Sale, lease, or transfer of capital assets.

CFR · 2024-01-01 · US · Title 7

(a) The term “disposition” in this part shall mean any sale, lease, or any other transaction in which the borrower transfers an interest in a capital asset to another entity or person. (b) A borrower may, without the prior approval of RUS, sell, lease, transfer, or otherwise dispose of any capital asset if the following conditions are met: (1) The borrower is not in default on any of its obligations to RUS; (2) In the most recent year for which data is available, the borrower has met its coverage ratios as set forth in 7 CFR 1710.114(b) or other financial requirements as established by their mortgages, loan contracts, or other security agreements; (3) The sale, lease, transfer, or disposition of assets will not reduce the borrower's existing or future requirements for energy or capacity being furnished to the borrower under any wholesale power contract which has been pledged as security to the government; (4) Fair market value is obtained for the assets; (5) No employee or board member of the organization has a direct personal financial interest in the disposition of the capital assets; (6) The aggregate value of assets sold, leased, transferred, or disposed of in any 12-month period is less than 10 percent of the borrower's net utility plant prior to the disposition, not to exceed $10,000,000.00; and (7) If the disposition of the capital asset: (i) Results in the borrower not retaining an interest in the asset; or (ii) Constitutes a “capital lease” under 7 CFR 1767.15(s)(1)

official document · source cfr-2024 · id 7:§ 1717.616