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equipment leasing transactions. The long-term notes used in HGA
Cinema Trust contained deferral provisions similar to those
involved herein. In fact, the only significant difference, in
most of the deals, is that instead of an indefinite offset
provision, the notes contain the following variation. The
deferral provisions are to be read in light of a "limited"
recourse obligation provision, the amount of which declines over
the years. However, by the time the deferred amounts are due--a
time which is well after the original lease--the scheduled
recourse obligation is zero. In some instances the recourse
obligation is zero from the outset. In another instance the
recourse is limited only to the value of the collateral.
Further, the residual value, regardless of the scheduled
obligation, and even under the most generous of estimates, is
also zero.
There is clearly a circularity of offsetting rent and debt
obligations in the provisions, and, generally, the only
difference from the notes in HGA Cinema Trust is the substitution
of a valueless recourse obligation provision for the offset and
discharge provision. There was little likelihood IRA would ever
be called on to pay the liability set forth in each of the long-
term notes. Further, there was no testimony or other evidence
presented at trial that it ever did. The intent of the limited
recourse provision and the deferral provision was the same as the
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