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contain an express term conditioning liability upon the payment
of rent. Thus, this situation is distinguishable from other
cases where we have upheld the validity of the long-term debt.
In our view, there was no possibility that IRA would ever
pay the long-term notes without receipt of the prior payments of
rent from the lessees. IRA's transactions were carefully
structured in such a way so as to preclude the possibility of any
additional financial exposure, while enabling it to claim
sizeable tax deductions and credits at a minimum cost. We
recognize that the payment of the full amount of 1 month's rent,
followed by IRA's failure to make the required principal and/or
interest payment on the note, could cause the entire unpaid
principal, and accrued but unpaid interest, to become immediately
due and payable. Failure to pay the debt, however, does not
permit the lessee to stop paying the rent. If the lessee decided
to withhold the next month's rental payment, such failure would
trigger the deferral provisions of the notes, leaving the lessee
or intermediary at that time, with at best a claim against IRA
for 1 month's principal and/or interest, rather than the full
amount of the debt. Therefore, the mere possibility that IRA’s
liability on the notes could be accelerated, which in fact never
happened, does not validate the debt, considering all of the
facts and circumstances. IRA has simply not carried its burden
of proving that the long-term notes were valid.
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