Rescission Offers Under Regulation D
A rescission offer is an offer to rescind a transaction in which a securities violation occurred or is believed to have occurred. If a sponsor believes that it may have securities law liability arising out of an offering, and has the financial resources to repurchase the limited partners' interests, it may resort to a rescission offer to provide itself with insulation against liability. On occasion, a workout which involves an infusion of new equity becomes stalled because the new participant is concerned that one or more of the sponsor's partnerships may be a source of securities law claims. In those situations the new participant may sometimes provide financial assistance to permit a rescission offer to proceed before the workout goes forward.
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