82-25 AUTHORIZING, APPROVING, RATIFYING AND CONFIRMING CERTAIN ADDITIONS AND CHANGES TO ECONOMIC DEVELOPMENT REVENUE BONDS (BRETTWOOD VILLAGE ASSOCIATES PROJECT)

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Preferences Under Section 547(b) of the United States Bankruptcy Code (Title II of the United States Code) , as amended, a trustee in Bankruptcy may void a transfer of property �"Preference") of a debtor (e.g. , the Partnership) where a transfer is made by the debtor (1) to or for the benefit of a creditor (e.g. , the Bond- holders) , (2) for or on account of an antecedent debt (e.g. , the Note) , (3) while the debtor was insolvent, (4) within 90 days prior to the filing of a petition in bankruptcy, and (5) in such a manner that such creditor receives more than such creditor would have been entitled to receive if the debtor were liquidated. Under the Bankruptcy Code a debtor is presumed to be insolvent during the 90-day period preceding the filing of a petition in bankruptcy. As the payment dates on the Note occur within 90 days of the payment dates on the Bonds, the potential of a court declaring any such payment to be a voidable Preference subject to disgorgement exists. In order to protect against the possibility of loss of payments to the Bondholders due to any payment by the Partnership being declared to be a voidable Preference, the Letter of Credit and the Indenture have been structured in the following manner. Under the Letter of Credit and the Indenture, the Trustee is authorized, to draw on the Letter of Credit and to apply the proceeds thereof as follows: (a) If payment on the Note is made by the Partnership and a petition in bankruptcy is filed by or against the Partnership or any general part- ner thereof within the 91-day period subsequent thereto, but before the related payment date on the Bonds, the Trustee is required to accelerate the Bonds and draw on the Letter of Credit to pay the principal, premium, if any, and interest on the Bonds then outstanding on the date of acceler- ation and to make the related payment due on the Bonds in the amount of the prior payment just made on the Note. Funds held by the Trustee which were derived from the payment on the Note are to be held by the Trustee until a determination is made by the courts as to whether such amounts must to be returned as a voidable Preference payment, or until an opinion of counsel satisfactory to the Trustee is rendered to the effect that all applicable statutues of limitation relating to Section 547 of the Bank- ruptcy Code have expired without any suit or other proceeding to recover said payments having been filed. If such amounts do not have to be returned, the Trustee is required to pay them to the Bank as reimbursement for a portion of the amount drawn on the Letter of Credit. (b) If payment on the Note is made by the Partnership and a petition in bankruptcy is filed by or against the Partnership or any general part- ner thereof within the 91-day period subsequent thereto, but after a related payment date on the Bonds has occurred, the Trustee is required to accelerate the Bonds and draw on the Letter of Credit in an amount sufficient to pay the principal, premium, if any, and interest on the Bonds then outstanding on the date of acceleration plus an amount equal to the prior payment just made on the Bonds. Funds derived from the Letter of Credit which are not applied to the payment of the principal amount of the Bonds so declared due plus accrued interest and premium, if any, due thereon, (i.e. , corresponding to the last payment on the Note and the Trustee's use of the same for payment on the Bonds) are to be held in a separate escrow account in the Bond Fund by the Trustee until a 15