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to further assessment, and as a limited partner, Mr. Greer was not
personally liable for the debts, obligations, or losses in Madison
in excess of his $50,000 capital contribution.
B. The Underlying Madison Transaction
The Madison promotion involved the following simultaneous
transactions:
(1) On or about December 31, 1982, PI sold four Sentinel EPS
Recyclers to Ethynol Cogeneration, Inc. (ECI), for $1,520,000 each
or a total of $6,080,000.
(2) The consideration of $6,080,000 provided by ECI
consisted of cash in the amount of $481,000 and a 12-year
nonrecourse note in the amount of $5,599,000, which was secured by
a first lien on the four recyclers.
(3) ECI sold the four recyclers to F&G Equipment Corp. (F&G)
for $7 million or $1.75 million each.
(4) The consideration provided by F&G consisted of cash in
the amount of $553,000 and a 12-year note in the amount of
$6,447,000, of which 80 percent was nonrecourse. The nonrecourse
portion of the note was senior to the recourse portion. The note
was secured by a second lien on the four recyclers.
(5) F&G agreed to lease the four recyclers to Madison. The
lease agreement terminated in 9-1/2 years and required an annual
lease payment of $960,000, or $80,000 per month.
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Last modified: November 10, 2007