If a distribution or power supply borrower is required by its loan documents to obtain prior approval from RUS before declaring or paying any dividends, paying or determining to pay any patronage refunds, or retiring any patronage capital, or making any other cash distributions, such approval is hereby given if the following conditions are met:
(a) After giving effect to the distribution, the borrower's equity will be greater than or equal to 30 percent of its total assets;
(b) The borrower is current on all payments due on all notes secured under the mortgage;
(c) The borrower is not otherwise in default under its loan documents; and
(d) After giving effect to the distribution, the borrower's current and accrued assets will be not less than its current and accrued liabilities.
Notes of Decisions
William Willis, III v. Dixie Electric Power Assn (2019)
ca5 · cites it 7×
“7 Chiefly relevant here, 7 C.F.R. § 1717.617 provides that if the terms of a loan agreement require RUS approval for member distributions, approval is automatically granted if the borrower meets four specified conditions, including that "[a]fter giving effect to the…”
Cessna v. Rea Energy Cooperative, Inc. (2017)
pawd · cites it 4×
“Such an application of state law- is preempted, REA posits, because it would conflict with the federal Rural Electrification Act and related regulations, and would force REA to violate its contract with the United States. In support of this argument, REA points to its loan…”
Pamela Caver v. Central Alabama Electric Cooperative (2017)
ca11
“7 C.F.R. § 1717.617 . Among other things, the loan agreement and regulations allow RUS, at certain times: (1) to set standards for property maintenance; (2) to set accounting standards; (3) to inspect the utility system, the books, and documents of every kind; (4) to regulate…”
Harper v. Southern Pine Electric (2021)
ca5
“7 C.F.R. § 1717.617 (2020). It exempts borrowers from its pre-approval requirement if, among satisfying other conditions, “[a]fter giving effect to the distribution, the borrower’s equity will be greater than or equal to 30 percent of its total assets .”
Leonard Cessna v. REA Energy Cooperative Inc (2018)
ca3
“In response, the utility points to terms in its loan agreement with RUS and 7 C.F.R. § 1717.617 , both of which limit its 5 authority to distribute Patronage Capital to its members without prior RUS approval.”
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