Louisiana Revised Statutes 45:1255 – Sale
Terms Used In Louisiana Revised Statutes 45:1255
- Assignee: means any legal or commercial entity, including but not limited to a corporation, limited liability company, partnership, limited partnership, or other legally recognized entity to which an electric utility sells, assigns, or transfers, other than as security, all or a portion of its interest in or right to investment recovery property. See Louisiana Revised Statutes 45:1252
- Contract: A legal written agreement that becomes binding when signed.
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- Fiduciary: A trustee, executor, or administrator.
- Financing order: means an order of the commission, if granted by the commission in its sole discretion, which allows for all of the following:
(a) The issuance of investment recovery bonds. See Louisiana Revised Statutes 45:1252
- Financing party: means any holder of investment recovery bonds, any party to or beneficiary of an ancillary agreement, and any trustee, collateral agent, or other person acting for the benefit of any of the foregoing. See Louisiana Revised Statutes 45:1252
- Investment recovery bonds: means bonds, debentures, notes, certificates of participation, certificates of ownership, or other evidences of indebtedness or ownership that are issued pursuant to an indenture, contract, or other agreement of an electric utility or an assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to provide, recover, finance, or refinance commission-approved investment recovery costs and financing costs, and which are secured by or payable from investment recovery property. See Louisiana Revised Statutes 45:1252
- Investment recovery charge: means the amounts authorized by the commission to recover, finance, or refinance investment recovery costs and financing costs. See Louisiana Revised Statutes 45:1252
- Investment recovery property: means the contract right constituting incorporeal movable property newly created pursuant to this Part which consists of any of the following:
(a) The rights and interests of an electric utility or successor or assignee of the electric utility specified under a financing order, including the right to impose, bill, charge, collect, and receive investment recovery charges authorized in the financing order and to obtain periodic adjustments to such charges as may be provided in the financing order. See Louisiana Revised Statutes 45:1252
- Lien: A claim against real or personal property in satisfaction of a debt.
- Lien creditor: means any of the following:
(a) A creditor that has acquired a lien on the property involved by attachment, sequestration, seizure, levy, or by similar means. See Louisiana Revised Statutes 45:1252
- person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
- Security interest: means a pledge, hypothecation, or other encumbrance of or other right over any portion of investment recovery property created by contract to secure the payment or performance of an obligation. See Louisiana Revised Statutes 45:1252
- Uniform Commercial Code--Secured Transactions: means Chapter 9 of Title 10 of the Louisiana Revised Statutes of 1950. See Louisiana Revised Statutes 45:1252
- utility: means an "electric public utility" as defined in Louisiana Revised Statutes 45:1252
The sale, assignment, or transfer of investment recovery property shall be governed by this Section. All of the following apply to a sale, assignment, or transfer under this Section:
(1) The sale, assignment, or other transfer of investment recovery property by an electric utility to an assignee that the parties have in the governing contract expressly stated to be a sale shall be an absolute transfer and true sale of, and not a security interest in, the transferor’s right, title, and interest in, to, and under the investment recovery property, other than for federal and state income tax purposes. For all purposes other than federal and state income tax and state franchise tax purposes, the parties’ characterization of a transaction as a sale of an interest in investment recovery property shall be conclusive that the transaction is a true sale and that ownership has passed to the party characterized as the purchaser, regardless of whether the purchaser has possession of any documents evidencing or pertaining to the interest. After such a transaction, the investment recovery property shall not be subject to any claims of the transferor or the transferor’s creditors, other than creditors holding a prior security interest in the investment recovery property perfected under La. Rev. Stat. 45:1256.
(2) The characterization of the sale, assignment, or other transfer as a true sale or other absolute transfer pursuant to Paragraph (1) of this Section and the corresponding characterization of the assignee’s property interest shall be determinative and conclusive irrespective of, and is not affected or impaired by, the existence of any of the following circumstances:
(a) Commingling of funds arising with respect to the investment recovery property with other monies of the electric utility prior to the electric utility’s transfer as collection agent of such funds to the assignee or financing party.
(b) The retention by the transferor of a partial or residual interest, including an equity interest or entitlement to any surplus, in the investment recovery property, whether direct or indirect, or whether subordinate or otherwise.
(c) Any recourse that the assignee may have against the transferor, except that any such recourse shall not be created, contingent upon, or otherwise occurring or resulting from the inability or failure of one or more of the transferor’s customers to timely pay all or a portion of the investment recovery charge.
(d) Any indemnifications, obligations, or repurchase rights made or provided by the transferor, except that such indemnity or repurchase rights shall not be based solely upon the inability or failure of a transferor’s customers to timely pay all or a portion of the investment recovery charge.
(e) The transferor acting as the collector of the investment recovery charges or the existence of any contract described in La. Rev. Stat. 45:1253(C)(9).
(f) The contrary or other treatment of the sale, assignment, or other transfer for tax, financial reporting, or other purposes.
(g) The granting or providing to holders of the investment recovery bonds of a preferred right to the investment recovery property, or credit enhancement by the electric utility or its affiliates with respect to the investment recovery bonds.
(h) The status of the assignee as a direct or indirect wholly owned subsidiary or other affiliate of the electric utility. The separate juridical personality of any assignee of investment recovery property which is a subsidiary or affiliate of the electric utility shall not be disregarded due to the fact that the assignee and the electric utility share any one or more incidents of control, including common managers, officers, directors, members, accounting or administrative systems, consolidated tax returns, or office space, that the assignee may be a disregarded entity for tax purposes, that the utility caused the formation of the assignee, that a contract by the utility and the assignee described in La. Rev. Stat. 45:1253(C)(9) exists, that the assignee has no other business other than pertaining to the investment recovery property, that the capitalization of the assignee is limited to amounts required for compliance with certain applicable federal income tax laws and revenue procedures, or that other factors used in applying a single business enterprise test to juridical persons are present.
(i) The matters described in La. Rev. Stat. 45:1254(E).
(j) Any other term of the contract under Paragraph (1) of this Section.
(3) Any right that an electric utility has in the investment recovery property prior to its sale, assignment, or transfer shall be incorporeal movable property in the form of a vested contract right, notwithstanding any contrary treatment for accounting or tax purposes. The ownership of an interest in investment recovery property shall be voluntarily transferred by a contract between the owner and the assignee that purports to transfer the ownership of that interest. Unless otherwise provided, the transfer of ownership shall take place as between the parties as soon as there is written agreement on the interest, the purchase price is fixed, and the financing order has been issued. Such transfer shall be perfected and take effect against all third parties including without limitation subsequent lien creditors when the transfer has become effective between the parties and when a financing statement giving notice of the sale, assignment, or transfer is filed in accordance with Paragraph (4) of this Section. Delivery of such an interest in investment recovery property shall take place by operation of law upon the transfer becoming effective against third parties.
(4) Financing statements required to be filed pursuant to this Section shall be filed, indexed, maintained, and continued in the same manner and in the same system of records maintained for the filing of financing statements under the Uniform Commercial Code–Secured Transactions. The filing of such a financing statement shall be the only method of perfecting a sale, assignment, or transfer of investment recovery property. The sale, assignment, or transfer of an interest in investment recovery property perfected by filing a financing statement shall be effective against the customers owing payment of the investment recovery charges, creditors of the transferor, subsequent transferees, and all other third persons, notwithstanding the absence of actual knowledge of or notice to the customers of the sale, assignment, or transfer.
(5) The priority of the conflicting ownership interests of assignees in the same interest or rights in any investment recovery property is determined as follows:
(a) Conflicting perfected interests or rights of assignees rank according to priority in time of perfection.
(b) A perfected interest or right of an assignee has priority over a conflicting unperfected interest or right of an assignee.
(c) A perfected interest or right of an assignee shall have priority over a person who becomes a lien creditor after the perfection of such assignee’s interest or right.
(6) The priority of a sale, assignment, or transfer perfected pursuant to this Section shall not be impaired by any later modification of the financing order or investment recovery property or by the commingling of funds arising from investment recovery property with other funds. Any other security interest that may apply to those funds, other than a security interest perfected under La. Rev. Stat. 45:1256, shall be terminated when those funds are transferred to a segregated account for the assignee or a financing party. If investment recovery property has been transferred to an assignee or financing party, any proceeds of that property shall be held for and delivered to the assignee or financing party by any collector under any contract described in La. Rev. Stat. 45:1253(C)(9) as a mandatary and fiduciary.
(7) No customer of an electric utility owing payment of an investment recovery charge may, by agreement with the electric utility or otherwise, prohibit, restrict, or require the consent of such customer to the assignment, pledge, or transfer of the investment recovery charge.
Acts 2010, No. 988, §2, eff. July 6, 2010.