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Original Purchase Transaction and End-User Lease
On or about February 15, 1980, International Business
Machines Corp. (IBM) sold for $2,056,060 certain computer
equipment to Alanthus Computer Corp. (ACC), an equipment leasing
corporation. Approximately 1 month later, on March 13, 1980, ACC
sold the computer equipment to Alanthus Corp. (Alanthus), its
parent corporation, for the same consideration of $2,056,060.
In connection with its purchase of the computer equipment,
Alanthus borrowed $1,868,657 from Manufacturers Hanover Leasing
Corp. (MHLC) in an arm's-length credit transaction. The loan
proceeds were used by Alanthus, with additional cash of $187,403,
to pay ACC the full purchase price of the computer equipment.
ACC apparently used the proceeds received from Alanthus to pay
IBM the full purchase price due on ACC’s purchase of the computer
equipment.
Under Alanthus’ 7-year promissory note issued in favor of
MHLC (Alanthus Note), beginning June 1, 1980, monthly payments of
$33,875 representing principal and interest at 13.25 percent per
annum were due and payable to MHLC. As collateral for the loan,
MHLC received security interests in the computer equipment and in
lease payments due under all end-user leases of the computer
equipment until the full amount of the loan plus interest was
repaid.
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Last modified: May 25, 2011