Keller
11-14-2008, 02:24 PM
Here is a completely different angle on the financial melt-down than most are likely to see:
So my group has a significant (our biggest, actally) client who recently (w/in the last 10 years) purchased a company with gross revenues in the tens of billions of dollars. Post-acquisition the company has been engaging in a significant and on-going restructuring for many purposes, some business and some "otherwise". As a result, the company structure (which is made up of thousands of legal entities, some recognized for tax purposes and others not) has changed entirely.
Prior to the client's acquisition of this company, the company had an outstanding third party loan of about 10B. One term of the loan was that the company would not dispose of "significantly all of its assets." If they did dispose of the assets, the company would have 30 days to cure (re-acquire all of the assets) or pay the amount in full. This was never a problem because whenever the loan, or a portion of it, was transfered from the original obligor, it was guaranteed. We were never concerned that the originator would have any issues with it.
Well, given the state of the economy and the lack of liquidity, we're very concerned that the bank will enforce the term of the loan and the company will be fucked. So, over the last two and a half weeks, we've been working on backward engineering the structure to unwind the company in the most tax efficient way possible.
Needless to say, we've had an all-hands-on-deck approach with about 10 lawyers working 12+ hrs per day on this deal. It's been a pretty amazing learning experience for me because I was not around when this structure was originally created and so I'm really learning the nuts and bolts.
What I can say at this point is that the level of sophistication in private enterprise is utterly amazing. I would have never in a thousand years dreamed up some of the shit that is going on inside of this company.
In any case, this serves as both a unique example of one effect of the current economy and as an explanation of why I've barely participated (even just to troll PB) in the forums recently and why I might not be for a little while to come.
So my group has a significant (our biggest, actally) client who recently (w/in the last 10 years) purchased a company with gross revenues in the tens of billions of dollars. Post-acquisition the company has been engaging in a significant and on-going restructuring for many purposes, some business and some "otherwise". As a result, the company structure (which is made up of thousands of legal entities, some recognized for tax purposes and others not) has changed entirely.
Prior to the client's acquisition of this company, the company had an outstanding third party loan of about 10B. One term of the loan was that the company would not dispose of "significantly all of its assets." If they did dispose of the assets, the company would have 30 days to cure (re-acquire all of the assets) or pay the amount in full. This was never a problem because whenever the loan, or a portion of it, was transfered from the original obligor, it was guaranteed. We were never concerned that the originator would have any issues with it.
Well, given the state of the economy and the lack of liquidity, we're very concerned that the bank will enforce the term of the loan and the company will be fucked. So, over the last two and a half weeks, we've been working on backward engineering the structure to unwind the company in the most tax efficient way possible.
Needless to say, we've had an all-hands-on-deck approach with about 10 lawyers working 12+ hrs per day on this deal. It's been a pretty amazing learning experience for me because I was not around when this structure was originally created and so I'm really learning the nuts and bolts.
What I can say at this point is that the level of sophistication in private enterprise is utterly amazing. I would have never in a thousand years dreamed up some of the shit that is going on inside of this company.
In any case, this serves as both a unique example of one effect of the current economy and as an explanation of why I've barely participated (even just to troll PB) in the forums recently and why I might not be for a little while to come.