- 17 - equipment. CFP used the $450,000 Residco note to reduce its promissory note obligation to ERA (that was incurred above in step 2). 9. On January 3, 1995, in a purported section 351 nonrecognition transaction, CFP transferred to CFX Financial Services, Inc. (CFX Financial), a subsidiary of CFX: (1) CFP’s remaining master lease residual interests with respect to the K- Mart, Shared, and other equipment (i.e., its master lease residual interests in that equipment, less the first 2 years of the master lease residual interest in the K-Mart equipment and the first 6 months of the master lease residual interest in the Amoco equipment that were sold to Residco as described above in step 8); (2) CFP’s master lease rental payment obligation to EQ; (3) the right to receive offsetting payments from EQ under the $14.125 million EQ equipment purchase installment note; and (4) the $747,910 EQ short-term promissory note. In exchange for CFP’s transfer, it received 75,000 shares of CFX Financial $1 par value preferred stock. On that same date, CFX contributed $2.8 million to CFX Financial and received 280 shares of CFX Financial common stock. (The assignment and assumption agreement between CFP and CFX Financial dated January 3, 1995, notes that the master lease equipment was subject to CLI’s lien under thePage: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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