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Wednesday, November 26, 2008
Ind. Decisions - "Judge gives reprieve to Hoosier Energy"
John Russell of the Indianapolis Star reports today on the SD Ind. decision yesterday in the case of Hoosier Energy v. John Hancock Life Ins. Access the 37-page opinion here. Some quotes from the story:
Customers of rural electric cooperatives in Indiana will not face immediate rate increases, as some had feared, after a federal judge agreed Tuesday to grant their key power provider a preliminary reprieve in a tangled financial deal with an insurance company.But the judge had harsh words for nearly everyone involved in the deal, which he called "a sham" and "a case study of some of the worst aspects of modern finance." * * *
In 2002, Hancock put together a deal under which it bought the generating station and leased it back to Hoosier. The utility received a $20 million fee, and Hancock was able to take a tax deduction from owning an industrial property.
"Despite the reams of paper and the circular flow of hundreds of millions of dollars, the transaction appears to have been a sham, without economic substance," the judge wrote in his ruling.
He said the court "will face some challenging problems" in crafting a remedy. Yet he said allowing Hancock to demand $120 million immediately would produce an unfair result by letting the insurer walk away "with the windfall of fraudulent tax benefits."
"The more prudent, risk-minimizing course at this point is to grant injunctive relief to prevent irreparable harm and to sort out later the difficult terms of final equitable relief," Hamilton wrote.
Posted by Marcia Oddi on November 26, 2008 08:15 AM
Posted to Ind Fed D.Ct. Decisions