2307004 Informal Interpretation

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Sheinberg, Samuel I.
From: 	HSRHelp
Sent: 	Tuesday, July 11, 2023 11:34 AM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Musick, Vesselina; Sheinberg, Samuel I.; Six, Anne; Whitehead, Nora;
Fetterman, Michelle
Subject: 	FW: Request for Interp. - 16 CFR 802.63 Newco
To:
Cc: HSRHelp <HSRHelp@ftc.gov>
From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Tuesday, July 11, 2023 11:33:32 AM (UTC-05:00) Eastern Time (US & Canada)
Subject: RE: Request for Interp. - 16 CFR 802.63 Newco
Agree, so long as Newco would not have been prohibited from using 802.63 if it had entered into the credit
arrangement directly (e.g., it is not a competitor or otherwise would not be able to claim that the acquisition of the debt
was in the ordinary course of its business).
Best regards,
Kristin
Kristin Shaffer
Attorney
Premerger Notification Office
Federal Trade Commission
202-326-2388 | kshaffer@ftc.gov
From:
Sent: Thursday, July 6, 2023 12:46:38 PM (UTC-05:00) Eastern Time (US & Canada)
To: HSRHelp <HSRHelp@ftc.gov>
Cc:
Subject: Request for Interp. - 16 CFR 802.63 Newco
Dear PNO,
We write to clarify guidance regarding newco formations in connection with debt restructuring under 16 CFR 802.63.
We understand that if a Newco is formed and ordinary course debt is transferred to the Newco post-bankruptcy petition
or post-announcement of the intention to file bankruptcy, then the exemption under 16 CFR 802.63 is no longer
available. However, we understand based on the below guidance that pre-petition (or announcement) reorganization of
debt by Lenders, including into a Newco, would not negate the exemption under 16 CFR 802.63. Could you please
confirm that pre-petition (or announcement) reorganization of ordinary course debt into a Newco does not negate the
exemption under 16 CFR 802.63? Note Newco would not hold any other assets.
 	Premerger Notification Practice Manual #164: “Once a debtor-creditor relationship has been created [in the
ordinary course of business], even if the debtor’s obligation subsequently is transferred to a different creditor,
any subsequent foreclosure or acquisition in lieu of foreclosure that satisfies or discharges the debt obligation in
whole or in part is generally exempt.”
 	https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/0805004 “You further confirmed that
the test applicable to so-called "Vulture Funds" is based on whether debt is acquired pre-or post-announcement
of an intention to file for bankruptcy and not on the intent of the creditor at the time debt is acquired.”
 	https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/1706003 “The vulture fund exception
would preclude the use of 802.63 if the LLC is created and the debt is transferred after the announcement of an
intention to file for bankruptcy.”
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• 	https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/1505003 and https://www.ftc.gov/ l ega l
library/browse/hsr-informal-i nterpretat ions/0907009 "Once a bankruptcy ha s been announc ed , credi tors
cannot reorgani ze any pre-petit ion debt such that the debt ( or the equit y or a ss ets ex changed for the debt) will
be held w ith in a separate UPE an d rely on the ex empt ion in 802.63."
Thank you ve ry much !
Best,
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