Interpreting The Earmarking Doctrine

Law360, New York (January 10, 2011, 12:29 PM EST) -- In an attempt to avoid an inevitable put on its convertible bonds (which would have capsized Korean company TriGem Computer Inc. (TGI) and caused it to be delisted from the Korean Stock Exchange), TGI used its American subsidiary, TriGem America Corporation (TGA), as a conduit to transfer about $17 million in cash from TGI to its bondholders as part of a purported swap agreement. TGI and TGA characterized their internal cash transfer as a payment of accounts receivable owed by TGI to TGA.

The “too clever”...
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