-253-
Holdings ostensibly became the full-fledged obligor on the $79
million receivable without any of the typical rights that a
guarantor might have, such as, importantly, a right of
subrogation against a revitalized New MGM.178 Cf. Putnam v.
Commissioner, 352 U.S. 82, 89 (1956); In re Enron Corp., 307
Bankr. 372, 379 (S.D.N.Y. 2004); Restatement (Third) of
Suretyship and Guaranty, sec. 27 (1996).
Petitioner suggests that the Credit Lyonnais group’s
subjective judgment that MGM Group Holdings would have value was
reasonable and well-founded. Petitioner contends that the Court
should not, with the benefit of hindsight, substitute its
judgment for that of the Credit Lyonnais group.
We have no basis in the record for concluding that the
Credit Lyonnais group made a determination that MGM Group
Holdings would have value. Instead, the evidence points in the
opposite direction. For many years, the Credit Lyonnais group
had struggled to keep MGM afloat; to that end, it had lent
enormous sums to MGM. In 1993, the Credit Lyonnais group caused
MGM to be restructured into two companies with nearly $1 billion
in debt being funneled into MGM Group Holdings. The only
realistic chance of recovering on that debt was a lucrative sale
178 Pursuant to its guaranty under the working capital
agreement, MGM Group Holdings was entitled to “all rights of
subrogation otherwise provided by law in respect of any payment
it may make or be obligated to make under this Guaranty”.
Exhibit 72-J, J000071.
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