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Excerpt from Current Issues and Rulemaking Projects Outline (November 14, 2000)

Section VIII.A.13. Current Disclosure, Legal and Processing Issues – Disclosure, Legal and Processing Issues –Trust Indenture Act Issues Arising in Certain Transactions Exempt from Securities Act Registration

Offerings exempt from registration under Sections 3(a)(9) and 3(a)(10) of the Securities Act and Section 1145(a) of the Bankruptcy Code are not exempt from qualification under the Trust Indenture Act. Like Section 5 of the Securities Act, Section 306 of the Trust Indenture Act works transactionally. Unless the indenture for a debt security is qualified under Section 305 of the Trust Indenture Act, which covers registered offerings, or exempt from qualification under Section 304, the sale of the debt security violates Section 306 of the statute. Section 306(c) forbids any offer of the debt security until an application for qualification of the related indenture has been filed with the Commission.

The Division has recently noted a number of offerings of debt securities for issuers in Chapter 11 proceedings where the applications for qualification on Form T-3 were not filed until after approval of the plans of reorganization by both creditors and other claimants and the bankruptcy courts. The Division's view is that the offering event in bankruptcy is the solicitation of plan approval from creditors and other claimants. Accordingly, the application for qualification in these cases should be filed before such approval is sought.



Modified: 02/09/2007