navigating challenging times: tax opportunities · 2020. 6. 4. · senior associate washington,...
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Navigating
Challenging
Times: Tax
Opportunities
June 4, 2020
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 2
Navigating
Environmental
Compliance in
the COVID Age
Save the
Date
• CLE Pending
Thursday, June 18, 2020
Speakers
Ronald Tenpas
Patrick Traylor
Corinne Snow
Conrad Bolston
Navigating Series
2
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 3
David Peck
Partner
Lina Dimachkieh
Partner
Gary Huffman
Partner
Washington, [email protected]
Jason McIntosh
Partner
Andrew Callaghan
Counsel
Mary Alexander
Senior Associate
Washington, [email protected]
Speakers
Navigating Challenging Times: Tax Opportunities
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 4
Agenda
1. Corporate Opportunities
2. Creative Financing & Partnership Structures
3. International Tax Planning Opportunities
4. Liability Management and Tax Attribute Preservation
Navigating Challenging Times: Tax Opportunities
5
Corporate
Opportunities
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 66
What is an Up-C?
Up-C Simplification
Traditional advantages of Up-C structure:
• OpCo Unitholders retain pass-through treatment and avoid
corporate-level taxes
• Tax-deferral for OpCo Unitholders on formation
• Step up for PubCo Inc. on OpCo Unitholder exchange
• Tax Receivable Agreement (“TRA”)
• M&A flexibility
Traditional disadvantages of Up-C structure:
• Cost and complexity of Up-C administration
• TRA liability impediment/cost to change of control transaction
• Recapture of prior DD&A deductions on exit
• Limitations on exchanges by OpCo Unitholders
• Limitations on index inclusion
PubCo Inc.
OpCo
LLC
OpCo Equity
Interests
+
Exchange Rights
OpCo
UnitholdersPublic
OpCo Equity
Interests
+
Managing
Member
Class A
SharesClass B
Shares
(Vote Only)
TRA
Payments
Exchange of
OpCo Units + Class B
Shares for Class A
Shares
Tax Basis
Step-Up
Upon
Exchange
Basic Up-C Structure
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Is my Up-C stil l worth it?
Up-C Simplification
What has changed?
• Reduction in federal corporate income tax rate from
35% to 21%
• Historically low valuations
• Lower than expected profitability
So what?
• OpCo Unitholders
‒ Pass-through treatment not as clearly beneficial
o Tax distributions/DD&A recapture
‒ TRA less valuable
‒ Potentially little or no gain on exchange
• PubCo Inc.
‒ Reduced value of step-up (past & future) due to 21%
rate and low stock prices
‒ If no significant prior exchanges at higher valuations,
opportunity to eliminate TRA at low point
PubCo Inc.
OpCo
LLC
OpCo Equity
Interests
+
Exchange Rights
OpCo
UnitholdersPublic
OpCo Equity
Interests
+
Managing
Member
Class A
SharesClass B
Shares
(Vote Only)
TRA
Payments
Exchange of
OpCo Units + Class B
Shares for Class A
Shares
Tax Basis
Step-Up
Upon
Exchange
Basic Up-C Structure
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Exchanges
of Units for
SharesFrequency / JurisdictionTiming Complaints Trends
8
December 31, 2017
• Value of Units: 15 MM units at $20 = $300 MM
• Tax Basis in Units: $60 MM
• Intangible/Goodwill Value: $150 MM
• Implied Value of PP&E: $150 MM
• Historic DD&A Allocated to Sponsor: $90 MM
June 1, 2020
• Value of Units: 15 MM units at $3 = $45 MM
• Tax Basis in Units: $60 MM
• Intangible/Goodwill Value: $0
• Implied Value of PP&E: $45 MM
• Historic DD&A Allocated to Sponsor: $90 MM
December 31, 2017
• Corporate Tax Rate: 35%
• Value of Units: 15 MM units at $20 = $300 MM
• Tax Basis in Units: $60 MM
• Step-up for PubCo Inc.: $240 MM
June 1, 2020
• Corporate Tax Rate: 21%
• Value of Units: 15 MM units at $3 = $45 MM
• Tax Basis in Units: $60 MM
• Step-up for PubCo Inc.: N/A
Termination
of TRA
• Overall Gain/(Loss): ($15 MM)
• Ordinary (DD&A Recapture) Gain: $0
• Capital Gain/(Loss): ($15 MM)
• Approx. Tax at Individual Rates: $0
• Overall Gain/(Loss): $240 MM
• Ordinary (DD&A Recapture) Gain: $90 MM
• Capital Gain/(Loss): $150 MM
• Approx. Tax at Individual Rates: ~$70 MM
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Decreasing TRA Termination Payments
Up-C Simplification
At IPO 2019 10-K
Estimated as of
6/1/20*
Spark Energy $67 million TRA settled in July 2019
for $11.2 million
---
Up-C #1 $181 million $58 million $33 million
Up-C #2 $107 million $79 million $37 million
Up-C #3 $177 million $102 million $49 million
Up-C #4 $160 million $135 million $68 million
*Extrapolated based on relative stock price on June 1, 2020 as compared to stock price on December 31, 2019. Assumes no
prior exchanges and de minimis basis in exchanged units.
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Is Now the Time?
Unwinding Corporate Structures
Advantages of flow-through structure:
• Single level of tax
• Ability to deliver asset-level step up to buyers
• Asset-level step up upon inheritance
• No restrictions on eligible owners vs. S corps
Exiting corporate form is often cost-
prohibitive:
• Taxable liquidation of corporation
• Tax on any built-in gain in both assets and stock
Seize the opportunity?
• Reduction in corporate tax rate from 35% to 21%
• Historically low valuations
Existing
Corporation
Shareholders
LLC
Assets
Unitholders(prior Shareholders)
Current Structure
Assets
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Potential Future Legislation
Unwinding Corporate Structures
*Assumes 20% deduction under §199A is available
**Assumes 20% deduction under §199A is not available
Pre-TCJA Current Law Biden Tax Plan
Corporate35% 21% 28%
IndividualOrdinary Income: Top rate of
39.6%
Qualified Dividends: Top rate
20%
Ordinary Income: Top rate
37%
Qualified Dividends: Top rate
20%
Ordinary Income: Top rate
39.6%
Qualified Dividends: Top rate
39.6%
Partnership IncomeTaxed at individual rates
Taxed at individual rates with
20% deduction for domestic
income
Taxed at individual rates with
20% deduction for domestic
income subject to a phase-
out
Effective Tax Rate for Income
from Corporations48% 36.8% 56.5%
Effective Tax Rate for
Partnership IncomeMaximum 39.6% Maximum 29.6%* Maximum 39.6%**
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 1212
Partnership “Freeze”
Unwinding Corporate Structures
Partnership “Freeze” Transaction
If the cost of conversion is still too high…
• Allows future appreciation above today’s prices to
be migrated out from under the existing corporation
Steps: In the most basic form, this could be
effectuated by –
• Existing corporation contributes its assets to newly-
formed LLC for Preferred Units
‒ Preferred Units entitled to par value at
today’s values and a low coupon reflecting
reduced risk
• Shareholders of the existing corporation (all or a
portion) contribute cash or property to LLC for
Common Units.
‒ Common Units are entitled to the bulk of
appreciation above and beyond the coupon
on the preferred
• The existing corporation is NOT converted and no
built-in gain is triggered
Common
Units
Shareholders /
Common
Unitholders
Partnership
LLC
Note: This example only illustrates the general
concept of a partnership “freeze” transaction.
Detailed analysis of U.S. federal income and
estate tax considerations would be required.
Existing
Corporation
Existing
Assets
“New”
Contribution
13
Creative
Financing &
Partnership
Structures
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Sale/Leaseback
Creative Financing & Partnership Structures
Seller/Lessee
Property
$
Lease
Rental Payment
Buyer/Lessor
Consequences
• Cash equal to property value
• Taxable gain/loss
• Continued use of property
• Deduction for rent payments
• Varying GAAP treatment (depends on lease
terms)
Consequences
• Bonus depreciation (may enhance or create an
NOL with 35% benefit)
• Income from rent taxed (currently) at 21%
• Varying GAAP treatment (depends on lease
terms)
Rev. Proc. 2001-28
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Sale/Leaseback
Creative Financing & Partnership Structures
• Primary Factors Needed for Lease Treatment
− Upfront Purchase Price: The property should be purchased at fair market value
− Buyer’s Amount at Risk: Buyer-Lessor should have a minimum “at-risk” investment (i.e., equity or recourse debt) of at least 20% of the purchase price. Seller-Lessee should not lend funds to Buyer-Lessor or guarantee any debt incurred by Buyer-Lessor in the acquisition
− Rent: Rent should also be market-based (it is preferable if the rent is not triple-net)
− Lease Term: The lease term should not exceed 80% of the economic life of the property
− Residual Value: Expected residual value (undiscounted) at the end of the lease term should be at least 20% of the original cost
− Purchase Option: Any repurchase option granted to Seller-Lessee should be for fair market value, measured at the end of the lease term
− No Put Right: Buyer-Lessor generally cannot have a “put” right with respect to property
− Fair Market Value Documentation: Any fair market values referred to above would ideally be supported by an independent valuation, but at the very least, by a detailed model prepared by an investment professional involved in the transaction
Rev. Proc. 2001-28
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Oil & Gas Drilling Financing
Creative Financing & Partnership Structures
Consequences
• “Out of budget” cash for drilling
• No tax gain/loss
• Residual income and cashflows after
investor capital returned
Consequences
• Immediate deduction for use of cash in
drilling operations (may enhance or create
an NOL with 35% benefit)
• Income from production taxed (currently) at
21%
Oil & Gas Co. Investor
Drill Sites $
Tax
Partnership
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Foreign Subsidiary Collateral
Creative Financing & Partnership Structures
• Section 956
− A U.S. shareholder of a controlled foreign corporation (a CFC) must include in income an amount based on the CFC’s investments in U.S. property, calculated under Section 956
− Section 956 may treat a CFC as holding the obligation of a U.S. person in certain circumstances:
o Stock representing two-thirds or more of the voting power of a CFC is pledged;
o CFC guarantees payment of the obligation; or
o CFC grants a security interest to the lender in its assets to secure the obligation
− The amount of U.S. property is the unpaid balance of the obligation in question on the determination date
− Rationale was that Section 956 amounts are effectively repatriated – and thus are “substantially the equivalent of a dividend”
• Section 245A
− Section 245A, which allows tax-free dividends from CFCs to corporate shareholders (by providing a dividends received deduction for 100% of the foreign-source component), does not apply to Section 956 inclusions (which are not actual dividends)
− House and Senate bills both proposed repealing Section 956 for corporate shareholders but the final TCJA did not amend Section 956
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 18
Foreign Subsidiary Collateral
Creative Financing & Partnership Structures
• Treas. Reg. §1.956-1
− The purpose of Section 956 is to treat dividends and amounts substantially
equivalent to dividends the same
− In 2019, the Treasury released final regulations that reduce the amount
determined under Section 956 with respect to certain domestic corporations that
own stock in CFCs
o The final regulations reduce the Section 956 inclusion by the Section 245A deduction that
would hypothetically be allowed if the Section 956 amount were an actual dividend
o If a domestic partnership is a U.S. shareholder of a CFC, the Section 245A deduction with
respect to the hypothetical distribution is the aggregate amount of the Section 245A
deductions that domestic corporations that are partners in the partnership would be
allowed.
− Section 956 still applies to non-corporate shareholders of CFCs
19
International Tax
Planning
Opportunities
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 2020
Outbounding Foreign Assets
U.S. Owner
Existing Foreign Entity
International Tax Planning Opportunities
ForeignOperations
Corporate or
Flow-thru
Entity?
Problem:
• U.S. tax reforms in 2018 (TCJA) reduced the benefits for U.S.
persons holding foreign operations through a flow-thru entity
Foreign Branch Structure
Foreign Flow-thru Foreign Corporation
U.S. Corporate
Owner
U.S. Individual
Owner
U.S. Corporate /
Individual Owners*
Generally
(GILTI):21% 37% 10.5%
Certain Oil &
Gas Income:21% 37% 0%
Certain Passive
/ Related Party
Income:
21% 37% 21%
*Assumes a U.S. individual makes an election to be taxed like a U.S. corporation, and the foreign
corporation does not make a dividend
• But on transition from a flow-thru entity to a corporate entity,
U.S. owner:
• Must recognize built-in gain; and
• May have to recapture losses in excess of built-in gain
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Outbounding Foreign Assets
Potent ia l So lut ion: Full Incorporation
International Tax Planning Opportunities
• Convert foreign entity from
flow-thru to corporation:
• Triggers built-in gain, but
may be substantially
less in low value
environment
• Also triggers loss
recapture, but in the
current market, taxpayer
may have other losses to
offset any gain or loss
recapture
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Outbounding Foreign Assets
International Tax Planning Opportunities
Potent ia l Solut ion : Partial Incorporation
New Foreign Corporation
Existing
Foreign
Entity
US Person
“New” Cash /
Investment
“New” Cash /
Investment (at
fixed price?)
Existing
Investment
• Make new investments in existing
foreign entity through a corporation:
• May not trigger any built-in
gain or loss recapture
• May be able to “lock-in”
historically low valuations for
purposes of future investments
in foreign operations
• But only a portion of the
foreign operations will benefit
from incorporation
Form New Entity
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Unwinding Sandwich Structures
International Tax Planning Opportunities
P O T E N T I AL S O L U T I O N :
Sell (or distribute) the foreign
subsidiaries to the foreign parent to
move them out from under the U.S.
subsidiary (so their income and
cash flow no longer move through
the U.S. subsidiary).
• Sale/distribution is generally
taxable - costly in normal
markets with appreciated
values.
• With lower values and low
corporate tax rates, tax is
reduced or eliminated
Foreign Parent
U.S. Subsidiary
Foreign Subsidiaries
Cash/
Note
Stock of
Foreign
Subs
December 31, 2017
Value of Foreign Sub: $1,000 MM
Tax Basis in Foreign Sub: $ 600 MM
Gain: $ 400 MM
Tax @ 2017 Corp. Rates: $ 140 MM
Value of Foreign Sub: $700 MM
Tax Basis in Foreign Sub: $600 MM
Gain: $100 MM
Tax @ 2020 Corp. Rates: $ 21 MM
April 1, 2020
(30% Decrease in Value)
VS
P R O B L E M :
“Sandwich
structures” may result
in unnecessary U.S.
income and
withholding tax as
earnings are
repatriated up the
ownership chain from
the foreign subsidiaries
through the U.S.
subsidiary to the
foreign parent
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Unwinding Sandwich Structures PROBLEM: In some cases, the
sale/distribution solution may still
trigger too much gain
POTENTIAL SOLUTION: Create a
new joint venture (“JV”):
(1) U.S. subsidiary contributes foreign
subsidiaries to the JV in exchange
for preferred equity with limited
upside in the JV; and
(2) foreign affiliate contributes other
foreign subsidiaries (or assets) to
the JV in exchange for common
equity with unlimited upside in the
JV
• While the joint venture solution
does not immediately remove all
the value from under the U.S.
subsidiary, it can limit the growth of
value over time under the U.S.
subsidiary
• Foreign affiliate’s common equity
captures more of the growth from
the JV in the future
• The preferred par value is set in
the current low-value environment,
allowing more opportunity for
common appreciation outside of
U.S. subsidiary
International Tax Planning Opportunities
Foreign Parent
Foreign AffiliateU.S. Subsidiary
Foreign Subsidiaries
Preferred
Subs
Contributions to New JV
New JV
Common
Other Foreign
Subsidiaries
Subs
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European Holding Company Jurisdictions –
Comparison Matrix
International Tax Planning Opportunities
1 Absent application of a relevant double tax treaty2 Subject to certain exemptions (e.g. payments to banks, or listing on a recognised
stock exchange)3 Except under certain profit-sharing arrangements4 Unless interest paid a on debt instrument that is treated as equity
26
Liability
Management and
Tax Attribute
Preservation
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 27
Example Terms of an NOL Rights Plan
NOL Poison Pills
Threshold 4.95% threshold
Term 3-year term (may have earlier expiration for (i) Stockholder Ratification, and/or (ii) certain Board
determinations)
Stockholder
Ratification
Consider a provision requiring the Board to submit the NOL rights plan to the stockholders for
ratification at the next annual meeting or the NOL rights plan will expire on the day after such
meeting pursuant to its terms
Board
Determinations of
Expiration Terms
Consider provisions establishing that the NOL rights plan will expire, pursuant to its terms, upon
either (i) the date set by the Board following a determination by the Board that the NOL rights
plan is no longer necessary or desirable for the preservation of the Company’s NOLs or
other tax attributes and/or (ii) the first day of a taxable year to which the Board determines that
NOLs or other tax attributes are no longer available to be carried forward or are otherwise
unavailable to offset future taxable income or tax
Exercise Price 3 - 6 times the current market price of the Company’s common stock
Exchange Ratio 1:1 (i.e., each right would be exchanged for one share)
Grandfather
Provision
The rights plan would “grandfather” existing stockholders that hold 4.95% or more of the
Company’s stock without triggering the rights plan. However, grandfathered stockholders would
not be permitted to acquire any additional shares
Certain Exemptions The Board may exempt, among other things, (i) private placements and underwritten share
issuances of the Company approved by the Board and (ii) any inadvertent triggering of the
rights plan if excess shares are divested promptly
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 28
Steps for Adoption
NOL Poison Pills
How to Adopt an NOL Rights Plan
• Adopt board resolutions to authorize the NOL rights plan and rights issuance
• Enter into NOL rights agreement with the rights agent
• File a Certificate of Designations with the Delaware Secretary of State
• Issue a press release regarding the adoption of the NOL rights plan
• Submit SEC filings‒ File a Form 8-K disclosing the adoption of the NOL rights plan
‒ File a Form 8-A with respect to the registration of rights under the NOL
rights plan
• Notify stock exchange of the adoption of the NOL rights plan
• Mail summary of rights for NOL rights plan to stockholders
29Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 29Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com
What?
Why?
• Rights triggered once ownership stake of an Acquiring Person crosses a
predefined ownership threshold (e.g., 4.95%)
• Rights not held by the Acquiring Person become exercisable
• Rights held by the Acquiring Person become void
• Then, if the Board does not elect to exchange the Rights, the Rights holders
may exercise their Rights by paying the exercise price
• Following the triggering event, Rights allow holders to purchase additional
shares of common stock with a then-market value equal to twice the
exercise price
• Amounts to a right to purchase shares for ½ market price
• For example, if the initial exercise price is $15.00 (6x share price of
$2.50) and the share price of the Company is still $2.50 when the
rights are triggered, each holder of common stock could purchase up
to 12 shares of common stock at $1.25 per share:
($15.00 * 1) / (50% * $2.50) = 12 shares
• Alternatively, the Board can elect to exchange the Rights after the triggering
of the plan. The exchange ratio is one share of common stock for each
Right
How
What
• Issuance of non-exercisable warrants
(“Rights”) to existing stockholders that
is initially to buy shares of preferred
stock at an exercise price that is out-of-
the-money (often 3 - 6 times the market
price)
• Delaware law endorses the use of
stockholder rights plans
Why
• Protects the Company’s NOLs and
other tax attributes from substantial
impairment
• Creates a barrier to stock
accumulation beyond a certain
threshold
• Deters any stockholder from
acquiring, including by increasing its
current stake in the Company, an
interest in the Company greater than
4.95%
When?
How?
When• Can be adopted and implemented on short notice and
without stockholder approval
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Overview
Related Party Debt Repurchases
• Debt repurchased by related parties may result in
cancellation of debt income (CODI)
• A borrower will have CODI when it repurchases its own
debt at a discount
• When debt is purchased by a party “related” to the
borrower, it is treated as if it is repurchased by the
borrower
• “Related parties” generally include any (i) person/entity that
owns more than 50% of the borrower, or (ii) entities with
more than 50% common ownership
• However, this determination is not always intuitive because
the ownership attribution rules are complicated and have
some unusual features
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Partnership Debtor & Purchaser
Related Party Debt Repurchases
Are Portfolio Company and Purchaser related?
• PE Fund owns (directly or constructively) more
than 50% of Portfolio Company
• PE Fund forms, and also owns more than 50%
of, Purchaser
• Two partnerships are related if more than 50% of
the capital or profits of the partnerships are
owned (directly or constructively) by the same
persons
• Because Portfolio Company and Purchaser are
each more than 50% owned by PE Fund, they
are related persons and a discounted purchase
would result in CODI
Scenario #1
Portfolio
Company
(Debtor)
PE Fund
Purchaser
PE Fund
Investors
Noteholders
Notes
$
> 50% > 50%
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Corporate Debtor & Partnership
Purchaser
Related Party Debt Repurchases
Are Portfolio Company and Purchaser related?
• PE Fund owns (directly or constructively) more
than 50% of Portfolio Company
• PE Fund forms, and also owns more than 50%
of, Purchaser
• A partnership and a corporation are related if
more than 50% of the capital or profits of the
partnership are owned (directly or constructively)
by the same persons that own more than 50% of
the value of the stock of the corporation
• Because Portfolio Company and Purchaser are
each more than 50% owned by PE Fund, they
are related persons and a discounted purchase
would result in CODI
Scenario #2
PE Fund
Purchaser
PE Fund
Investors
Noteholders
Notes
$
> 50% > 50%
Portfolio
Company
(Debtor)
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Partnership Debtor & Corporate
Purchaser
Related Party Debt Repurchases
Are Portfolio Company and Purchaser related?
• PE Fund owns (directly or constructively) more
than 50% of Portfolio Company
• PE Fund forms, and also owns more than 50%
of, Purchaser
• A partnership and a corporation are related if
more than 50% of the capital or profits of the
partnership are owned (directly or constructively)
by the same persons that own more than 50% of
the value of the stock of the corporation
• Because Portfolio Company and Purchaser are
each more than 50% owned by PE Fund, they
are related persons and a discounted purchase
would result in CODI
Scenario #3
PE Fund
PE Fund
Investors
Noteholders
Notes
$
> 50% > 50%
Portfolio
Company
(Debtor)
Purchaser
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 34
Potential Solution
Related Party Debt Repurchases
Portfolio
Company
(Debtor)
PE Fund
Purchaser A
Investor
Group A
Noteholders
Notes
$
Investor
Group B
Investor
Group C
Purchaser B Purchaser C
$
Notes Notes
$
< 50% < 50%< 50%
Note: Same result if Portfolio
Company were a corporation
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 35
Potential Solution (cont’d)
Related Party Debt Repurchases
• None of the Purchasers are related to Portfolio Company.
– No purchasing entity will be treated as owning more than 50% of Portfolio Company provided
that each group of Investors owns less than 50% of PE Fund and there is no overlap in the
investor groups.
– Therefore, no group of persons directly or constructively owns more than 50% of each of
Portfolio Company and each Purchaser.
– Note that overlap of investors (including ownership of GP) could affect the percentage of
constructive ownership.
• This is also true if Portfolio Company is a corporation and the Purchasers are
partnerships or the Portfolio Company is a partnership and the Purchasers are
corporations.
Confidential & Proprietary ©2020 Vinson & Elkins LLP velaw.com 3636
Corporate Debtor & Purchaser
Related Party Debt Repurchases
Are Portfolio Company and Purchaser related?
• PE Fund owns (directly or constructively) more than 50%
of Portfolio Company.
• PE Fund forms, and also owns more than 50% of,
Purchaser.
• Two corporations are related if a group of 5 or fewer
persons who are individuals, estates, or trusts (ITEs)
own (directly or constructively) more than 50% of the
stock in each of Portfolio Company and Purchaser.
• An ITE that owns at least 5% of the capital or
profits of a PE fund will be treated as owning a
portion of the stock of the Portfolio Company and
Purchaser that is owned by the PE fund in
proportion to the ITE’s interest in the capital or
profits of the PE fund, whichever is greater.
• If PE Fund does not have ITEs that are 5% or greater
partners that collectively own more than 50% of the PE
fund, the Purchaser and Portfolio Company would not be
related.
Scenario #4
PE Fund
PE Fund
Investors
Noteholders
Notes
$
> 50% > 50%
Purchaser
Portfolio
Company
(Debtor)
Confidential and Proprietary ©2020 Vinson & Elkins LLP velaw.com
Austin
T +1.512.542.8400
Dallas
T +1.214.220.7700
Dubai
T +971.4.330.1800
Hong Kong
T +852.3658.6400
Houston
T +1.713.758.2222
London
T +44.20.7065.6000
New York
T +1.212.237.0000
Richmond
T +1.804.327.6300
Riyadh
T +966.11.250.0800
San Francisco
T +1.415.979.6900
Tokyo
T +81.3.3282.0450
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