUHVHQFH RI WKLUG SDUWLHV RI ZKRP WKH FRXUW FDQQRW DFTXLUH MXULVGLFWLRQ WUDQVDFWLRQ RU RFFXUUHQFHl XQGHU VHFWLRQ EHFDXVH WKH FODLPV ZHUH )(' ,9 5 & 3 D mORJLFDOO\ UHODWHGl ,G DW
In re:Gordon Sel-Way v. (In re:Gordon Sel-Way v.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.