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On April 7, 1986, the District Court entered an Order and
Decree of Foreclosure and Sale that: (1) Directed the mortgage
be foreclosed and the mortgaged assets sold by public auction on
May 28, 1986; and (2) held that the partnership and the partners
were not entitled to redemption rights.
On April 18, 1986, the partnership filed a motion to amend
the District Court’s April 7, 1986, Order and Decree so as to:
(1) Clarify that recovery was limited to the partnership’s assets
and the interests of the partners therein; (2) correct the
property descriptions; and (3) defer the foreclosure sale for at
least 6 months to enable pending workout negotiations to continue
between certain partners and DOE. With regard to this latter
point, the motion stated that the partnership had claimed and
passed through to its partners investment tax credits of
approximately $250 million and deductions of approximately $390
million and that a substantial part of these credits and
deductions would be subject to recapture if the plant were
disposed of in less than 5 years. The motion indicated that
pending proposals by some of the partners to continue operating
the plant and to restructure the DOE-guaranteed indebtedness
depended upon the continued availability of the economic value of
these tax benefits. The partnership requested a period for
“equitable redemption” and contended that the foreclosure sale
should be deferred pending the partners’ ongoing efforts to
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