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SEC Filings
424B5
ENERGY TRANSFER OPERATING, L.P. filed this Form 424B5 on 01/10/2019
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Available cash with respect to any quarter is generally all of our cash on hand at the end of such quarter, less cash reserves for certain purposes. Our general partner will determine the amount and timing of such distributions and have broad discretion to establish and make additions to our reserves or the reserves of our operating subsidiaries as they determine are necessary or appropriate. As a result, we do not have the same flexibility as corporations or other entities that do not pay dividends or that have complete flexibility regarding the amounts they will distribute to their equity holders. Although our payment obligations to our partners are subordinate to our payment obligations to you, the timing and amount of our quarterly distributions to our partners could significantly reduce the cash available to pay the principal, premium (if any) and interest on the notes.

A court may use fraudulent conveyance considerations to avoid or subordinate the Sunoco Logistics guarantees.

Various applicable fraudulent conveyance laws have been enacted for the protection of creditors. A court may use fraudulent conveyance laws to subordinate or avoid Sunoco Logistics’ guarantees of the notes. It is also possible that under certain circumstances a court could hold that the direct obligations of Sunoco Logistics could be superior to the obligations under its guarantees of the notes.

A court could avoid or subordinate Sunoco Logistics’ guarantees of the notes in favor of its other debts or liabilities to the extent that the court determined either of the following were true at the time Sunoco Logistics issued the guarantees:

 

   

that Sunoco Logistics incurred the guarantees with the intent to hinder, delay or defraud any of its present or future creditors or that Sunoco Logistics contemplated insolvency with a design to favor one or more creditors to the total or partial exclusion of others; or

 

   

that Sunoco Logistics did not receive fair consideration or reasonably equivalent value for issuing the guarantees and, at the time it issued the guarantees, that Sunoco Logistics (i) was insolvent or rendered insolvent by reason of the issuance of the guarantees, (ii) was engaged or about to engage in a business or transaction for which the remaining assets of Sunoco Logistics constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured.

The measure of insolvency for purposes of the foregoing will vary depending upon the law of the relevant jurisdiction. Generally, however, an entity would be considered insolvent for purposes of the foregoing if the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets at a fair valuation, or if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and matured. Among other things, a legal challenge of Sunoco Logistics’ guarantees of the notes on fraudulent conveyance grounds may focus on the benefits, if any, realized by Sunoco Logistics as a result of our issuance of the notes. To the extent Sunoco Logistics’ guarantees of the notes is avoided as a result of fraudulent conveyance or held unenforceable for any other reason, the note holders would cease to have any claim in respect of the applicable guarantee and the notes would be structurally subordinated to all liabilities of Sunoco Logistics. The indenture governing the notes will contain a “savings clause,” which limits the liability of Sunoco Logistics on its guarantees to the maximum amount that Sunoco Logistics can incur without risk that its guarantees will be subject to avoidance as a fraudulent transfer. We cannot assure you that this limitation will protect such guarantees from fraudulent transfer challenges or, if it does, that the remaining amount due and collectible under the guarantees would suffice, if necessary, to pay the applicable series of notes in full when due.

 

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