Hubert Enterprises, Incorporated, Successor By Merger To Hubert Holding Company - Page 14




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               Here, in a worst case scenario, HBW is not a payor of last             
          resort as to LCL’s recourse debt.  In such a scenario, LCL                  
          defaults on the debt without any assets to repay any of the debt.           
          LCL’s default, however, does not mean that the recourse creditor            
          can simply turn to HBW to collect any part of the debt.  HBW’s              
          obligation under the DRO requires in part that HBW liquidate its            
          interest in LCL, and LCL’s default on its payment of its recourse           
          debt does not trigger a liquidation of HBW’s interest in LCL (or            
          of LCL itself).6  Nor in a worst case scenario could LCL’s                  
          recourse creditor recover directly from HBW or compel a                     
          dissolution of LCL so as to force a liquidation of HBW’s interest           
          in LCL.  The revised operating agreement states that LCL shall be           
          liquidated upon its “dissolution” and that dissolution occurs               
          “only as provided by the Wyoming LLC Act.”  Under that act, the             
          dissolution of a limited liability company occurs only upon the             
          happening of one of three events, none of which is the company’s            
          default on the payment of a debt.  See Wyo. Stat. Ann. sec.                 




               6 Petitioner apparently assumes that in a worst case                   
          scenario HBW will liquidate its interest in LCL and then have a             
          deficit capital account thus triggering the DRO.  We disagree               
          with the assumption.  As stated herein, HBW’s liquidation of its            
          interest in LCL is left up to HBW, and we do not assume that HBW            
          on its own would liquidate its interest in LCL if it was                    
          detrimental for HBW to do so.  In other words, as discussed                 
          below, LCL could not be made to liquidate by a creditor in any              
          circumstance, not even by a creditor that forced LCL into                   
          receivership or bankruptcy.                                                 






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Last modified: March 27, 2008