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From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Tuesday, July 11, 2023 11:33:32 AM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: HSRHelp <HSRHelp@ftc.gov>
Subject: RE: Request for Interp. - 16 CFR 802.63 Newco

[Redacted]

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

�鶹��ý Trade Commission

202-326-2388 | kshaffer@ftc.gov

From: [Redacted]
Sent: Thursday, July 6, 2023 12:46:38 PM (UTC-05:00) Eastern Time (US & Canada)
To: HSRHelp <HSRHelp@ftc.gov>
Cc: [Redacted]
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.”
• /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.”
• /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.”
• /legal-library/browse/hsr-informal-interpretations/1505003 and /legal-library/browse/hsr-informal-interpretations/0907009 “Once a bankruptcy has been announced, creditors cannot reorganize any pre-petition debt such that the debt (or the equity or assets exchanged for the debt) will be held within a separate UPE and rely on the exemption in 802.63.”

Thank you very much!