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participating financially in the project’s operation.18 As
discussed in greater detail infra, on April 7, 1986, a Federal
District Court directed the mortgage on the partnership’s $1.5
billion debt to be foreclosed; the court scheduled the
foreclosure sale for May 18, 1986 (subsequently extended to June
30, 1986).
Partners Request Letter Ruling
On May 22, 1986, ANR and Transco filed with the IRS a
request for a ruling that the partnership’s default on the
indebtedness and related events had not resulted in recapture of
investment or energy credits or given rise to gain recognition.
The partners viewed such a ruling as fundamental to pending
proposals to use prior tax benefits to fund additional capital
infusions into the project. The partners did not want to be in
the whipsaw position of having both to recapture the tax benefits
and to use them to fund the project. ANR and Transco requested
the IRS to expedite consideration of the ruling request to enable
them to submit their restructuring proposal to DOE and prevent
the impending foreclosure sale of the project. (As discussed in
greater detail infra, in September 1986 the IRS ruled that the
events as of May 22, 1986, had not resulted in recapture of
investment or energy credits or given rise to gain recognition.)
18 On Apr. 4, 1986, ANRC filed a statement of interest,
which was one of nine received by DOE.
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