Fred, The private placements are debt instruments (or variations on what is near equity-like deeply subordinated debt), backed by the collateral of the asset sold to the SPV by the parent. Often, the parent may continue to hold on to some risk associated with the SPV. And the SPV's equity (i.e. voting control) is held by the SPV. Without access to the private placement memorandum for a particular deal (in possession of the purchasers, like the MacArthur Foundation and various pension funds), one cannot tell the answer in this particular case.
In most cases, the accounting reality attempts to track the underlying economic reality - i.e. is the SPV really no longer a risk to the parent. But that clearly did not happen in the core transactions at ENE. Today's release of the Powers report should be useful in assessing this. There is no way to know, however, at this point about the structure of the entire 3,000 entities. Stephen F. Diamond School of Law Santa Clara University [EMAIL PROTECTED]
