§ 18-108 — Characterization of transfer

Illinois § 18-108

• Jurisdiction: Illinois
• Topic: REGULATION
• Ch. 220: UTILITIES
• Act 220 ILCS 5/: Public Utilities Act.
• Art.: Article XVIII - Electric Utility Transitional Funding Law

Text

A sale, assignment or other transfer of intangible transition property or grantee instruments which is expressly stated in the documents governing such transaction to be a sale or other absolute transfer, in a transaction approved in a transitional funding order, shall be treated as an absolute transfer of all of the transferor's right, title and interest in, to and under such intangible transition property or grantee instruments which places such transferred property beyond the reach of the transferor or its creditors, as in a true sale, and not as a pledge or other financing, of such intangible transition property or grantee instruments, as the case may be; provided, however, that whether or not such transfer is deemed to be a sale for federal tax purposes shall be governed by applicable law without regard to this Section 18-108. The characterization of any such transfer as an absolute transfer and the corresponding characterization of the transferee's property interest shall not be defeated or adversely affected by, among other things: (i) the commingling of revenues arising with respect to intangible transition property or grantee instruments, as the case may be, with funds of the electric utility or other funds of the assignee, issuer or grantee; (ii) granting to holders of transitional funding instruments a preferred right to the intangible transition property, whether direct or indirect; (iii) the provision by the electric utility, grantee, assignee, or issuer of any recourse, collateral or credit enhancement with respect to transitional funding instruments or grantee instruments, as the case may be; (iv) the retention by the assigning party of a partial interest in any intangible transition property, whether direct or indirect, or whether subordinate or otherwise; or (v) the electric utility's responsibilities for collecting instrument funding charges and any retention of bare legal title for the purpose of such collection activities; provided, however, that nothing in this Section 18-108 is intended to preclude consideration of such provisions in determining whether or not such transfer is deemed to be a sale for federal tax purposes under other applicable law. A sale, assignment, or other transfer of intangible transition property or grantee instruments, as the case may be, shall be deemed perfected as against third persons, including any judicial lien creditors, when all of the following have taken place: (1) The Commission has issued the transitional funding order creating the intangible transition property; and (2) A sale, assignment or transfer of the intangible transition property or grantee instruments, as the case may be, has been executed and delivered in writing by the electric utility.

Legislative History

(Source: P.A. 90-561, eff. 12-16-97.)