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loan it received from the unrelated third party, in addition to
the $3.6 million it owed to NITCO.
By about April 1992, BMCT, FiberComm, and NITCO had formed
BMCT, L.P. (the BMCT limited partnership). Although the BMCT
limited partnership's formation was actually concluded and
finalized by them in April 1992, the BMCT limited partnership's
written partnership agreement stated that the partnership
agreement was made and entered into by them as of November 30,
1991. The partnership agreement provided that BMCT and FiberComm
would serve as the general partners and that NITCO would be a
limited partner in the BMCT limited partnership. There were no
other partners in the BMCT limited partnership.
BMCT and FiberComm contributed all their assets, subject to
all their liabilities, to the BMCT limited partnership. NITCO
contributed to the BMCT limited partnership the loans it had
previously made to BMCT, interest that had accrued with respect
to the loans, and certain equipment.
The formation of the partnership was not an arm's-length
transaction among BMCT, FiberComm, and NITCO. The respective
partnership interests that BMCT, FiberComm, and NITCO received in
the BMCT limited partnership were not commensurate with and bore
no reasonable relationship to their relative capital
contributions to the BMCT limited partnership. Considering the
relative amount of NITCO's capital contribution, NITCO's limited
partnership interest was a substantially lesser interest than
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