FYI.  You won't hear from me again until I have a constructive solution to this potentially insolveable problem.

 -----Original Message-----
From: 	"ROBERT ANDERSON" <robert.anderson@blakes.com>@ENRON [mailto:IMCEANOTES-+22ROBERT+20ANDERSON+22+20+3Crobert+2Eanderson+40blakes+2Ecom+3E+40ENRON@ENRON.com] 
Sent:	Thursday, August 09, 2001 2:39 PM
To:	Keohane, Peter
Subject:	Triangular setoff

The draft I sent you of the triangular setoff provision may still require significant revision. I have the following primary concerns which are not easily reconciled:

1. for an assignment to be effective it must take effect prior to bankruptcy or mutuality will be lost by the interposition of a bankruptcy trustee;

2. although words of present assignment are used,  under the current wording the assignment probably does not occur at least until there is a defaulting party;

3. if we should wish to characterize it as a general assignment for security purposes (perfection of which would require registration), there does appear to be any obligation  between X and XA (as opposed to Y) for which the assignment is to secure performance.

When you are available, I would like to speak to you regarding the foregoing.
Regards,



A. Robert Anderson
Blake, Cassels & Graydon LLP
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