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period would effectively double the obligation. Moreover,
Machise would be faced with paying compensation fees for a period
of several consecutive years, as each investor partnership's
debts became due. Fred and Bruce, however, provided no
meaningful basis upon which the investors could expect that
Machise would be able to pay its debts after 1 year, to say
nothing of paying 10 years' worth of late charges. The evidence
noticeably lacks any contemporary forecast or analysis of
Machise's earning power or of any provision that it was making to
create a fund that would enable it to pay its purported
obligations. Fred did not provide for any such analysis or
require any such provision, and the partners did not ask for one.
In circumstances such as these, the courts have concluded
that any prospect of repayment is illusory. As the Court of
Appeals for the Second Circuit has stated in a similar situation:
"At the end of twelve years, the * * * [creditors] could look
only to the corporate assets * * * to collect amounts still owed
on the notes. A trier could thus easily find that by then the
corporate cupboards would be bare." Barrister Associates v.
United States, 989 F.2d 1290, 1299 (2d Cir. 1993). So it was in
the cases at hand, and we so find.
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