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interested parties for such a transaction.” Upon conclusion of
the meeting, it was decided that petitioner “would await Mr.
Martin’s findings before any additional work takes place”
regarding the sale of ML Leasing. In approximately April 1986,
petitioner decided to pursue a sale of ML Leasing and appointed
Theodore D. Sands, managing director of the Investment Banking
Division at Merrill Parent, to serve as the chief negotiator with
respect to the sale.7 Mr. Sands suggested that petitioner “clean
up” ML Leasing by removing any assets the company did not want to
sell (i.e., the 1986 retained assets).8 Mr. Sands, however, did
not suggest the manner in which the 1986 retained assets should
be transferred from ML Leasing, and he did not suggest
implementing the 1986 cross-chain sale at issue in this case.
B. Petitioner Seeks a Purchaser
Mr. Sands was asked to develop a profile of a likely
prospective purchaser for ML Leasing and a list of prospective
purchasers. Mr. Sands established three criteria for a potential
purchaser of ML Leasing: (1) A purchaser should be financially
7On July 28, 1986, petitioner officially appointed a five-
person project team to conduct the divestiture of ML Leasing,
which included Mr. Sands as chief negotiator.
8The 1986 retained assets consisted of assets leased under
operating, finance, and leveraged leases, subject to the
liabilities associated with such assets, and the shares of 34
corporate subsidiaries that owned leased equipment and leased
real property. The decision as to which assets would be sold and
which would be retained was made by the head of investment
banking at Merrill Parent.
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