srm_40appa4.htm

40-APP/A 1 srm_40appa4.htm AMENDMENT #4 TO FORM 40-APP srm_40appa4.htm

United States of America

before the

SECURITIES AND EXCHANGE COMMISSION

In the Matter of:

SUNWEST ROLLOVER MEMBER LLC

c/o Michael A. Grassmueck

United States District Court Receiver

Manager of Sunwest Rollover Member LLC

The Grassmueck Group

Post Office Box 3649

Portland, OR 97208-5248

File No. 812-13778

Investment Company Act of 1940

FOURTH AMENDED AND RESTATED APPLICATION

FOR AN ORDER OF EXEMPTION UNDER SECTIONS 6(c) and 6(e)

OF THE INVESTMENT COMPANY ACT OF 1940

October 8, 2010

Please direct all communications

concerning this Application to:

Carol Dey Hibbs, Esq.

Tonkon Torp LLP

1600 Pioneer Tower

888 S.W. Fifth Avenue

Portland, OR 97204-2099

(503) 802-2016

Table of Contents

I.	Summary of Application			1
II.	Applicant			2
III.	Background of the Sunwest Enterprise			3
IV.	Structure of Applicant			5
	A.	Reasons for Applicant’s Structure; Applicant’s Purposes		5
	B.	Structure of Applicant		7
	C.	Negotiation of Applicant’s Structure		10
	D.	Sunwest Creditors Who Were Eligible to Elect to Receive Interests in Applicant		12
	E.	No Conflict Among Classes of Applicant’s Securities		13
V.	Operations of Applicant			13
	A.	Applicant’s Assets		13
	B.	Applicant’s Revenues and Borrowings		13
	C.	Possible Capital Calls by Blackstone LLC		14
	D.	Applicant’s Limited Life		17
	E.	Management of Applicant		17
VI.	Relief Sought by Applicant			18
	A.	Applicant as Potential Investment Company		18
	B.	Summary of Relief Sought		18
	C.	Applicable Investment Company Act Provisions		18
VII.	Statement in Support of Requested Relief			19
	A.	Grounds for Exemptive Relief		19
	B.	Relief Requested Is Consistent with Previous Commission Action		19
		1.	Reasons for Applicant’s Structure; Applicant’s Purpose.	21
		2.	Structure of Applicant.	21
		3.	Active Participation of Sunwest Investors in Negotiating Structure.	22
		4.	Involvement of Court.	22
		5.	Possible Capital Calls.	22
		6.	Applicant’s Limited Life.	23
		7.	Limited Investments; Frequency of Distributions.	24
		8.	Payment of Expenses.	24
		9.	Limited Transferability of Applicant’s Interests.	24
		10.	Virtually Identical Provisions of Investment Company Act Would Apply.	24
		11.	Conclusion.	25
	C.	Application Is Appropriate in the Public Interest		25
	D.	Application is Consistent with the Protection of Investors		25
	E.	Application Is Consistent with Purposes of Investment Company Act		27
VIII.	Conditions to the Requested Relief			28
IX.	Authorizations			28
X.	Requested Relief			29
XI.	Conclusion			29

Exhibit A

I. Summary of Application

As set forth in this Application, Sunwest Rollover Member LLC (“Applicant”) presents a particularly compelling case for exemption from provisions of the Investment Company Act of 1940, as amended (the “Investment Company Act”), to facilitate what is believed to be one of the most successful resolutions of an SEC receivership case in recent memory.

On May 28, 2010, Applicant filed an application (the “Original Application”) for an Order of the Securities and Exchange Commission (the “Commission”) pursuant to Section 6(c) of the Investment Company Act, exempting Applicant from certain provisions of the Investment Company Act. The Original Application was amended and restated on June 17, 2010, June 28, 2010 and July 8, 2010. Applicant hereby further amends and restates the Original Application to apply for an Order of the Commission pursuant to Sections 6(c) and 6(e) of the Investment Company Act exempting Applicant from all provisions of the Investment Company Act and the rules thereunder, except: Section 9; Sections 17(a), 17(d) and 17(e); Section 31, as modified herein (“Modified Section 31”); and Sections 36 through 53 of the Investment Company Act and the rules thereunder.

Applicant currently is exempt from the provisions of the Investment Company Act under Rule 3a-2 while Applicant negotiates with the appropriate persons to permit the dissolution of Applicant and the distribution of Applicant’s assets to Applicant’s members. Applicant seeks the exemptive Order on a precautionary basis in the event negotiations to dissolve Applicant are unsuccessful during the one-year period permitted under Rule 3a-2.

The relief requested in this Fourth Amended and Restated Application (the “Application”) would exempt Applicant from all provisions of the Investment Company Act, except those specified above. Applicant submits that the exemption is necessary and appropriate in the public interest and is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Investment Company Act. It is also consistent with precedent, particularly the Commission’s orders in The Drexel Burnham Lambert Group Inc. (“Drexel”)1 and The LTV Aerospace Creditors Liquidating Trust (“LTV”)2 matters, as discussed in detail below.3 In particular, the following points are key:

Applicant’s structure was developed to resolve bankruptcy proceedings and to facilitate remedies for investors in the related SEC Enforcement Action (as defined below);

1 The Drexel Burnham Lambert Group Inc., Investment Company Act Release Nos. 18643 (April 1, 1992) (notice of application) and 18675 (April 24, 1992) (order).

2 The LTV Aerospace Creditors Liquidating Trust, Investment Company Act Release Nos. 19596 (July 26, 1993) (notice of application) and 19648 (August 24, 1993) (order).

3 See Section VII.B, “Statement in Support of Requested Relief – Relief Requested Is Consistent with Previous Commission Action,” below.

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Applicant’s structure ameliorates unfavorable tax consequences for those investors who elected to receive interests in Applicant;

Applicant’s capital structure was developed for the benefit of the persons who suffered losses from the operations of Sunwest, including victims of alleged misconduct by certain founders of Sunwest (the “Sunwest Founders”) and others;

Investors who were eligible to receive interests in Applicant, their counsel, investment bankers and other advisors, as well as the Court (as defined below) and its appointed mediators, were active participants in designing and determining Applicant’s structure;

Applicant will not be engaged in investing, reinvesting or trading in securities, and the only securities that Applicant may hold are its interests in Blackstone LLC (as defined below) and Temporary Investments (as defined below);

Transferability of Applicant’s securities are severely restricted;

Applicant has a limited life; and

Applicant will continue to be subject to the jurisdiction of the Court.

The above factors are appropriate grounds for the requested relief, particularly in view of the provisions of the Investment Company Act that will apply to Applicant to protect its members, if the Commission grants Applicant’s requested relief.

II. Applicant

Applicant is Sunwest Rollover Member LLC, a Delaware limited liability company formed for the purpose of holding “Rollover Equity Interests” in BRE/SW Portfolio LLC, a Delaware limited liability company (for convenience, “Blackstone LLC”). Blackstone LLC was formed to acquire substantially all of the core assets (consisting of more than 140 senior living facilities throughout the United States) (collectively, the “Sunwest Assets”) of the “Sunwest Enterprise,” as more fully described below. The acquisition of the Sunwest Assets by Blackstone LLC is referred to herein as the “Blackstone Acquisition.” The Blackstone Acquisition is governed by the terms and conditions of an Agreement of Purchase, Sale and Contribution dated as of January 15, 2010, as amended (the “PSA”). The Blackstone Acquisition closed on August 5, 2010.

The assets of Applicant will consist exclusively of the Rollover Equity Interests in Blackstone LLC and the following short-term instruments pending distributions to Applicant’s members or disbursements in payment of Applicant’s obligations: (a) general obligations of the United States, or its agencies and instrumentalities; and/or (b) deposit accounts with banks, which accounts are insured by the Federal Deposit Insurance Corporation or an equivalent insuring organization (collectively, the “Temporary Investments”). Applicant will not otherwise invest or reinvest assets or engage in other activities.

Applicant currently is administered by Michael A. Grassmueck, the Receiver appointed by the United States District Court for the District of Oregon (the “Court”) with respect to the “Receivership Entities,” as defined in the Court’s Order.

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Mr. Grassmueck was appointed as Applicant’s sole initial Manager by the initial member of Applicant, and his appointment has been approved by Order of the Court. Mr. Grassmueck is not an “interested person” of Applicant within the meaning of Section 2(a)(19) of the Investment Company Act.

III. Background of the Sunwest Enterprise

The Sunwest Enterprise is a group of related entities formerly involved in the acquisition, development, design, construction, financing, insuring and operation of senior living and other properties nationwide, along with miscellaneous other assets and operations. Prior to 2008, the Sunwest Enterprise operated 290 facilities and was one of the largest assisted living providers in the United States.

The Sunwest Enterprise financed the acquisition and development of its senior living and other properties through various means, including the sale to investors of tenant-in-common interests (the “TIC Investors”) and limited liability company interests (the “LLC Investors”) in properties owned by the Sunwest Enterprise. The Sunwest properties were owned by some 1,200 TIC Investors and nearly 200 LLC Investors. The LLC Investors, in turn, were owned by approximately 1,500 members. Each Sunwest-affiliated property purported to have separate ownership, often involving multiple TIC Investors and/or LLC Investors. The TIC Investors and the LLC Investors are referred to herein, collectively, as the “Sunwest Investors.”

On December 1, 2008, Stayton SW Assisted Living, L.L.C., one of the Sunwest entities (the “Debtor”), initiated its bankruptcy case, now United States District Court for the District of Oregon, Case No. 09-cv-6082-HO (the “Bankruptcy Case”), with the filing of its voluntary petition under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). Until August 5, 2010,4 when Blackstone Acquisition closed, the Debtor remained in possession of its assets and continued to operate its business as debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

On March 2, 2009, the Commission commenced an action in the Court against Sunwest Management, Inc. (“SMI”) and other persons and entities alleging, among other things, violation of federal securities laws, and sought an injunction and appointment of a receiver in SEC v. Sunwest Management, Inc., et al, Case No. 09-cv-6056-HO (the “SEC Enforcement Action”). In its complaint, the Commission alleged, among other matters, that SMI and others committed violations of securities laws in the offering of interests in the Sunwest Enterprise and operated the Sunwest Enterprise as a unitary enterprise virtually as a “Ponzi” scheme.

On March 10, 2009, the Court entered its Order in the SEC Enforcement Action granting an injunction and appointing Michael A. Grassmueck as Receiver and Clyde A. Hamstreet as Chief Restructuring Officer of the “Receivership Entities” that were part of the Sunwest Enterprise.

4 August 5, 2010 was the closing date of the Blackstone Acquisition and also is the effective date of the Plan of Reorganization.

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In 2009, the Tenants in Common Committee (the “TIC Investor Committee”) was established to represent the interests of the TIC Investors in the SEC Enforcement Action. The TIC Investor Committee also has continued to act on behalf of the TIC Investors in the Bankruptcy Case. The Court has also appointed a Management Committee, which is made up of two representatives of the TIC Investor Committee and two representatives of the Unsecured Creditors Committee.5 Representatives of the TIC Investor Committee and the Management Committee, and their respective counsel and advisors, actively participated in negotiations leading to the development of the Distribution Plan and the Plan of Reorganization. Representatives of the committees considered and discussed numerous alternative methods of maximizing the value of the Sunwest Investors’ interests in the Sunwest Enterprise, including, among others, development of a stand-alone Plan of Reorganization and the acquisition of Sunwest properties by third parties. The Blackstone Acquisition was eventually determined to be the most favorable alternative available to Sunwest Investors and creditors. The PSA with Blackstone LLC has been executed on behalf of the Management Committee, signifying its agreement to the terms of the Blackstone Acquisition.

On October 1, 2009, the Court entered its Order (the “Approval Order”) in the SEC Enforcement Action approving the Distribution Plan of Receiver and Chief Restructuring Officer for Sunwest Enterprise (the “Distribution Plan”). The Approval Order authorized the Receiver and the Chief Restructuring Officer to reorganize the Sunwest Unitary Enterprise recognized in the Distribution Plan through the Bankruptcy Case.

The Distribution Plan and Approval Order provided for the sale or contribution of the Sunwest Assets pursuant to a “Stalking Horse Sale and Auction” (as that term is defined in the Distribution Plan).

In the Fall of 2009, affiliates of Blackstone LLC expressed their interest in acquiring the Sunwest Assets. Negotiations ensued between the Chief Restructuring Officer and the Receiver, on one hand, and the affiliates of Blackstone LLC, on the other hand. As further discussed in Section IV.C, “Structure of Applicant – Negotiation of Applicant’s Structure,” below, representatives of the TIC Investor Committee and the Management Committee also were actively involved in negotiating the structure pursuant to which Blackstone LLC would acquire the Sunwest Assets, and the negotiated terms of Applicant’s structure were designed for the benefit of the Sunwest Investors who were eligible to elect to invest in Applicant.

On December 22, 2009, the Court entered its Order Granting Joint Motion of Debtor, the Tenants in Common Committee and the Unsecured Creditors’ Committee for Substantive Consolidation of Assets and Liabilities of Sunwest Related Entities (the “Consolidation Order”). The Consolidation Order provided that all assets and liabilities of the Sunwest Enterprise were substantively consolidated into Debtor’s Bankruptcy Case, that equitable title to real estate held by the Sunwest Enterprise was consolidated into Debtor’s bankruptcy estate, and that Debtor had the right to convey title to, or interests in, real property pursuant to a confirmed Plan of Reorganization or other Order of the Court.

5 “The role of the [management] committee is to represent and advocate for the interests of all investors in the Sunwest entities by consulting with the chief restructuring officer, the receiver, the other parties in the case, and the court.” Testimony of William Bryan, Chairman of the Management Committee, in the confirmation hearing, July 13, 2010.

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On January 15, 2010, the Debtor and Blackstone LLC entered into the PSA providing for the sale or contribution of substantially all of the core assets of the Sunwest Enterprise, including the interests in the properties owned by the TIC Investors and the LLC Investors, to Blackstone LLC or the successful bidder at the Stalking Horse Sale and Auction.

On March 29, 2010, the Court entered its Order, among other matters, approving the PSA, together with the auction process, bidding procedures and overbid protections contemplated by the PSA. The Bid Deadline established for the Stalking Horse Auction expired on May 10, 2010. On May 17, 2010, the Court entered its Order identifying and approving Blackstone LLC as the successful bidder and purchaser under the PSA.

The Plan of Reorganization has been approved by the requisite number of claimants in a confirmation vote. The confirmation hearing before the Court was held on July 13, 2010, and the Court entered its Order confirming the Plan of Reorganization (the “Confirmation Order”) on July 19, 2010.

On July 31, 2010, Applicant’s initial Manager and its sole member adopted resolutions pursuant to Rule 3a-2 under the Investment Company Act authorizing and directing Applicant and its representatives to promptly enter into further negotiations and discussions with Blackstone LLC and Applicant’s members to permit the dissolution of Applicant and the distribution of its assets (which assets would consist exclusively of Rollover Equity Interests and, possibly, Temporary Investments) to Applicant’s members. Effecting such dissolution would cause Applicant’s members to become direct investors in Blackstone LLC.

The Blackstone Acquisition closed on August 5, 2010 with respect to 134 Sunwest facilities. Eight Sunwest facilities were subsequently transferred to Blackstone LLC, and four additional facilities may be transferred within the next few weeks.

IV. Structure of Applicant

A.	Reasons for Applicant’s Structure; Applicant’s Purposes

Administration of the SEC Enforcement Action and the Bankruptcy Case has been a complex and arduous task. The corporate and ownership structure which had been employed by the Sunwest Enterprise necessitated considering not only maximizing recovery for creditors and investors, but also considering numerous and intricate tax consequences. In addition to potential loss of their investments, many Sunwest Investors were also faced with potential tax liabilities that significantly exceeded any expected cash recovery from the Plan of Reorganization. Balancing these requirements resulted in a Plan of Reorganization that not only maximized economic recovery, but also provided investors with an opportunity to defer adverse tax consequences. The result is a Plan of Reorganization that appears to represent one of the most successful SEC receivership cases in memory. As counsel for the Unsecured Creditors’ Committee stated at the confirmation hearing on July 13, 2010:

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. . . the result that has been obtained . . . is really very, very significant, and at one time completely beyond anyone’s contemplation that we would recover these kinds of funds, and do it in a manner that gives the people three options.

They can get preferred stock, they can get common stock, or they can get cash. That’s almost unbelievable in the bankruptcy world that the creditors would have those sort of options. And there has never been a case like this that has so – has worked so hard to protect not only just the typical goal of maximizing results, but the additional goal of avoiding impairment of tax claims, which as the court knows, was a critical part of the negotiations with the prospective purchasers, including Blackstone. It’s a great result.6

As salutary as the results of the Plan of Reorganization appear to be, they also raise issues under the Investment Company Act. That is because ownership by Applicant of a minority interest in the entity acquiring the Sunwest Assets, which is the cornerstone of the successful Plan of Reorganization, also appears to constitute “owning,” “holding” or acquiring securities under Section 3(a)(1)(C) of the Investment Company Act. Applicant does not have the experience, the wherewithal or the desire to operate as an investment company. Unless Applicant dissolves or the Commission issues the requested exemption, Applicant will be required to devote scarce financial and other resources to comply with the provisions of the Investment Company Act. Applicant would prefer to preserve these funds for the benefit of its members, who have already experienced significant losses as a result of their investments in the Sunwest Enterprise.

Due to the complex and unusual capital structure of the Sunwest Enterprise, outright sale of the Sunwest Assets to Blackstone LLC likely would have resulted in adverse income tax consequences to numerous Sunwest Investors. The structure of Applicant was designed to provide significant tax benefits to Sunwest Investors.7 In addition, outright sale of the Sunwest Assets to Blackstone LLC would have deprived those Sunwest Investors who wish to do so of the opportunity to continue their investment and share any future appreciation following the Blackstone Acquisition. Given the current economic climate, particularly as it relates to real estate values, Blackstone LLC and numerous Sunwest Investors are hopeful that, with improved management, the Sunwest Assets will appreciate in value and/or be sold at a higher price in a few years.

6 In an unusual recent filing with the Court, the Commission also characterized the Plan of Reorganization as an “extraordinary outcome,” which “consisted of a unique approach that relied on the Court’s equity powers, as exercised in approving the Distribution Plan, in combination with bankruptcy powers exercised in approving the bankruptcy reorganization plan” and “created a unique and powerful opportunity to benefit all creditors and investors.” Statement in Support of Final Application for Approval and Payment of Professional Compensation, Securities and Exchange Commission v. Sunwest Management, Inc. et al. United States District Court for the District of Oregon, Case No. 09-CV-6056-HO (Filed with the Court October 7, 2010).

7 Through Applicant’s structure, certain Sunwest Investors were able to pursue the possibility of deferring a taxable event in connection with the acquisition by Blackstone LLC of their interests in the Sunwest Assets and the bankruptcy estate. The proposed structure was designed to provide significant tax benefits to a substantial number of TIC Investors. In summary, since each of Applicant and Blackstone LLC is treated under Subchapter K of the Internal Revenue Code of 1986, as amended (the “IRC”), as a partnership for federal income tax purposes, any gains embedded in the TIC interests contributed to Applicant (and subsequently contributed by Applicant to Blackstone LLC) are expected to continue to be deferred, and any items of income or gain realized by Blackstone LLC and allocated to Applicant will flow through to the members of Applicant without being taxable at either the Blackstone LLC or Applicant level. Through this structure, the Sunwest Investors who elected to receive Applicants’ Preferred Units also may be able to defer a taxable event and, at the same time, received an instrument having a preferential fixed return. Applicant does not intend to be subject to Subchapter M of the IRC.

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Blackstone LLC is affiliated with Blackstone Group, a large publicly traded private equity fund. Applicant expects that Blackstone LLC will wind down after a few years consistent with the typical liquidity objectives applicable to private equity fund investments. See Section V.D, “Operations of Applicant – Applicant’s Limited Life,” below.

B.	Structure of Applicant

To address the tax issues (see footnote 7 above) and valuation concerns of the Sunwest Investors, the PSA and the Plan of Reorganization provide that the consideration paid by Blackstone LLC in acquiring the Sunwest Assets would, at the election of the Sunwest Investors, take the form of a combination of:

Cash; and/or

Issuance of equity interests in Blackstone LLC in exchange for the contribution of the interests of the Sunwest Investors in the Sunwest Assets and the bankruptcy estate. The equity interests in Blackstone LLC (i.e., the Rollover Equity Interests) that are being issued to Applicant consist of:

o Common Interests in Blackstone LLC; and

o 6% Class A Preferred Units in Blackstone LLC.8 9

8 Holders of Applicant’s Preferred Units contributed interests in the Sunwest Assets and the bankruptcy estate valued at $100 for each Preferred Unit. Each Preferred Unit issued by Applicant is entitled to a preferred cumulative return of 6% per year on the $100, and each Preferred Unit is redeemable after five and one-half years at the option of the holder of the Preferred Unit (and, under certain circumstances, at Applicant’s option). Applicant’s Preferred Units mirror the terms of the 6% Class A Preferred Units issued by Blackstone LLC to Applicant. Accordingly, if holders of Preferred Units in Applicant require redemption, Applicant will, in turn, require redemption from Blackstone LLC.

9 Under the PSA and the Plan of Reorganization, Applicant was limited to 49% of the Common Interests in Blackstone LLC and $50 million of the 6% Class A Preferred Units in Blackstone LLC. Neither the Common Units nor the Preferred Units were over-subscribed, so the over-subscription procedures developed in the Bankruptcy Case did not become applicable.

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Interests in Applicant are being issued in exchange for the interests of Sunwest Investors in the Sunwest Assets and the bankruptcy estate.10 Interests in Applicant are not being issued for cash.

Sunwest Investors who elected to receive Common Interests or Preferred Units in Blackstone LLC did not become direct members of Blackstone LLC. Rather, such Sunwest Investors contributed their interests in the Sunwest Assets and the bankruptcy estate to Applicant, which, in turn, contributed the property interests to Blackstone LLC. Blackstone LLC is in the process of issuing its securities to Applicant, and Applicant is in the process of issuing its securities to the Sunwest Investors who elected to invest in Applicant.

The Preferred Units and Common Units being issued by Applicant mirror the 6% Class A Preferred Units and Common Interests being issued by Blackstone LLC that are held by Applicant. Applicant’s only investments and activities (other than Temporary Investments) will be its investment in Blackstone LLC. Applicant will have no other sources of revenue. Only Applicant is receiving Blackstone LLC’s 6% Class A Preferred Units – all other investors in Blackstone LLC have received Common Interests.11

Because Applicant is primarily a vehicle through which Sunwest Investors invest in Blackstone LLC, it is essential that the terms of Applicant’s Common Units and Preferred Units mirror the economic terms of the Common Interests and 6% Class A Preferred Units to be issued by Blackstone LLC to ensure that the Sunwest Investors receive, without dilution by other activities, the same investment results through Applicant as they would have received if they had invested directly in Blackstone LLC, except for Applicant’s issuance of the contingent non-voting profits interests (the “Profits Interests”) that are being issued to the Sunwest Founders. Accordingly, Section 6.3.3 of the Plan of Reorganization requires Applicant’s Common Units and Preferred Units to mirror the economic terms of the Common Interests and the 6% Class A Preferred Units that Blackstone LLC is issuing to Applicant.

The Profits Interests are the third class of securities to be issued by Applicant. The Profits Interests entitle the Sunwest Founders to receive a portion of Applicant’s earnings if total distributions and payments to Sunwest’s general unsecured creditors and the Sunwest Investors (not including the Sunwest Founders) aggregate in excess of $500 million. After that point, the next $500 million of distributions will be allocated among holders of Common Units and holders of the Profits Interests pursuant to a schedule approved by the Court, such that, if $1 billion were to be distributed, the Sunwest Founders would receive 25% of that amount. Thereafter, 75% of

10 Interests in Applicant have been issued pursuant to the Plan of Reorganization in the Bankruptcy Case. Therefore, issuance complies with Section 23(a)(2) of the Investment Company Act. See Section 2(a)(33) of the Investment Company Act.

11 The other owners of the Common Interests of Blackstone LLC are: (a) BRE/SW Member LLC (an affiliate of Blackstone LLC); (b) Emeritus Corporation (a nationally prominent owner and operator of assisted living facilities); and (c) CPDF II LLC (an affiliate of Emeritus Corporation).

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distributions would be paid to the holders of the Common Units and 25% of distributions would be paid to the holders of the Profits Interests.12

The terms of the Profits Interests were developed as a result of a mediation in 2009 and subsequent Court hearings in which Sunwest Founders and their families agreed to contribute all of their interests in the Receivership Entities in exchange for: (a) the release of certain claims against the Sunwest Founders by the bankruptcy estate and by the Receiver; and (b) the receipt of the contingent Profits Interests. The Profits Interests were negotiated to resolve certain issues with respect to the Sunwest Founders. The Profits Interests relate solely to the allocation of distributions among the members of Applicant and other Sunwest creditors, and do not affect the distributions Applicant will receive from Blackstone LLC. Therefore, Blackstone LLC will not issue to Applicant a security comparable to the Profits Interests.

In exchange for their interests in the Sunwest Assets and the bankruptcy estate, Sunwest Investors were eligible to elect to receive: (a) cash from the bankruptcy estate; (b) Common Units of Applicant; or (c) Preferred Units of Applicant. Under the PSA and the Plan or Reorganization, Applicant was not permitted to own any more than 49% of the Common Interests to be issued by Blackstone LLC or more than $50 million of the 6% Class A Preferred Units to be issued by Blackstone LLC, and, since the securities that Applicant has issued mirror the securities of Blackstone LLC that Applicant owns, Applicant was not permitted to issue its Common Units or Preferred Units in excess of such amounts.

Sunwest Investors have elected whether they wish to receive cash, Common Units or Preferred Units. Applicant is in the process of issuing Common Units to approximately 440 Sunwest Investors and Preferred Units to approximately 125 Sunwest Investors. In addition, Profits Interests are being issued to three Sunwest Founders. Applicant owns securities of Blackstone LLC valued at approximately $70 million.

The Sunwest Assets were owned by some 1,200 TIC Investors and nearly 200 LLC Investors, and the LLC Investors, in turn, were owned by approximately 1,500 members. Because most Sunwest Investors elected to receive cash rather than interests in Applicant, the expense of maintaining Applicant will be borne by fewer members and will be proportionally more burdensome to Applicant’s members than was initially anticipated.

The following diagram illustrates the organizational structure of Blackstone LLC and Applicant following the Blackstone Acquisition of the Sunwest Assets:

12 Disposition of any proceeds of the Profits Interests to the Sunwest Founders is subject to an agreement between the Sunwest Founders and the State of Oregon, Department of Consumer and Business Services, Division of Finance and Corporate Securities, and to resolution of matters pending between the Commission and the Sunwest Founders.

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The transferability of Applicant’s interests is severely restricted,13 and such interests will not be publicly traded. Therefore, Applicant’s interests initially are held, and will continue to be held, by Sunwest Investors and Sunwest Founders who are familiar with the reasons for Applicant’s capital structure and who, in fact, are the recipients of the benefits of the structure.

C.	Negotiation of Applicant’s Structure

The negotiations which led to the structure of Applicant and the terms of the PSA with Blackstone LLC were protracted, arms-length, spirited and actively participated in by Sunwest Investors and their representatives, counsel, investment bankers and other advisors. The structure reflected in the final PSA was adopted only after other potential bidders imposed significant competitive pressures on Blackstone LLC.

13 Among other significant restrictions on transfer, Applicant’s governing documents permit transfers of Applicant’s interests only after Applicant’s Board of Managers, with the advice of counsel, has determined that Applicant’s securities will not be deemed “traded on an established securities market” or “readily tradable in a secondary market (or the substantial equivalent thereof).” In making its determination, the Board of Managers may limit any transfers so that the transfers comply with a safe harbor in the IRC regulations, so Applicant will avoid publicly traded partnership status.

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In the Fall of 2009, The Blackstone Group expressed interest in acquiring the Sunwest Assets. The Chief Restructuring Officer and the Receiver and their counsel and other advisors began negotiations with affiliates of The Blackstone Group and their counsel and other advisors. Representatives of the TIC Investor Committee and the Management Committee were actively involved in negotiating Applicant’s structure and the terms of the PSA.

The letter of intent relating to the Blackstone Acquisition, dated September 14, 2009, contemplated a cash-only transaction. The purchase price was to be $235 million cash, plus the assumption by Blackstone LLC of approximately $1 billion of the Debtor’s liabilities. Blackstone did not offer or desire to permit Sunwest Investors to invest in Blackstone LLC. Because the potential tax consequences to the TIC Investors from a cash transaction were potentially so unfavorable (see footnote 7 above), and because many Sunwest Investors desired to be able to participate in any possible appreciation of the Sunwest Assets, representatives of the TIC Investor Committee and the Management Committee strongly advocated a structure that would allow Sunwest Investors to elect to “roll over” their existing Sunwest investments into Blackstone LLC rather than to receive cash distributions. These negotiations initially achieved only minimal results. The initial PSA, which the Debtor and Blackstone LLC entered into on January 15, 2010, permitted the Sunwest Investors to elect to acquire only up to $25 million of equity in Blackstone LLC.

Representatives of the TIC Investor Committee and the Management Committee were not satisfied with the limited potential investment by Sunwest Investors in Blackstone LLC as reflected in the January 15, 2010 PSA, as, in their view, it did not provide the tax deferral desired by hundreds of Sunwest Investors. Representatives of the Management Committee continued to contact other third parties that might be interested in acquiring the Sunwest Assets, contacting approximately a dozen potential bidders. Representatives of the Management Committee succeeded in locating an interested third party, which was willing to offer terms that provided to Sunwest Investors increased opportunity to retain their investments in the Sunwest Assets and preserve the desired tax treatment. The Court authorized the Management Committee to retain separate investment bankers and directed that due diligence be shared with the competing bidder.

On March 10, 2010, the Court ordered the Debtor, Blackstone LLC, the other bidder, the committees and their representatives, to meet in New York during the week of March 15, 2010 to determine whether Blackstone LLC or the other bidder would offer the best terms and then to negotiate the terms of the transaction with the higher bidder. Marathon negotiations were attended by the Debtor’s Chief Restructuring Officer, Receiver, counsel and investment bankers, by the Management Committee and its counsel and investment bankers, by Blackstone LLC and its counsel, and by the other bidder and its counsel and investment bankers. The Judge and two court-appointed mediators attended and supervised the negotiations.

During the week, the apparently winning bidder, as between Blackstone LLC and the other bidder, changed from day to day. It was not clear whether Blackstone LLC or the other bidder would ultimately prevail. After days of negotiations, Blackstone LLC substantially increased the terms of its offer from the terms reflected in the January 15, 2010 PSA. It increased its offering price by $50 million and increased the permitted participation by the Sunwest Investors from a maximum of $25 million to up to 49% of the Common Interests in Blackstone LLC, and, in addition, offered to permit the Sunwest Investors to elect to receive up to $50 million of 6% Class A Preferred Units of Blackstone LLC. Thus, Blackstone increased its offer from $235 million

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(including allowing Sunwest Investors to invest up to $25 million) to $285 million (including allowing Sunwest Investors to acquire, through Applicant, up to 49% of Blackstone’s Common Interests and up to $50 million of 6% Class A Preferred Units of Blackstone LLC).

The Managing Director of Blackstone LLC testified at the confirmation hearing that the reason for the increase in March was “to get approval of the transaction from various parties involved in the overall bankruptcy.” Applicant believes that Blackstone LLC included the 6% Class A Preferred Units in its new proposal to provide an instrument for investors, which offered a fixed return while at the same time permitting existing Sunwest investors to “roll over” into Blackstone LLC and thus preserve the desired tax treatment.

The revised Blackstone proposal was recognized as significantly superior to any other offer or interest received. The rest of the week was spent negotiating specific provisions of Amendment No. 2 to the PSA to reflect Blackstone LLC’s enhanced offer. The amendment to the PSA was signed by the parties on March 25, 2010. The Chief Restructuring Officer and the Receiver signed the amendment on behalf of the Debtor. The Chief Restructuring Officer and the Receiver concluded that the Blackstone Acquisition and the structure of Applicant are in the best interests of the Sunwest Investors.

William Bryan, the Chairman of the Management Committee, also signed the amendment to manifest the Committee’s agreement. Mr. Bryan testified in support of the PSA at the July 13, 2010 confirmation hearing, stating: “Ultimately, I think what we achieved was a proposal from Blackstone that incorporated the best of both Blackstone’s initial proposal and also some features of the [other bidder’s] funding agreement.”

On March 29, 2010, the Court approved the PSA, as amended, and also approved the auction process, bidding procedures and overbid protections that would govern the Stalking Horse Sale and Auction. During the required Stocking Horse Sale and Auction, the Debtor approached approximately 15 other potential bidders, and approximately 10 of those potential bidders signed confidentiality agreements and performed some due diligence. However, no competing bid was submitted, and, on May 17, 2010, the Court entered its Order identifying and approving Blackstone LLC as the successful bidder and purchaser of the Sunwest Assets.

D.	Sunwest Creditors Who Were Eligible to Elect to Receive Interests in Applicant

The Court classified the bankruptcy claims in the Plan of Reorganization into a total of 12 classes. No creditors, except the Sunwest Investors, had the right to elect among cash, Common Units and Preferred Units. No creditors, except the Sunwest Founders, received the contingent non-voting Profits Interests. The other 10 classes of creditors will receive only cash or other consideration, as specified in the Plan of Reorganization.

No Sunwest Investor was required to receive interests in Applicant. Only Sunwest Investors who voluntarily elected to receive interests in Applicant became members of Applicant. All Sunwest Investors had alternative methods of resolving their claims with the bankruptcy estate if they did not wish to invest in Applicant.

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E.	No Conflict Among Classes of Applicant’s Securities

There should not be any conflicts among the classes of Applicant’s securities, as the rights of the Common Units, Preferred Units and Profits Interests are all defined by the limited liability agreement of Applicant (“Applicant’s LLC Agreement”), as approved by the Court. To the extent there were conflicts among the various types of Sunwest Investors who were eligible to elect to receive interests in Applicant, those conflicts were resolved in the Bankruptcy Case when it was determined which categories of Sunwest Investors would have received priority if Common Units or Preferred Units had been over-subscribed.

V. Operations of Applicant

A.	Applicant’s Assets

The assets of Applicant will consist exclusively of the Rollover Equity Interests in Blackstone LLC and Temporary Investments pending distributions to Applicant’s members or disbursements in payment of its obligations. Applicant will not otherwise invest or reinvest assets or engage in other activities.

B.	Applicant’s Revenues and Borrowings

Applicant’s sole source of revenue will be its investment in Blackstone LLC (other than any income from Temporary Investments). It is not anticipated that there will be significant distributions to Applicant in the initial years of operation of Blackstone LLC, but that Applicant will have significant administrative, compliance and similar expenses because Applicant must comply with applicable provisions of the securities laws and because it has hundreds of members. Therefore, Blackstone LLC has agreed to reimburse Applicant $400,000 each year (the “Reporting Reimbursement),” and the Debtor has agreed to loan Applicant up to a total of $2 million to permit Applicant to pay its expenses.14 Such expenses will include administrative expenses (including the expenses of a third-party administrator, which Applicant intends to retain), expenses of providing tax and other information to Applicant’s members, legal and accounting expenses, expenses of complying with the provisions of the Investment Company Act that will become applicable to Applicant if it does not dissolve, and similar administrative and compliance expenses. The Reporting Reimbursement and the loan were negotiated to help ensure that Applicant will have sufficient resources to maintain its existence and compliance. Given the Reporting Reimbursement and the loan, Applicant does not anticipate needing to raise capital to pay its administrative, compliance and similar expenses.

14 The loan will bear interest at 6% per year, and will mature on the third anniversary of the closing of the Blackstone Acquisition (i.e., on August 5, 2013). Applicant did not seek financing for the loan from commercial banks or other unaffiliated lenders as Applicant did not believe that such financing would be available on favorable terms, or for the purposes intended. The interest rate applicable to the loan was selected, because it is the same rate applicable to the Blackstone LLC’s 6% Class A Preferred Units, which are guaranteed obligations to pay and therefore are similar to a debt obligation and the terms of which were arrived at through arms’-length negotiations with an unaffiliated party. Although Applicant and Debtor are separate legal entities, there exists a significant overlap among the members of Applicant on the one hand and the creditors and investors in Debtor on the other hand, such that the potential for conflicts of interest is virtually eliminated.

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C.	Possible Capital Calls by Blackstone LLC

The limited liability agreement governing Blackstone LLC (“Blackstone’s LLC Agreement”) permits its Board of Directors to request members (including Applicant) to make additional capital contributions if the Board determines in good faith: (a) that Blackstone LLC requires additional capital to meet its financial obligations; or (b) that raising additional capital for investment in facilities that are contiguous or adjacent to facilities acquired from the Debtor is advisable and in the best interests of Blackstone LLC. See Section 3.2 of Blackstone’s LLC Agreement. The requirement that any additional properties be contiguous or adjacent to properties acquired from the Debtor was negotiated in order to protect Sunwest Investors. Limiting requests for additional capital will more likely allow Applicant to satisfy any capital requests and maintain its proportionate interest in Blackstone LLC. To further protect Applicant’s participation right, Applicant has the right to select one member of Blackstone LLC’s three-person Board of Directors. See Section 5.12(A) of Blackstone’s LLC Agreement. The Board of Directors’ only approval right is to determine the amount of, and whether and when Blackstone LLC will request, any additional capital. See Section 5.12(C) of Blackstone’s LLC Agreement.

Based on the summary three-year financial projections and capitalization table provided by Blackstone LLC for inclusion in the Debtor’s Disclosure Statement, Applicant does not anticipate that Blackstone LLC will request additional capital to meet its general financial obligations.

Because Blackstone LLC’s right to purchase additional properties is restricted to properties that are contiguous or adjacent to facilities acquired from the Debtor, Applicant does not anticipate that Blackstone LLC will make frequent requests for additional capital contributions from its members, if any requests are made. Nevertheless, Applicant sought the right to participate in any such requests for additional capital to preserve the Sunwest Investors’ proportionate interest in Blackstone LLC’s Common Interests.15 The contiguous/adjacent limitation and Applicant’s participation right were the subjects of in-depth negotiations with Blackstone LLC in which representatives of the TIC Investor Committee and the Management Committee, and their advisors, were active participants. The limitation on capital calls and the participation right are integral features of the Blackstone Acquisition that was approved by the Court in the Confirmation Order.

The principal consequence of Applicant failing to make a requested capital contribution would be dilution of Applicant’s proportional interest in Blackstone LLC. Failure to make a requested capital contribution is not a default and would not result in expulsion from Blackstone LLC. Section 3.3 of Blackstone’s LLC Agreement provides two alternatives if a common member of Blackstone LLC fails to contribute requested capital. The contributing common members may each, in such member’s sole discretion, in proportion to its percentage ownership of Common Interests or in such other percentage as such common members may agree: (a) loan the deficiency to the non-contributing member; or (b) contribute the deficiency to Blackstone LLC. If the contributing common members decide to loan the deficiency to the non-contributing member, the loan would bear interest at a rate of at least 20% per year. The loan would then be treated as a

15 Applicant has no right to make additional contributions as to the 6% Class A Preferred Units of Blackstone LLC. Only holders of Common Interests may participate in capital calls by Blackstone LLC.

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capital contribution by such non-contributing member to Blackstone LLC. All distributions that would otherwise be made to the non-contributing member would be paid to the common members that made the loans until such loans have been paid in full. In lieu of lending money to the non-contributing member, the contributing common members may contribute the deficiency to Blackstone LLC and receive additional Common Interests, thus reducing the non-contributing member’s percentage ownership of Common Interests proportionally.

Applicant’s LLC Agreement (Sections 3.4 through 3.6) governs how Applicant would request capital from its own members. Applicant may raise capital only for the purpose of paying Applicant’s expenses or responding to a capital request from Blackstone LLC. Because of the $400,000 Expense Reimbursement from Blackstone LLC and the loan of up to $2 million from the Debtor, Applicant does not anticipate that it will need to sell additional securities to pay its expenses. If Applicant does sell securities to pay its expenses, the offer would first go to the members of Applicant who are eligible to participate. Any such offering would be extended to third parties only if Applicant’s members do not purchase the offered securities. See Section 3.6 of Applicant’s LLC Agreement.

If Blackstone LLC were to make a capital call, Applicant, in turn, would offer Common Units to qualified members to raise the requested amount. Applicant’s LLC Agreement (Section 3.5.1) states that a preference would be given to holders of Common Units in any such offering, since the Common Units are fully participating, as opposed to the Preferred Units, which give holders a preferential fixed rate of return and a redemption right. Only Applicant’s members (and no third parties) are permitted to purchase Common Units in connection with a capital call from Blackstone LLC. See Sections 3.5 and 3.6 of Applicant’s LLC Agreement. Failure to purchase additional securities is not a default (see Section 3.5.1 of Applicant’s LLC Agreement). (Applicant’s LLC Agreement does not include the loan concept found in Blackstone’s LLC Agreement.)

Any offering by Applicant, whether to pay its expenses or to raise capital in response to a capital call from Blackstone LLC, must be conducted in compliance with federal and state securities laws. Applicant was able to offer its securities to all Sunwest Investors in the Bankruptcy Case, even though not all of them are accredited investors within the meaning of Regulation D, because that offering was exempt from registration under federal and state securities laws pursuant to Section 1145(a) of the Bankruptcy Code. However, any subsequent offering by Applicant would not be exempt under the Bankruptcy Code, so Applicant must register the securities or qualify for an exemption under federal and state securities laws.

Applicant would have 30 days to respond to a capital call from Blackstone LLC (see Section 3.2(A)(2) of Blackstone’s LLC Agreement). That would not give Applicant enough time to register an offering under the Securities Act. Because the transferability of Applicant’s securities is severely restricted (see footnote 13 above), Applicant will not have any public float. Therefore, under current law, a shelf registration will not be an option. The most likely exemption available to Applicant is an offering made only to accredited investors under Rule 506 of Regulation D.

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Sunwest Investors were given notice that any subsequent offering by Applicant would have to comply with federal and state securities laws. Sections 3.4 and 3.5.1 of Applicant’s LLC Agreement each include a provision stating that Applicant will not offer or sell any securities to any person that does not meet all qualifications under applicable federal, state and local securities laws in order for such offer and sale to qualify as exempt from applicable registration requirements. Sunwest Investors also were advised in the Debtor’s Disclosure Statement that any subsequent offering by Applicant would be made only to persons qualified to participate in the offering in accordance with applicable securities laws, and, as a result, the pro rata interests of members who do not participate in an offering may be diluted.

Applicant needs the potential to raise additional capital in order to continue its legal existence (if additional capital is needed to pay Applicant’s expenses) or to maintain Applicant’s proportionate interest in Blackstone LLC (if additional capital is needed by Applicant to respond to a capital request by Blackstone LLC). Offering securities only to accredited investors in any subsequent capital call is not unfair to the members who do not qualify as accredited investors, because all members received notice of the possibility and, nonetheless, elected to invest in Applicant. In addition, if Applicant sells securities after the consummation of the Blackstone Acquisition, such securities would be sold at a price equal to or greater than the net asset value of the securities at the time of the offering. Therefore, while Applicant’s members who purchase additional securities would increase their percentage ownership relative to the members who do not purchase additional securities, the value of the securities held by the members who do not purchase additional securities would not be reduced.

Applicant believes it is unlikely that Applicant or Blackstone LLC will request any additional capital. If they do, it is anticipated that they would do so infrequently, since they are expected to have sufficient capital for their general financial needs and because they may otherwise request capital only to permit Blackstone LLC to purchase facilities that are contiguous or adjacent to facilities it acquired from the Debtor. Nevertheless, the participation right is an important protection to Applicant’s members as a whole.

If Applicant is not able to negotiate its dissolution within Rule 3a-2’s one-year period, and if the Commission does not grant Applicant’s requested relief, Applicant will need to register under the Investment Company Act. Registration under the Investment Company Act would impose significant burdens on Applicant, but such registration would still not permit an offering to be made to all investors under the Securities Act. In other words, under the Securities Act, the offering still would likely have to be limited to accredited investors, if Applicant wishes to participate in a capital call. Since the additional expenses of complying fully with the Investment Company Act would be borne by all members, including those who would not be able to participate in the offering, registration under the Investment Company Act would not benefit Applicant or its members.

If Applicant were to sell any additional securities, the securities almost certainly would be sold to Applicant’s members, and not to third parties. Applicant’s structure was developed to benefit Applicant’s members; Applicant’s right to participate in any capital calls by Blackstone LLC was actively negotiated; and all Sunwest Investors were advised of the potential for dilution in the event of future offerings by Applicant. Applicant’s issuance of additional securities at or above the net asset value of such securities would not affect any non-contributing investor unfairly, and is consistent with the Drexel precedent. See Section VII.B.5, “Statement in Support of Requested Relief – Relief Requested Is Consistent with Previous Commission Action – Possible Capital Calls,” below.

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D.	Applicant’s Limited Life

The possibility that Applicant might issue additional securities does not make Applicant an operating business. As discussed in the section immediately above, Applicant may raise additional capital only under very limited circumstances, and, in no event, will Applicant engage in any operating activities.

Although Blackstone LLC is, through its subsidiaries, an operating company, Applicant anticipates that Blackstone LLC will have a limited life. Applicant expects that Blackstone LLC will seek a liquidity event after a few years consistent with the investment objectives common to private equity fund investments. All loans assumed by Blackstone LLC will have terms of no more than five years. The Managing Director of Blackstone LLC testified at the confirmation hearing that Blackstone LLC will be required to refinance or sell the Sunwest Assets within five years. Such sale or refinancing will make dissolution of Applicant likely within five years or less.

Applicant’s limited life is consistent with the Drexel and LTV precedents, and the fact that Blackstone LLC is an operating company is consistent with the Drexel precedent. See Section VII.B.6, “Statement in Support of Requested Relief – Relief Requested Is Consistent with Previous Commission Action – Applicant’s Limited Life,” below.

E.	Management of Applicant

Applicant’s initial Manager is Michael A. Grassmueck, the Receiver. He was appointed by the initial member of Applicant, and his appointment has been approved by Order of the Court. Mr. Grassmueck is not an “interested person” of Applicant, within the meaning of Section 2(a)(19) of the Investment Company Act, and Applicant expects him to continue to not be an “interested person” throughout his term.16

Mr. Grassmueck will serve as Applicant’s sole Manager until the later of December 31, 2010 or the election of a three-person Board of Managers by Applicant’s members. If a vacancy occurs in the Board and if the former Manager was not an “interested person” of Applicant, the

16 As discussed in Section V.B, “Operations of Applicant – Applicant’s Revenues and Borrowings,” above, the Debtor has agreed to loan Applicant up to $2 million to permit Applicant to pay its expenses. Currently, the Debtor’s assets are under the control of the Chief Restructuring Officer. At some point, Mr. Grassmueck, as the Receiver, will have control of the Debtor’s assets and would then become the person overseeing any loans the Debtor makes to Applicant. Applicant does not anticipate needing to borrow any money from the Debtor until after Mr. Grassmueck’s position as Manager of Applicant has terminated. However, if Mr. Grassmueck were to be in control of the Debtor’s assets when the Debtor loans money to Applicant, he might then be considered an “interested person” of Applicant under Section 2(a)(19)(A)(vi)of the Investment Company Act.

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person elected to fill the vacancy also must not be an “interested person” of Applicant. See Sections 7.2 and 7.3 of Applicant’s LLC Agreement.

VI. Relief Sought by Applicant

A.	Applicant as Potential Investment Company

But for the exemption provided by Rule 3a-2 under the Investment Company Act, Applicant would be an investment company, as defined in Section 3(a)(1)(C) of the Investment Company Act, because: (a) Applicant has acquired investment securities (i.e., interests in Blackstone LLC) having a value exceeding 40% of the value of Applicant’s total assets; and (b) none of the other exemptions or exceptions specified in the Investment Company Act apply to Applicant.

B.	Summary of Relief Sought

For the reasons discussed herein, it is appropriate in the public interest and consistent with the purposes of the Investment Company Act and the protection of investors to exempt Applicant from all of the provisions of the Investment Company Act and the rules thereunder, except: Section 9; Sections 17(a), 17(d) and 17(e); Modified Section 31; and Sections 36 through 53 of the Investment Company Act and the rules thereunder.

C.	Applicable Investment Company Act Provisions

Section 6(c) of the Investment Company Act provides, in part, that the Commission, “by order upon application, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provisions of [the Investment Company Act] or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this title.”

Section 6(e) of the Investment Company Act provides, in part, that, in connection with the issuance of any order exempting an investment company from any provision of Section 7 of the Investment Company Act, if the Commission “deems it necessary or appropriate in the public interest or for the protection of investors that certain specified provisions of [the Investment Company Act] pertaining to registered investment companies shall be applicable in respect of such company, the provisions so specified shall apply to such company, and to other persons in their transactions and relations with such company, as though such company were a registered investment company.”

If the Commission grants Applicant’s requested relief, the sections of the Investment Company Act that would apply to Applicant for the protection of investors are:

(a) Section 9 (making certain persons ineligible to serve or act in the capacity of employee, officer or Manager of Applicant);

(b) Sections 17(a), 17(d) and 17(e) (making it unlawful for Applicant to engage in most transactions with affiliated persons);

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(c) Modified Section 31 (under Modified 31, Applicant will be subject to all of Section 31 and the rules thereunder, except that Rule 31a-1(a) will be modified to require retention of the documents that constitute the record forming the basis for the annual audited financial statements that Applicant will provide to its members, rather than the documents forming the basis for the financial statements that would be filed pursuant to Section 30 of the Investment Company Act, since Section 30 requires semiannual financial statements in addition to annual financial statements; under Applicant’s requested relief, Applicant would provide annual audited financial statements to its members prepared in accordance with generally accepted accounting principles and Rule 1-02(d) of Regulation S-X); and

(d) Sections 36 through 53 (these are sections of general applicability, which, among other things: (i) permit the Commission to bring an action against any officer or Manager of Applicant alleging that such person has engaged in, or is about to engage in, a breach of that person’s fiduciary duties to Applicant; (ii) prohibit larceny and embezzlement involving Applicant’s assets; (iii) authorize the Commission to make rules, issue orders, hold hearings and enforce the Investment Company Act; (iv) generally make contracts entered into in violation of the Investment Company Act unenforceable by either party (or by third parties in certain circumstances); (v) require adoption of compliance policies and procedures, appointment of a chief compliance officer and related compliance matters; and (vi) impose liability and penalties on persons who violate the Investment Company Act or any rule issued thereunder.

VII. Statement in Support of Requested Relief

A.	Grounds for Exemptive Relief

Section 6(c) of the Investment Company Act allows the Commission to exempt any person or transaction from the Investment Company Act “if and to the extent that such exemption is necessary or appropriate and in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions” of the Investment Company Act.

Section 6(e) of the Investment Company Act provides that, in connection with the issuance of any order exempting an investment company from registering under the Investment Company Act, if the Commission “deems it necessary or appropriate in the public interest or for the protection of investors,” the Commission may make certain specified provisions of the Investment Company Act applicable to such company as though it were registered.

Applicant believes it is in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Investment Company Act and the rules thereunder, and is consistent with precedent, to exempt Applicant from all provisions of the Investment Company Act and the rules thereunder, except: Section 9; Sections 17(a), 17(d) and 17(e); Modified Section 31; and Sections 36 through 53 of the Investment Company Act and the rules thereunder, as discussed below.

B.	Relief Requested Is Consistent with Previous Commission Action

The Commission has granted comparable relief to other issuers formed as a result of bankruptcy proceedings. See Drexel and LTV, cited above in footnotes 1 and 2, respectively. In issuing its exemptive orders to Drexel and LTV, the Commission recognized that it was in the public interest and consistent with the protection of investors and the purposes of the Investment

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Company Act to provide extensive exemptive relief for entities formed as a result of bankruptcy proceedings, whose operations would be overseen by a court. Applicant submits that its requested relief is equally in the public interest and consistent with the protection of investors and the purposes of the Investment Company Act.

Applicant was formed to resolve bankruptcy proceedings in a manner beneficial to Sunwest Investors who elected to receive their bankruptcy distributions in the form of interests in Applicant. Although formed as a limited liability company rather than a liquidating trust, in terms of Applicant’s structure and function, and the policies underlying the Investment Company Act, Applicant is indistinguishable from the Drexel and LTV entities that were granted exemptions by the Commission.

As in Drexel and LTV, Applicant’s capital structure is designed to:

o Resolve bankruptcy issues;

o Preserve desired tax treatment; and

o Permit electing bankruptcy claimants to share in any future appreciation.

As in Drexel, Applicant’s tiered capital structure is designed to accommodate the differing interests of certain bankruptcy claimants.

As in Drexel and LTV, the investors and their advisors fully participated in negotiations leading to the structure of Applicant.

As in Drexel and LTV, the Court was actively involved in the development of Applicant’s structure and the Court’s jurisdiction over Applicant will continue.

As in Drexel, the structure of Applicant contains prudent provisions to permit (with appropriate safeguards) limited raising of capital in the event needed in the future.

Applicant has a limited life, automatically dissolving on December 31, 2020 unless previously dissolved:

o The Drexel trust had a four-year term plus three potential two-year extensions.

o LTV had a 10-year duration.

o Applicant expects a shorter duration due to economic considerations.

As in Drexel and LTV, Applicant will not trade in securities. Its only investment is in Blackstone LLC (and Temporary Investments pending distributions).

Both Applicant and LTV involve reserves and borrowing provisions to permit the entity to cover its expenses.

Both Applicant and Drexel severely limit transferability of interests.

Applicant proposes to comply with essentially the same provisions of the Investment Company Act as were applied in Drexel and LTV.

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1. Reasons for Applicant’s Structure; Applicant’s Purpose.

Like Drexel and LTV, Applicant’s structure resulted from the settlement of bankruptcy claims. See Drexel application at 35-36; LTV application at 4. The reasons for Applicant’s structure, as approved in the Plan of Reorganization, are strikingly similar to the reasons adopted for the structure approved in Drexel and LTV: to resolve competing claims of various parties in a bankruptcy proceeding.

Applicant’s Common Units and Preferred Units are primarily designed to ameliorate the adverse tax consequences which would result from liquidating the Sunwest Enterprise or selling the Sunwest Assets directly to Blackstone LLC. Similarly, the complex structure of the liquidating trust (the “Drexel Trust”) and related entities described in the Drexel application was developed, in part, to allow some claimants to preserve their desired tax treatment. Claimants in Drexel were allowed to hold certain securities directly or through a corporate entity, which would result in different tax consequences. Like the Sunwest Investors, claimants in the Drexel bankruptcy were permitted to make their investment decision based on their desired tax treatment. See Drexel application at 28-29.

Outright sale of the Sunwest Assets to Blackstone LLC for cash also would have deprived those Sunwest Investors who wish to do so of the opportunity to continue their investment and share any future appreciation following the Blackstone Acquisition. The ability to share in any future appreciation is consistent with the Drexel and LTV matters. See Drexel application at 8-9, 14-15 and 55; LTV application at 13-14 (assets were expected to be actively managed and operated for a period of years, and perhaps restructured, to maximize the value of the assets to the claimants in those bankruptcy proceedings).

2. Structure of Applicant.

Applicant has three classes of securities (i.e., Common Units, Preferred Units and the contingent Profits Interests). This relatively complex structure is also entirely consistent with the Drexel precedent. The Drexel Trust was to issue CBI-As, CBI-Bs (with four subclasses) and CBI-Cs (with three subclasses), each having different entitlements to distributions and differing transferability characteristics. See Drexel application at 12 and 32. To allow for tiered distributions to claimants, limited partnership interests in DPI L.P. (“DPI”) were to be issued in two classes, DPI-As and DPI-Bs (the latter of which was to be further divided into two subclasses). See Drexel application at 23-24.

Applicant’s Profits Interests provide no distributions at all to the Sunwest Founders unless and until distributions to Sunwest’s general unsecured creditors and the Sunwest Investors exceed $500 million. Here again, the structure is similar to that reflected in the Drexel precedent. The CBI-Cs to be issued by the Drexel Trust permitted the holders of the CBI-Cs to begin to share in the amounts distributable by the Drexel Trust to holders of other securities only after certain levels of aggregate distributions were made. See Drexel application at 32.

Applicant and Blackstone LLC are new entities formed to resolve bankruptcy proceedings. That is consistent with the Drexel and LTV precedents. The Drexel Trust, New Street Capital Corporation (“New Street”), DBP Corp. (“DBP”) and DPI were all new entities

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formed to resolve bankruptcy proceedings. See Drexel application at 8-10, 15 and 20-22. LTV was also a new entity formed to resolve bankruptcy proceedings. See LTV application at 1.

Applicant has no power to control Blackstone LLC. That limitation is consistent with the Drexel precedent, since the Drexel Trust had no power to influence or control the affairs of DPI, absent DPI’s default under the secured note issued by DPI to the Drexel Trust. See Drexel application at 25.

Applicant’s structure is fully consistent with the Drexel and LTV precedents.

3. Active Participation of Sunwest Investors in Negotiating Structure.

The negotiations which led to the final terms of the PSA, the structure of Applicant and the terms of Applicant’s securities were protracted, arms-length, spirited and actively participated in by Sunwest Investors and their representatives, counsel, investment bankers and other advisors. As a result of such involvement, the Sunwest Investors have been and are adequately protected. This is consistent with the Drexel and LTV applications. Both of the Drexel and LTV bankruptcy proceedings involved complex and contentious negotiations involving many interested parties. See Drexel application at 7 and 53; LTV application at 2-3.

4. Involvement of Court.

Like the applicants in the Drexel and LTV matters, the Court has been actively involved in all aspects of the Debtor’s reorganization, including the development of Applicant’s capital structure and the terms of the Blackstone Acquisition. The Confirmation Order included a finding that the PSA was negotiated, proposed and entered into by the parties in good faith and from arms’-length bargaining positions. Like Drexel and LTV, the Court will have continuing jurisdiction over Applicant. See Drexel application at 8 and 53; LTV application at 3 and 26. The Court’s active, ongoing oversight and involvement in Applicant’s affairs is expected to terminate after January 2011 once the precise amount of Common Units and/or Preferred Units held by each member of Applicant has been calculated and Applicant’s members have elected a three-person Board of Managers. Although the Court’s jurisdiction over Applicant will continue thereafter, it is expected that the Court’s involvement will primarily be to resolve any disputes that arise under Applicant’s governing documents.

5. Possible Capital Calls.

Applicant’s limited right to issue additional securities is fully consistent with the Drexel precedent. Two of the Drexel subsidiaries, New Street and DBP, were permitted to be exempt from almost all provisions of the Investment Company Act,17 even though they were authorized to sell additional securities in private placements. See Drexel application at 55-56. The exemptions were to continue so long as the subsidiaries were majority-owned subsidiaries of the

17 New Street was subject only to modified Section 9, modified Section 17, modified Section 31, and Sections 36 through 53 of the Investment Company Act. DBP was subject only to Section 9, modified Section 17 and Sections 36 through 53 of the Investment Company Act. See Drexel Application at 3-4.

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Drexel Trust and did not make a public offering of their securities. There is no need to impose such conditions on Applicant, because: (a) the purpose of any capital call by Applicant would be solely to maintain Applicant’s existence or to maintain its proportionate interest in Blackstone LLC; (b) the limitation on the ability of Blackstone LLC to request additional capital was negotiated to reduce the number of capital calls; and (c) Applicant’s representative on Blackstone LLC’s Board of Directors will represent Applicant’s interests in connection with any proposed capital calls by Blackstone LLC.

Like Drexel, Applicant’s participation right, which must be exercised in compliance with applicable securities law, permits maximum potential benefit for Applicant and its members, does not adversely affect the members who cannot participate in any such offering, and does not adversely affect the general public interest. See Drexel application at 56. See also, Section V.C, “Operations of Applicant – Possible Capital Calls by Blackstone LLC,” above.

6. Applicant’s Limited Life.

Applicant has been formed to resolve bankruptcy proceedings in a manner that is beneficial to the Sunwest Investors who have elected to invest in Applicant. Although Applicant is not structured as a liquidating trust, its purpose of resolving bankruptcy proceedings is the same as that of a liquidating trust. Applicant’s term will automatically expire on December 31, 2020, unless dissolved earlier. This duration is consistent with the Drexel and LTV precedents. The Drexel Trust had a four-year duration, with three additional two-year extensions permitted if approved by the bankruptcy court. See Drexel application at 13. LTV had a 10-year duration, subject to earlier termination under certain circumstances. See LTV application at 7. See also, Drexel application at 29 (certain Drexel entities had the right to borrow from the Drexel Trust to pay their income tax liabilities; any such loan was to mature no longer than 11 years after the date the Drexel plan of reorganization was consummated).

As discussed in Section V.C, “Operations of Applicant – Possible Capital Calls by Blackstone LLC,” above, Applicant may offer certain of its members the right to contribute additional capital if additional capital is requested from Blackstone LLC. Given the limited circumstances in which Blackstone LLC may make such requests, this possibility is entirely consistent with Applicant’s status as an entity structured to resolve bankruptcy proceedings and distribute proceeds to investors.

The fact that Blackstone LLC is an operating company also is consistent with the Drexel precedent. New Street and DBP, the Drexel Trust subsidiaries that were permitted to make private placements of their securities, as discussed above, were operating businesses. See Drexel application at 52 (stating that the activities of the Drexel Trust are incidental to dissolution even though several of its subsidiaries are operating companies and are expected to continue beyond the Drexel Trust’s existence). New Street (the reorganized Drexel Burnham Company) was to hold, manage and conduct business using certain Drexel assets. New Street intended to actively manage its portfolio and also might seek to influence or control its portfolio companies, participate in restructuring plans, and provide limited financial advisory services. One of New Street’s wholly-owned subsidiaries was a registered broker-dealer. DBP owned certain partnerships and other companies, some of which were to continue as operating businesses. DPI was another operating Drexel entity that was granted a broad exemption in the Drexel matter. The only DPI security the Drexel Trust held was a secured note, so the Drexel Trust did not control DPI, in the

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absence of a default by DPI on the note. The limited liability interests of DPI were to be held by approximately 2,000 current or former employees of Drexel (or their beneficiaries). There was no specified duration for the existence of New Street or DBP. See Drexel application at 14-15 and 20-21.

Applicant’s limited life is consistent with the Drexel and LTV precedents. The fact that Blackstone LLC is an operating company also is consistent with the Drexel precedent.

7. Limited Investments; Frequency of Distributions.

Applicant will hold only interests in Blackstone LLC and Temporary Investments. See Drexel Application at 28; LTV Application at 9.

If Applicant is not required to be registered under the Investment Company Act, it would be able to distribute cash as it is received from Blackstone LLC (which could be more often than annually). Since Applicant may invest only in Temporary Investments pending distribution of its cash, the ability to make more frequent distributions would increase the return to Applicant’s members and is consistent with the Drexel precedent. See Drexel application at 11 (stating that the Drexel Trust may make quarterly distributions on certain of its securities).

8. Payment of Expenses.

Applicant will receive an annual $400,000 Expense Reimbursement from Blackstone LLC, and Applicant may borrow up to a total of $2 million from the Debtor, to pay Applicant’s administrative, compliance and similar expenses. This is consistent with LTV, where an expense reserve for LTV was to be funded by a payment of $1 million from LTV’s bankrupt predecessor, and LTV was to have authority to borrow up to an additional $2 million to pay its operating expenses. See LTV application at 8-9.

9. Limited Transferability of Applicant’s Interests.

The transferability of certain of the securities described in the Drexel application was severely restricted, like Applicant’s interests (see footnote 13 above). See Drexel application at 18.

10. Virtually Identical Provisions of Investment Company Act Would Apply.

If Applicant is unsuccessful in negotiating and effecting its dissolution within Rule 3a-2’s one-year period, and if the Commission grants Applicant’s requested relief, Applicant would comply with essentially the same provisions of the Investment Company Act as the applicants in Drexel and LTV. See Drexel application at 3-5; LTV application at 1. Like Drexel and LTV, Applicant would comply in full with Section 918 and Sections 36 through 53 of the Investment Company Act and the rules thereunder.

18 Two of the Drexel entities sought a modification of Section 9. See Drexel application at 73-75.

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Applicant also would comply in full with Sections 17(a), 17(d) and 17(e) of the Investment Company Act and the rules thereunder, although the applicants in Drexel and LTV obtained modifications from certain of those provisions, so they could engage in certain transactions with affiliates. See Drexel application at 66-70 (seeking modification of Sections 17(a) and 17(d)); LTV application at 26-28 (seeking modification of Section 17(a)). If the Commission grants Applicant’s requested relief, and if, thereafter, Applicant enters into any transaction with an affiliate, it would do so in full compliance with Sections 17(a), 17(d) and 17(e).

In addition, Applicant would comply with Section 31 and the rules thereunder, except that the records retained by Applicant pursuant to Rule 31a-1(a) would form the basis of Applicant’s annual audited financial statements, rather than the financial statements required by Section 30 of the Investment Company Act (which also was the case in the Drexel matter). See Drexel application at 62.19

11. Conclusion.

The relief Applicant seeks is well within existing precedent and does not present any issues not previously resolved by the Commission. All aspects of Applicant’s request are supported by either Drexel or LTV, and many aspects are supported by both Drexel and LTV.

C.	Application Is Appropriate in the Public Interest

Because Applicant was formed in connection with the Bankruptcy Case and will continue to be subject to the jurisdiction of the Court, the exemptions requested are consistent with the public interest.

D.	Application is Consistent with the Protection of Investors

Sunwest Investors who have elected to invest in Applicant are protected by the factors described below, and these protections are consistent with the Drexel and LTV precedents:

Representatives of the Sunwest Investors actively participated in the development of Applicant’s structure and the terms of the PSA with Blackstone LLC. In fact, the Management Committee located another potential buyer after the initial PSA had been signed. Competing bids from that third party directly resulted in the enhanced offer from Blackstone LLC that significantly increased the ability of the Sunwest Investors to participate in the ownership of Blackstone LLC. See Section IV.C, “Structure of Applicant – Negotiation of Applicant’s Structure,” above.

Applicant’s structure was developed with the active participation of the Court. See Drexel application at 53.

19 LTV, which was going to register certain of its securities under the Securities Exchange Act of 1934, as amended, also agreed to comply with Sections 17(f) and 30(d) of the Investment Company Act. See LTV application at 1 and 11-12.

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Applicant’s Common Units and Preferred Units were designed to benefit the Sunwest Investors and are owned only by the Sunwest Investors who have elected to receive Common Units or Preferred Units. See Section IV.A, “Structure of Applicant – Reasons for Applicant’s Structure; Applicant’s Purposes,” above.

The Court has confirmed the Plan of Reorganization and has entered the Confirmation Order. See Drexel application at 8; LTV application at 3.

The Court will retain jurisdiction over Applicant and its activities. See Drexel application at 8 and 53; LTV application at 26.

The transferability of Applicant’s interests is severely restricted (see footnote 13 above), and such interests will not be publicly traded. See Drexel application at 12 and 18. Because of the restrictions on transfer, Applicant’s interests initially are held, and will continue to be held, by Sunwest Investors and Sunwest Founders who are familiar with the reasons for Applicant’s capital structure and who, in fact, are the recipients of the benefits of the structure.

The appointment of the initial Manager of Applicant was approved by the sole member of Applicant and by the Court. The initial Manager is not an “interested person” of Applicant. See Drexel application at 13; LTV application at 7.

Applicant’s initial three-person Board of Managers will be elected by Applicant’s members, and two of the three Managers must not be “interested persons” of Applicant. Subsequent Managers also will be elected by the members. If a vacancy occurs on the Board and if the former Manager was not an “interested person” of Applicant, the person elected to fill the vacancy also must not be an “interested person” of Applicant. See Sections 7.2 and 7.3 of Applicant’s LLC Agreement. See also, LTV application at 10.

Compensation of Applicant’s Managers is limited to a maximum of $39,000 per year pursuant to Applicant’s LLC Agreement. This is significantly less compensation than was provided in the Drexel and LTV precedents. See Drexel application at 14; LTV application at 11.

Applicant may not change its purpose without a vote of its members, pursuant to Section 7.6.2 of Applicant’s LLC Agreement. See LTV application at 10.

Other than holding interests in Blackstone LLC, Applicant may invest only in Temporary Investments pending distributions to Applicant’s members. See Drexel application at 28; LTV application at 9.

Under the requested exemption, Applicant would provide full and fair disclosure to its members by providing annual audited financial statements prepared in accordance with Regulation S-X. See Drexel application at 58-59, 62; LTV application at 11-12.

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E.	Application Is Consistent with Purposes of Investment Company Act

Applicant’s requested relief is consistent with the purposes fairly intended by the policy and provisions of the Investment Company Act.

The Investment Company Act is intended to:

“prevent insiders from managing the companies to their benefit and to the detriment of public investors” – Applicant is not “managed” in the traditional sense, because Applicant’s LLC Agreement places severe limitations on the Managers’ ability to “manage” Applicant, including limiting all investments to Applicant’s interests in Blackstone LLC and Temporary Investments. In addition, the initial Manager is not an “interested person” of Applicant within the meaning of the Investment Company Act, and at least two of the three members of Applicant’s Board of Managers will not be “interested persons” of Applicant. Applicant’s initial three-person Board of Managers and subsequent Managers will be elected by the members of Applicant. See Sections 7.2 and 7.3 of Applicant’s LLC Agreement.

“prevent the issuance of securities having inequitable or discriminatory provisions” – The overall fairness of the Plan of Reorganization, including the terms of the Blackstone Acquisition, Applicant’s structure and the terms of the securities to be issued by Applicant, have been the subject of Court-approved disclosure and confirmation by the Court.

“prevent the management of investment companies by irresponsible persons” – The selection of the initial Manager, and the method of selecting subsequent Managers, ensures that they represent the interests of Applicant’s members. In addition, under the requested exemption, Applicant would become subject to the limitations of Section 9 of the Investment Company Act.

“prevent the use of unsound or misleading methods of computing the earnings and asset value” – Applicant is required to pass through all earnings and distributions to its members, except for reserves the Board of Managers deems appropriate to pay Applicant’s expenses. See Sections 5.2 and 5.3 of Applicant’s LLC Agreement.

“prevent changes in the character of investment companies without the consent of investors” – No change to Applicant’s purpose is possible under the terms of Applicant’s LLC Agreement, without the consent of members. See Section 7.6.2 of Applicant’s LLC Agreement. Applicant will not acquire any assets other than its interests in Blackstone LLC and Temporary Investments. See Sections 1.3 and 7.6.7 of Applicant’s LLC Agreement.

“prevent investment companies from engaging in excessive leveraging” – Although Applicant’s LLC Agreement permits the Managers to borrow money (see Section 7.5.3 of Applicant’s LLC Agreement), there is no incentive to borrow money other than if necessary to pay expenses.

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“ensure the disclosure of full and accurate information about the companies and their sponsors” – The initial disclosures to Sunwest Investors were approved by the Court in May 2010. Applicant will provide to members annually: (a) Applicant’s audited annual financial statements; and (b) information necessary for the members to prepare their tax returns. See Sections 10.3 and 10.4 of Applicant’s LLC Agreement. In addition, under the requested exemption, Applicant’s annual audited financial statements would comply with Regulation S-X.

VIII. Conditions to the Requested Relief

Applicant agrees that any Order of the Commission granting the requested relief will be subject to the following conditions:

Applicant will not own or hold securities other than: (a) interests in Blackstone LLC and (b) Temporary Investments (i.e., short-term investments in general obligations of the United States, or its agencies and instrumentalities, and/or deposit accounts with banks, which accounts are insured by the Federal Deposit Insurance Corporation or an equivalent insuring organization).

Applicant’s governing documents will not be amended to permit Applicant’s securities to be freely tradable.

Applicant annually will provide to its members financial statements audited in accordance with generally accepted accounting principles and Rule 1-02(d) of Regulation S-X. For purposes of this requirement, “audit” will have the meaning defined in Rule 1-02(d) of Regulation S-X.

Applicant will not hold itself out as an investment company.

IX. Authorizations

Pursuant to Rule 0-2(c)(l) under the Investment Company Act, Applicant states that all actions necessary to authorize the execution and filing of this Application in Applicant’s name and on its behalf have been taken. Applicant states that the undersigned has been fully authorized to sign and file this Application and any amendments thereto as are deemed appropriate.

The items required by Rule 0-2(c)(1) under the Investment Company Act are attached to the Third Amended and Restated Application filed on July 7, 2010. The verification required by Rule 0-2(d) under the Investment Company Act is attached hereto as Exhibit A.

Pursuant to Rule 0-2(f) under the Investment Company Act, Applicant hereby states that the address of Applicant is Post Office Box 3649, Portland, OR 97208-5248, and Applicant further states that all communications or questions concerning this Application should be directed to:

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Carol Dey Hibbs, Esq.

Tonkon Torp LLP

1600 Pioneer Tower

888 S.W. Fifth Avenue

Portland, OR 97204-2099

(503) 802-2016

X. Requested Relief

Applicant requests that the Commission issue an Order pursuant to Rule 0-5 without the necessity of holding a hearing.

WHEREFORE, Applicant requests that the Commission enter an Order exempting Applicant from all provisions of the Investment Company Act and the rules thereunder, except: Section 9; Sections 17(a), 17(d) and 17(e); Modified Section 31; and Sections 36 through 53 of the Investment Company Act and the rules thereunder. Such Order would take effect if Applicant is unable to negotiate and effect its dissolution within Rule 3a-2’s one-year period.

XI. Conclusion

As with any bankruptcy or insolvency case, it is of fundamental importance to have efficient operations and to minimize expenses of administration. In the present case, the tax consequences to some Sunwest Investors of a traditional liquidation or sale of the Sunwest Assets were potentially so grave that ameliorating those consequences compelled adoption of a relatively complex structure. Nonetheless, it is Applicant’s goal to conduct its operations as efficiently as possible to minimize expenses, while also satisfying Applicant’s fiduciary responsibilities to its members and thereby maximizing the after-tax return to its members. Applicant’s requested exemptions are designed to enable it to maximize returns to investors, are appropriate in the public interest, are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Investment Company Act, and are consistent with precedent.

Dated: October 8, 2010	Sunwest Rollover Member LLC

	By:	/s/ Michael A. Grassmueck
	Name:	Michael A. Grassmueck
	Title:	Manager

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EXHIBIT A

STATE OF OREGON	)
	) ss:
COUNTY OF MULTNOMAH	)

The undersigned states that he has duly executed the attached Fourth Amended and Restated Application for an Order of Exemption Under Sections 6(c) and 6(e) of the Investment Company Act of 1940, as amended, dated October 8, 2010, for and on behalf of Sunwest Rollover Member LLC; and that all action by members and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

	Sunwest Rollover Member LLC

	By:	/s/ Michael A. Grassmueck
	Name:	Michael A. Grassmueck
	Title:	Manager

Exhibit A