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subject to the original financing and user leases. Charterhouse
then sold the equipment to Hambrose, subject to the original
financing and user leases. Hambrose then simultaneously leased
the equipment back to Charterhouse. Hambrose then sold the
equipment to the partnership, subject to the original financing
and user leases, and also assigned to the partnership all rights
under the equipment lease between Hambrose and Charterhouse.
Upon completion of all of the transactions, the partnership owned
the computers, the end user companies used them, and
Charterhouse, Hambrose, and the partnership traded streams of
financing payments and lease payments.
The Initial Equipment
CIS financed, on a nonrecourse basis, the purchase of
certain IBM computer equipment (the Initial Equipment), for a
total purchase price of $1,196,254.74.2 The purchase was
financed through four different third party lenders, and all of
the Initial Equipment was leased by CIS to four different actual
end users of the equipment. Charterhouse then paid CIS an
aggregate purchase price of $474,415 for the Initial Equipment,
$18,978 of which was paid in cash, and the balance of $455,437
2 The parties stipulated that the $1,196,254.74 represented
the total amount financed through third party lenders for the
purchase of the Initial Equipment. Since there is no indication
from the record that any cash, or other funds, was paid to
acquire the Initial Equipment, the Court surmises that the total
amount financed represented the total purchase price of the
Initial Equipment.
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Last modified: May 25, 2011