March 23 2017 Blocking Director May Not Prevent Bankruptcy Remote Entity From Filing Bankruptcy From Bankruptcy Law News on Bloomberg Law Bloomberg Laws Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions tracks major commercial bankruptcies and reports on developments in bankruptcy By Gardner F Davis and John J Wolfel Jr Gardner F Davis is a partner and corporate lawyer with Foley Lardner LLP He advises boards of directors and special committees in regard to fiduciary duty issues in various contexts and he has extensive experience restructuring financially distressed enterprises both inside and outside of bankruptcy John J Wolfel Jr is a partner and corporate lawyer with Foley Lardner LLP His practice is focused on corporate and securities laws matters including mergers and acquisitions and securities law compliance counseling Bankruptcy remote special purpose entities commonly known as BREs are routine in financing transactions They protect secured lenders by segregating borrowers assets and business operations from those of parent and affiliates Most BREs are formed simultaneously with the closing of loans to isolate lenders collateral from potential claims by creditors of the parent and affiliates Another goal reducing the chance that borrowers voluntarily file for bankruptcy is aided by BRE governing documents that require approval of an independent director or member chosen by the lender to authorize a voluntary filing This blocking director is intended to create a hurdle that bankruptcy courts will respect Lenders and borrowers frequently assume the blocking director is not really independent but will act in the lenders best interest and likely wont approve the bankruptcy filing BREs are usually organized in Delaware and the states LLC Act provides great flexibility in organizing an LLC permitting the elimination or modification of the traditional fiduciary duties applicable to managers and members Lenders usually require the blocking director to consider interests of creditors and frequently eliminate the blocking directors fiduciary duty to the parent and affiliates Sometimes the lender eliminates all of the blocking directors fiduciary duties This structure substantially reduces the likelihood that the borrower will be dragged into bankruptcy because of financial problems of its parent or affiliates But there is uncertainty regarding the BREs ability to file bankruptcy when the BRE itself suffers financial distress and can not repay the lender according to the loan terms Then the question becomes under what circumstances can the BRE file bankruptcy without the blocking directors consent The answer requires examination of the tension created by the federal Bankruptcy Code and supporting public policy the Delaware statute creating LLCs and the common law fiduciary duty applicable to trustees corporate directors and similar decision makers The matter remains in the early stages of development without a definitive answer in existing case law A bankruptcy court would probably focus on whether a reasonable business person would conclude that the BRE has a reasonable prospect for successfully reorganizing under Chapter 11 The court would likely permit a bankruptcy to proceed where the debtor can repay the secured lender in full with interest and salvage meaningful additional value for the BRE The standard of judicial review often determines the outcome of litigation challenging a directors decisions Courts usually review actions by directors under the deferential business judgment rule which creates a presumption that in making a business decision directors acted on an informed basis in good faith and in an honest belief that the action taken was in the best interests of the company However there is a strong argument that the bankruptcy court should review the blocking directors refusal to authorize a bankruptcy under either the enhanced scrutiny or entire fairness standards both of which substantially increase the likelihood that the bankruptcy judge will ultimately permit the BRE to pursue reorganization in bankruptcy The bankruptcy courts analysis for purposes of determining whether to ignore the blocking director approval requirement would likely mirror the courts consideration of the issues presented by the motion to dismiss for bad faith often filed by secured creditors at the beginning of single asset bankruptcies involving nonBRE debtors Therefore the blocking directors refusal to consent makes little practical difference with respect to whether a bankruptcy court ultimately would permit a financially distressed BRE to pursue bankruptcy Absolute Prohibition Against Bankruptcy Would Be Void as a Matter of Public Policy It is against public policy for a debtor to waive the prepetition protection of the Bankruptcy Code This prohibition of prepetition waiver has to be the law otherwise astute creditors would require their debtors to waive Business entities have been held to have in certain instances rights akin to that of natural persons The federal public policy to be guarded here is to assure access to the right of a person including a business entity to seek federal bankruptcy relief as authorized by the Constitution and enacted by Congress Most courts have held that an absolute prohibition against filing bankruptcy in an entitys organization documents when included at the request of a lender is unenforceable as a matter of public policy Formalities of BREs Organizational Documents and State Business Organization Law Must Be Satisfied to File Bankruptcy But bankruptcy law is equally clear that corporate formalities and state law must be satisfied in commencing a bankruptcy case A bankruptcy case filed on behalf of an entity without authority under state law and the governing documents is improper and must be dismissed Bankruptcy courts must look to state law to determine who has authority to commence a bankruptcy case on behalf of a limited liability company organized pursuant to state law Analysis of BRE Bankruptcy Case Law Several bankruptcy courts have addressed BRE bankruptcy filings and determined based on various alternative reasoning that the blocking director provision does not prevent a voluntary bankruptcy None of these cases requires a court to rule that the traditional BRE structure is invalid on its face However they indicate the Bankruptcy Court will be sympathetic with the BREs desire to file bankruptcy and will not tolerate a blocking director structure which in operation is tantamount to an absolute bar to bankruptcy General Growth Properties Inc In re General Growth Properties Inc 409 BR 43 Bankr SDNY 2009 involved the bankruptcy of a large real estate investment trust in which numerous shopping centers were owned by separate BREs The lenders believed that the General Growth BREs were bankruptcyproof because the blocking directors would not authorize a bankruptcy filing Prior to filing bankruptcy General Growth secretly replaced the blocking directors selected by the lenders The new proborrower blocking directors authorized the bankruptcy filing Therefore the bankruptcy court in General Growth never directly addressed the issue of whether the blocking directors consent was required The General Growth court addressed the BRE arrangement within the context of the lenders motion to dismiss the case based in part on the theory that the replacement of the blocking directors constituted bad faith The court noted that some of the lenders thought the independent directors were obligated to protect their interests alone As articulated by debtors counsel the assumption by the lenders was that the independent director was not really independent The court also stated if the lenders believed that an independent manager can serve on a board solely for the purpose of voting against a bankruptcy filing because of the desires of a secured creditor they were mistaken As the Delaware cases stress directors and managers owe their duties to the corporation and ordinarily to the shareholders The General Growth court expressly found that Independent Managers did not have a duty to keep any of the Debtors from filing a bankruptcy case Lake Michigan Beach Pottawattamie Resort LLC In In re Lake Michigan Beach Pottawattamie Resort LLC 547 BR 899 Bankr ND Ill 2016 the lender required the borrowers operating agreement designate the lender as a special member with the right to approve or disapprove any bankruptcy filing The operating agreement provided that the lender was not obligated to consider any interests or desires other than its own and had no duty or obligation to give any consideration to any interest of or factors affecting the Company or the Members The BRE nevertheless filed bankruptcy without the consent of the special member The court recognized that the blocking director is the lynchpin that holds together a bankruptcy remote special purpose entity formed to ring fence assets from creditors other than the secured creditor who is unwilling to lend otherwise and for whom the structure is made The court explained that lenders use this structure because a simpler absolute prohibition against filing for bankruptcy will likely be deemed void as against public policy The court recognized that corporate formalities and state corporate law must also be satisfied in commencing a bankruptcy case Put another way the longstanding policy against contracting away bankruptcy benefits Common wisdom dictates that corporate control documents should not include an absolute prohibition against filing bankruptcy Even though the blocking director structure impairs or in operation denies a bankruptcy right it adheres to that wisdom It has built into it a saving grace the blocking director must always adhere to his or her general fiduciary duties to the debtor in fulfilling the role That means at least theoretically there will be a situation where the blocking director will vote in favor of a bankruptcy filing even if in so doing he or she acts contrary to purposes of the secured creditor for whom he or she serves The Pottawattamie court found that considerations of fiduciary duties and public policy concerns further extends to a situation where the blocking director position is a member of a limited liability company The essential playbook for a successful blocking director structure is this the director must be subject to normal director fiduciary duties and therefore in some circumstances vote in favor of a bankruptcy filing even if it is not in the best interests of the creditor that they were chosen by The Pottawattamie court also found that under Michigan law members of a limited liability company have a duty to consider the interests of the company not only their own interests By excluding the debtors interest from consideration by the lender when acting as a special member thereby allowing the lender to consider only its own best interests the provision expressly eliminates the only redeeming factor that permits the blocking directormember construct The provision that the lenders consent was required in order for the Debtor to petition for relief is therefore unenforceable both as a matter of Michigan corporate governance and bankruptcy law What the court is left with is this the blocking member provision is void Intervention Energy In re Intervention Energy Holdings LLC 553 BR 258 Bankr D Del 2016 involved a Delaware limited liability company that issued one equity unit to its lender for the price of one dollar under a socalled golden share arrangement The borrowers operating agreement required unanimous approval of all members to file bankruptcy and the lender naturally refused to consent The Intervention Energy court recognized that any attempt by a creditor in a private prebankruptcy agreement to opt out of the collective consequences of a debtors future bankruptcy filing is generally unenforceable The Bankruptcy Code preempts the private right to contract around its essential provisions Yet to contract away the right to seek bankruptcy relief is precisely what both parties here have attempted to accomplish The federal public policy to be guarded here is to assure access to the right of a person including a business entity to seek federal bankruptcy relief as authorized by the Constitution and enacted by Congress It is beyond cavil that a state can not deny to an individual such a right I agree with those courts that hold the same applies to a corporate or business entity in this case an LLC A provision in a limited liability company governance document obtained by contract the sole purpose of which is to place into the hands of a single minority equity holder the ultimate authority to eviscerate the right of that entity to seek federal bankruptcy relief and the nature and substance of whose primary relationship with the debtor is that of creditor not equity holder and which owes no duty to anyone but himself in connection with an LLCs decision to seek bankruptcy relief is tantamount to an absolute waiver of a right and even if arguably permitted by state law is void as contrary to federal public policy Kingston Square In re Kingston Square Associates 214 BR 713 Bankr SDNY 1997 involved the lenders motion to dismiss a bankruptcy for bad faith because the borrower circumvented the bankruptcy proof provisions by causing friendly creditors to institute an involuntary bankruptcy The independent director appointed by the lender refused to approve the bankruptcy filing The Kingston Square court emphasized the relatively significant amount of compensation paid to the independent director by the lender and its affiliates for its services as a blocking director in connection with various financing transactions The bankruptcy judge found that the blocking directors conduct was a mitigating factor in favor of the borrower on the issue of bad faith But blocking directors claim of ignorance as to the limited partners who are plainly analogous to stockholders proves too much to credit The blocking director is an attorney who worked on sophisticated financings It is inconceivable that he would not understand that the corporate general partners of which he was a director bore fiduciary obligations to the limited partners That is the stuff of a basic corporate law course in law school Yet he completely ignored the limited partners plight in the face of foreclosure actions instituted by the group that placed him on the boards of directors of these The court ruled in favor of the borrower on the issue of good faith and therefore permitted the bankruptcy to proceed and did not need to reach the question of whether the bankruptcy proof provision was void against public policy However Kingston Square clearly shows hostility toward the blocking directors refusal to act in the best interest of the borrower in order to please the lender who appointed him Blocking Director Owes a Fiduciary to BRE The Delaware Limited Liability Company Act 8 Del Code Ann 181104 states that in any case not provided for in this chapter the rules of law and equity including fiduciary duties shall govern This means that a manager of a Delaware LLC owes equitable fiduciary duties unless modified or eliminated by the express language of the operating agreement Like the Delaware General Corporation Act the LLC Act does not explicitly provide for fiduciary duties of loyalty and care consequently the traditional rules of law and equity govern A fiduciary relationship is a situation in which one person reposes special trust in and reliance on the judgement of another or where a special duty exists on the part of one person to protect the interests of another The manager or managing member of an LLC is vested with discretionary power to manage the business and easily fits the definition of fiduciary Both LLC members and managers active in a business and corporate directors have the fiduciary duties of loyalty and care which impose an affirmative obligation on members or managers to protect the interests of the business and act in good faith However the limited liability company agreement can expand restrict or eliminate fiduciary duties The Delaware LLC Act 6 Del Code 181101e gives members broad discretion in structuring the LLC and organizing the relationships between members and managers Members and managers of an LLC will owe fiduciary duties unless the operating agreement unambiguously states otherwise Lenders frequently require that the BRE operating agreement restrict and sometimes eliminate the blocking directors fiduciary duty However the case law discussed above particularly Pottawattamie and Intervention Energy make it clear that elimination of the blocking directors fiduciary duty to act in the best interest of the BRE violates federal public policy supporting access to bankruptcy and will excuse the need for blocking directors consent Bankruptcy Court Will Review the Blocking Directors Refusal to Authorize Bankruptcy Having established that the blocking director must owe a fiduciary duty to the BRE the bankruptcy court presumably should review the blocking directors refusal to authorize a bankruptcy filing to determine whether the duty has been breached The corporate directors fiduciary duty to the company is generally expressed in terms of duty of care duty of loyalty and good faith The Delaware LLC Act draws on both limited partnership and corporate law Both the general partners of a Delaware limited partnership and the directors of a Delaware corporation have duties of care loyalty and good faith The fiduciary duty of care requires that the blocking director like a corporate director exercise the care of ordinarily prudent and diligent persons under similar circumstances Gross negligence is usually the standard by which a court evaluates a potential breach of the duty of care The duty of loyalty mandates that the best interest of the company take precedence over any interest possessed by a director officer or controlling shareholder The blocking director must promote the interests of the BRE without regard for personal gain The requirement to act in good faith is a subsidiary element ie a condition of the fundamental duty of loyalty Bad faith sometimes referred to as the lack of good faith has been defined as a conscious and intentional disregard of responsibilities adopting a we dont care about the risk attitude Bad faith may be shown where a director intentionally acts with a purpose other than advancing the best interests of the corporation or with the intent to violate applicable positive law or where a director intentionally fails to act in the face of a known duty to act demonstrating The Delaware LLC Act prohibits elimination of the implied contractual covenant of good faith and fair dealing 8 Del Code Title 6 1101c This contract law concept is distinct from the fiduciary duty of good faith and serves primarily to restrain a contract partys abusive use of discretion The Delaware court in Gerber v Enterprise Products Holdings LLC 67 A3d 400 418419 Del 2013 explained Fair dealing is not akin to the fair process component of entire fairness ie whether the fiduciary acted fairly when engaging in the challenged transaction as measured by duties of loyalty and care It is rather a commitment to deal fairly in the sense of consistently with the terms of the parties agreement and purpose Likewise good faith does not envision loyalty to the contractual counterparty but rather faithfulness to the scope purpose and terms of the parties contract Both necessarily turn on the contract itself and what the parties would have agreed upon had the issue arisen when they were bargaining originally Emphasis added This implied contractual duty of good faith and fair dealing owed by a blocking director to the parent of the BRE probably requires that the blocking director consider the possibility of a voluntary bankruptcy However the abuse of discretion standard of review for the implied contractual covenant of good faith is much less favorable to the parent than the traditional breach of fiduciary duty standard of review discussed below In Allen v El Paso Pipeline GP Co LLC 113 A3d 167 Del Ch 2014 the court addressed a limited partnership agreement that disclaimed all fiduciary duty and determined that the sole test was a contractual duty of good faith to the company not the limited partner The court held that the contractual test for good faith is subjective rather than objective The definition of good faith in the LP Agreement is satisfied if the actor subjectively believes that it is in the best interest of the Partnership When applying the test the ultimate inquiry must focus on the subjective belief of specific directors accused of wrongful conduct Objective facts remain logically and legally relevant to the extent they permit an inference that the defendant lacked the necessary subjective belief The El Paso court explained it may be reasonable to infer subjective bad faith in less egregious transactions when a plaintiff alleges objective facts indicating that a transaction was not in the best interests of the partnership and the directors knew those facts Business Judgment Rule LLC managers like corporate directors are protected against lawsuits asserting deficient conduct by the business judgment rule which is a standard of judicial review for fiduciary conduct not a description of a duty or a standard for determining whether a breach has occurred The rule is applied to determine whether the fiduciarys decision can be subject to challenge in court The rule is a judicially created presumption that decisions are made by informed and disinterested directors in the good faith belief that the decision will serve the best interests of the company If the plaintiff can not overcome the presumption usually by specific proof of conflict of interest illegality fraud or bad faith the rule prohibits the court from going further and examining the underlying business decisions merits If the presumption of the rule is rebutted then the burden of proving entire fairness shifts to the director defendants A plaintiff can overcome the presumption by pleading specific facts from which Interestedness The concept of director interestedness comes into play regarding potential conflicts of interest A director is considered interested when he or she will receive a personal financial benefit from the transaction that is not equally shared by the stockholders or will suffer a detrimental impact from the proposed transaction The facts will likely vary case to case but debtors counsel presumably can make a persuasive argument that the blocking director earns substantial income from providing this service for lenders and that this income constitutes a personal interest for the blocking director that calls into question her interestedness Independence Independence exists if a directors decision is based on the corporate merits of the subject before the board rather than on extraneous considerations or influence The Delaware Supreme Court in Cede Co v Technicolor Inc 634 A2d 345 362 Del 1992 has defined a director as being independent only when the directors decision is based entirely on the corporate merits of the transaction and is not influenced by personal or extraneous considerations By contrast a director who receives a substantial benefit from supporting a transaction can not be objectively viewed as disinterested or independent A director is beholden to the lender if the director receives a benefit upon which the director is so dependent or is of such subjective material importance that its threatened loss might create a reason to question whether the director is able to objectively consider the corporate merits of a challenged transaction The bankruptcy court must determine based on a totality of the circumstances whether the blocking director is for any substantial reason incapable of making a decision based only on the BREs best interests The issue is not the integrity of the directors but their objectivity and impartiality both in fact and perception and whether their decision was anything but the exercise of considered and unbiased judgement The blocking directors business of providing services for lenders and the potential adverse impact on that business from authorizing a bankruptcy presumably will support an argument that the blocking director is not actually independent Strict Standard of Judicial Review Delaware Courts have decided a series of highprofile cases in connection with the sale of a company that requires the application of enhanced judicial scrutiny to probe the deliberative process as well as the reasonableness of the directors decisions The Delaware Chancery Court in Blackmore Partners LP v Link Energy LLC 864 A2d 80 84 Del Ch 2004 relying on corporate case law held that the allegation that the Defendant Directors of a Delaware LLC approved a sale of substantially all of the LLCs assets and a resultant distribution of proceeds that went exclusively to the companys creditors raises a reasonable inference of disloyalty or intentional misconduct The independent managers decision whether to authorize a bankruptcy filing or merely permit the secured creditor to foreclose on all the BREs assets and retain all proceeds arguably would be analogous to a sale of the company and therefore justifies application of enhanced judicial scrutiny In Delaware when the controlling stockholder acquires a company in a conflict of interest transaction the operative standard of judicial review ordinarily is the even more stringent entire fairness test with the defendant having the burden of persuasion Not even an honest belief that the transaction was entirely fair will be sufficient to establish entire fairness The transaction itself must be objectively fair independent of the boards belief The lenders relationship with the blocking director arguably is similar to the role of a controlling shareholder who appoints the corporate board that approves the controlling shareholders acquisition of the company in a freezeout merger The decision whether to file bankruptcy clearly involves a conflict of interest for the lender The bankruptcy courts potential evaluation of the blocking directors decision not to approve a bankruptcy filing under the entire fairness standard could substantially undercut the tactical advantage the lender hoped to obtain through the blocking director approval process The bankruptcy court essentially would second guess the blocking director and place Potential Dismissal of Bankruptcy for Bad Faith The issue before the bankruptcy court when reviewing the blocking directors decision not to file bankruptcy under the strict entire fairness standard of review is very similar to the question the bankruptcy court would have faced if the special purpose borrowers operating agreement did not contain a blocking director but was merely a single asset debtor bankruptcy Absent the blocking director consent requirement in the event of a bankruptcy the secured lender probably would ask the bankruptcy court to dismiss the bankruptcy under Bankruptcy Code Section 1112b for cause on the grounds the case was filed in bad faith A line of bankruptcy cases involving single asset real estate project bankruptcies show that factors indicating bad faith include situations where the debtor only has one major asset the debtors financial condition is in essence a twoparty dispute between the debtor and the secured creditor and the bankruptcy is filed to frustrate the lenders right to foreclose on the collateral As part of the bad faith analysis bankruptcy courts usually consider the borrowers equity or lack thereof in the property and the ability to reorganize This test for bad faith under Bankruptcy Code Section 1112b is very similar to the Conclusion Broadly whether a reasonable business persons conclusion after reviewing the facts and circumstances that the BREs bankruptcy reorganization would likely succeed and provide for the full repayment of the secured creditors with interest and a meaningful residual value for the BRE is an important consideration It would likely mean that the BRE has a reasonable prospect of convincing the bankruptcy court that the independent managers refusal to approve the bankruptcy filing constituted a breach of her fiduciary duty that should not prevent the bankruptcy from going forward Although the blocking director consent requirement may initially appear to borrowers and lenders as a major impediment to the BRE filing bankruptcy the practical impact of failure to obtain blocking director consent probably will not make a significant difference in the ultimate outcome in which the BRE has good prospects for a successful reorganization Copyright 2017 The Bureau of National Affairs Inc All Rights Reserved Request Bankruptcy Law News on Bloomberg Law

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O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O 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O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O 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BNN Newsroom Events Webinars Library Newsletters Banking Financial Services Issues of Interest BNN General Interest Newsletter Family Wealth Matters International Tax Insights Professional Services Insider Real Estate Construction News Risk Business Advisory Alert Tax Advisory The Commercial Mix The Healthcare Record Tax Notebook Blogs In The Community Employee Benefits Blog TaxExempt Organizations Blog Tax Cuts and Jobs Act Resource Center Home Resources Library Maine Sales Tax on Casual Rentals Maine Sales Tax on Casual Rentals Daniel Gayer Tax Senior Manager November 2012 Many people in Maine own vacation homes camps or ski condos that they rent casually for a few weeks or perhaps several months during the year often to defray costs of ownership when they are not using the property themselves Even though most people probably would think of sales tax more in connection with buying a new car or other products this type of casual rental is also subject to Maine sales tax If you own living quarters that you rent for 15 days or more in a year you are required to register with Maine Revenue Services and collect There are several exceptions to this rule A property owner does not need to collect sales tax if The property is rented for fewer than 15 days during the calendar year However if the owner uses a real estate agent or property rental company the owner must collect and remit sales tax regardless of the number of days rented The property is rented to a sales tax exempt organization such as a governmental agency The property is rented to a person continuously for 28 days or more for use as a primary residence The property is rented to a person continuously for 28 days or more when the person is residing away from his or her primary residence for employment or education If this exception is used the property owner must obtain a statement from the employer or educational institution confirming that the renters stay in the area relates to work or education The property owner also owns a business and rents living quarters to an employee for the convenience of the property owner If the property owner is an individual who files a Maine Individual Income Tax Return Form 1040ME and sales tax of less than 2000 is collected during the year taxable rents of less than 28570 the owner does not need to file a separate sales tax return Instead the sales tax may be reported and remitted along with his or her individual income tax If total sales tax collected exceeds 2000 Maine Revenue Services requires separate sales tax returns For more information on Maine sales tax how to register and file returns or other state and local tax questions please contact Merrill Barter BNNs state and local tax practice leader Disclaimer of Liability This publication is intended to provide general information to our clients and friends It does not constitute accounting tax or legal advice nor is it intended to convey a thorough treatment of the subject matter IRS CIRCULAR 230 DISCLOSURE Pursuant to requirements imposed by the Internal Revenue Service any tax advice contained in this communication including any attachments is not intended to be used and can not be used for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting marketing or recommending to another person any taxrelated matter Please contact us if you wish to have formal written advice on this matter

O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O B I I O B I B I I O B I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O B I I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O B I I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O


Basel III Capital and Liquidity Ratios Measuring supplemental leverage and liquidity coverage ratios Download August 2015 A A A US and international banking organizations are subject to a range of regulatory capital requirements The Supplementary Leverage Ratio SLR is the newest of these requirements Supplementary Leverage Ratio Background and Overview US and international banking organizations are subject to a range of regulatory capital requirements The Supplementary Leverage Ratio SLR is the newest of these requirements Capital at the most basic level is the difference between a banks assets and liabilities It is a financial cushion used to absorb unexpected losses to protect deposits and other liabilities In the numerator different capital ratios require different types of capital such as tier 1 capital or common equity tier 1 capital In the denominator capital ratios may be based on a riskweighted measure or a nonriskweighted leverage measure The Basel Committee on Banking Supervision BCBS a global group of bank supervisors strengthened capital requirements in 2010 in response to concerns that insufficient capital contributed to and worsened the 2008 financial crisis This package of regulatory capital reforms known as Basel III included the SLR The SLR is intended to be a backstop to the riskweighted capital requirements and limit the amount of leverage that a banking organization may incur using a blunt nonriskbased measure Regulators believed that the riskweighted capital requirements misjudged the actual risk of certain assets such as residential mortgages and as a result banks did not hold sufficient capital to absorb losses In response the SLR intentionally does not distinguish among assets based on risk Because the SLR is not risksensitive a bank must hold the same amount of capital against low risk assets eg cash and US Treasuries as higher The BCBS finalized a 3 SLR requirement in 2010 and revised the methods to measure on and offbalance sheet exposures the denominator in January 2014 US Implementation of the SLR The US bank regulators the Federal Reserve Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency implemented the 3 SLR in 2013 as part of the revised Basel III capital rules This 3 SLR applies to the largest banking organizations with 250 billion or more in total consolidated assets or 10 billion or more in onbalance sheet foreign exposure In April 2014 the US bank regulators finalized an enhanced SLR on the 8 US global systemically important banks GSIBs and their insured depository institutions This heightened standard is USspecific and not required by the BCBS As part of the enhanced SLR the 8 US GSIBs must meet a 5 SLR at the holding company level and a 6 SLR at the bank level Banks also must hold a cushion above this 6 to account for volatility In September 2014 the US bank regulators revised the methods to measure on and offbalance sheet exposures in the SLR denominator to be consistent with the Basel revisions These revisions marginally improved the SLR including changes to Recognize cash variation margin in derivatives transactions Allow netting of securities financing transactions SFTs when the securities are not rehypothecated Adopt a less punitive treatment of offbalance sheet commitments and Allow daily averaging of onbalance sheet assets to reduce volatility in the SLR calculation Implications for Large US Banking Organizations The SLR does not become fully effective until January 1 2018 But banking organizations are already making changes to comply with the SLR given that the final rules require public disclosures beginning January 1 2015 The SLR makes products and services that use the balance sheet more expensive The SLR has the largest impact on the banks that are bound by the SLR rather than the riskbased capital requirements That is each banking organization must hold the highest amount of capital required by any of its capital ratios whether riskbased or the SLR Custody and trust banks and brokerdealer banking organizations are more likely to be bound by the SLR because they have a relatively higher proportion of low risk assets As a result their capital requirements under the riskinsensitive SLR are likely to be Conversely banking organizations with relatively higher risk assets such as universal banks are more likely to be bound by the riskbased requirements The SLR has a unique impact on custody and trust banks and other business models with a high proportion of low risk assets Because the SLR is not risk sensitive these low risk assets attract the same capital charge as higher risk higher yielding assets As a result the SLR may encourage these banks to barbell their balance sheets by holding higher risk and higher yielding assets to balance out the capital charge from the large amount of lower risk lower yielding assets required by the Liquidity Coverage Ratio LCR Further the enhanced 56 SLR places US GSIBs at a disadvantage compared with their foreign counterparts although this may soon change as other jurisdictions are also contemplating heightened leverage requirements To manage these requirements firms may shed assets compress trades eg increase offsetting trades better hedge credit derivatives and increase holdings of credit risk assets Next Steps Firms are still evaluating the optimal asset mix to balance the liquid asset requirements of the LCR with the high capital charge of the SLR This is a difficult exercise and the appropriate mix remains a moving target as regulators continue to develop new capital and liquidity regulations and change monetary policy In the capital space an international group is working on total lossabsorbing capacity TLAC which will require banks to hold a minimum amount of capital longterm debt and certain other liabilities that can be bailedin in the event of resolution The Federal Reserve is contemplating an additional capital surcharge for banks that rely heavily on shortterm wholesale funding and higher capital surcharges for the 8 US GSIBs In the liquidity space there are forthcoming rules on a longterm liquidity requirement known as the net stable funding ratio The Federal Reserves rules on liquidity stress testing and liquidity risk management also will become effective shortly Finally the SLR may have less of an impact as the money supply contracts and there are fewer cash deposits in the system leading to smaller overall balance sheets Liquidity Coverage Ratio Background and Overview The Liquidity Coverage Ratio LCR is the first minimum quantitative regulatory liquidity requirement applied to banking organizations The Basel Committee on Banking Supervision BCBS a global group of bank supervisors developed the LCR in response to concerns that a lack of liquidity contributed to and worsened the 2008 financial crisis The LCR is intended to promote the shortterm resilience of banking organizations absorb shocks from financial and economic stress and improve the measurement and management of liquidity risk To achieve these goals the LCR requires a company to hold enough high quality liquid assets HQLA to meet net cash outflows over a stressed 30day period The LCR rules specify which types of assets count as HQLA eg cash and US Treasuries and how to calculate cash outflows eg deposit runoffs and inflows eg receipt of loan payments US Implementation of the LCR In October 2013 the US bank regulators the Federal Reserve Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency proposed rules to implement the Basel LCR in the US The proposed US LCR rule was significantly more conservative than the Basel LCR and members of the public filed over 100 comment letters in response US bank regulators finalized the LCR rule in September 2014 The final LCR applies to the largest banking organizations with 250 billion or more in total assets or 10 billion or more in onbalance sheet foreign exposure and to insured depository institutions with 10 billion or more in total assets that are subsidiaries of such companies A less stringent modified LCR applies to banking organizations with less than 250 billion but 50 billion or more in total assets Following comments from BNY Mellon and others in the industry the final US LCR rule addressed several but not all of the issues in the proposed rule For instance the final rule Eliminates some of the overly conservative runoff assumptions regarding nonmaturity deposits Adopts a new methodology that is designed to capture maturity mismatches only from certain types of transactions such as repos and reverse repos with financial sector entities Broadens the types of deposits that qualify for more favorable treatment as operational deposits such as mutual fund and certain correspondent banking deposits Delays the dataintensive daily reporting requirement to July 2015 for the largest banking organizations and to July 2016 for other banking organizations and Leaves open the possibility that certain municipal securities may be sufficiently liquid to be included as HQLA which would be proposed in a future rulemaking Implications for Large US Banking Organizations Banking organizations covered by the final LCR rule must meet 80 percent of the standard beginning in 2015 90 percent in 2016 and 100 percent in 2017 This US implementation timeline is a full two years ahead of the international schedule which does not require full compliance until 2019 As a result US banking organizations are already making changes to manage the LCR whereas their foreign counterparts may not yet be The final US LCR rule mitigates many of the LCR concerns for custody and trust banks The proposed US LCR rule did not appropriately capture stable and low risk sources of deposit funding from custody and other servicing relationships The final rule allows a wider range of client deposits such as cash from mutual funds and certain correspondent banking relationships to receive LCR credit As a result banks may hold less HQLA against these deposits and place them into higher yielding assets Other types of client deposits such as cash from hedge funds and private equity funds continue to be For retail universal and brokerdealer banking organizations the final rule improves the treatment of certain retail funding retail brokered deposits collateralized deposits eg for public sector and corporate trust deposits committed facilities to special purpose entities that do not issue securities or commercial paper and assets held in segregated accounts in accordance with regulatory requirements for the protection of client trading assets Although these changes offer some relief the agencies did not change other major aspects of the proposal and the final rule remains more stringent than the international Basel LCR For example the final rule generally does not expand the categories of assets that qualify as HQLA or further adjust the rules to recognize the unique nature of prime brokerage services The treatment of derivatives and a companys debt securities also remains largely unchanged Next Steps The LCR is only one component of a broader liquidity framework Other existing and forthcoming requirements include Liquidity stress test and risk management requirements in the Federal Reserves enhanced prudential standards under Section 165 of the DoddFrank Act Comprehensive Liquidity Analysis and Review which is similar to stress testing 4G and 5G liquidity reporting requirements Forthcoming rules on the net stable funding ratio which addresses longerterm liquidity risks by requiring enough stable funding over a oneyear time horizon and Potential intraday liquidity monitoring rules The Federal Reserve Financial Stability Board and other regulators also are increasingly focused on the more general liquidity risks of shortterm wholesale funding asset fire sales and matched books The LCR addresses some of these risks by increasing the liquidity charge on committed credit and liquidity facilities and securities financing transactions SFTs but the LCR only applies to SFTs that mature within 30 days As a result regulators are contemplating other reforms to address the liquidity risks of shortterm wholesale funding and SFT financing including a heightened capital surcharge for firms that rely heavily on shortterm wholesale funding and minimum This content is part of BNY Mellons Focus on Regulation Readiness a dedicated section on bnymelloncom that showcases trending timely and relevant regulatory and policy related content BNY Mellon understands the new regulatory realities and has the expertise to help you keep pace maintain compliance and get ahead This information which may be considered advertising is for general information and reference purposes only and is not intended to provide legal tax accounting investment financial or other professional advice on any matter and is not to be used as such BNY 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Tips for Repowering Older Boats Todays fourstroke outboards are more reliable than ever before with flybywire controls and onboard sensors that maximize performance and efficiency But as my Roman forebears used to say caveat emptor The fourstroke solution is not the singular magical fix ideal for repowering all boats What boats are we talking about What are the challenges What should you do before repowering Heres the scoop The first generation of fourstrokes all had one thing in common They were heavy When you added all of those extra fourstroke parts like an oil sump valve train etc the engines definitely increased both their mass and weight For example the Yamaha F200F225 fourstrokes weighed more than 600 pounds and they still do today at 608 pounds A 200 hp twostroke engine of that era might have weighed 425 pounds The 2002 model year is noted for one event that changed the way that outboard boats were designed and powered Yamahas F200F225 V6 hit the market Yamaha In 2014 just about any makers 200 hp V6 costs upwards of 20000 installed depending on your gauge package controls installation etc Although it doesnt burn pricey twostroke outboard oil it does require additional maintenance like oil changes every 100 hours of use and valve adjustments at every 300 to 400 hours expenses that dont impact twostroke owners For a complete breakdown of the cost of outboard ownership visit boatingmagcomboatinglaboutboards Plus fourstrokes that deadhead half of their cylinders with every turn of the crankshaft need more cylinder mass to compete with the propshaft sea horses generated by twostroke power plants that are firing all of their cylinders with every rotation of the crank If you are repowering a newer boat going with a fourstroke repower is probably nothing to worry about But when considering a new outboard for a pre2002 vessel there is a concern regarding which solution will work best since these boats likely werent designed with the requisite buoyancy aft that is needed to keep cockpit scuppers above Repower Problems Pick the wrong engine to repower your boat and you could be in for these troubles Always contact the boatbuilder prior to repowering 1 Loss of ability to selfbail 2 Possible swamping with open transoms 3 Porpoising 4 Slow planing 5 Poor visibility forward Boating Magazine If you have to stick with a twostroke due to either weight or mass Evinrude ETEC and Mercury OptiMax twostroke directinjection V6s should do the job Sure youll have to buy some twostroke oil in bulk which adds to the costpermile of boat operation but youll never have to do an oil change swap an oil filter or adjust valves all of which add to annual operating costs Scuppers above the waterline ensure drainage Wide chines are one way to help float heavier power Brackets with more immersion provide more buoyancy Boating Magazine Also fourstrokes are losing weight which should help when repowering an older legacy boat Yamaha recently introduced an inline 28liter F200 that tips the scales at a svelte 487 pounds which is actually lighter than a twostroke 30liter V6 OptiMax Not to be outdone by the competition Merc introduced its own nextgen fourstroke last year a 150 hp an inline4 with a 30liter block that has room to grow It tips the scale at 465 pounds The valves on this new Merc 150 never need adjustment which will lower operating costs Heavy Hitters Weight and torque ramped up when Honda and Yamaha debuted new fourstroke outboards 2002 Boaters were ready but some boats were not Twostrokes by Evinrude Mercury thrive 2014 Fourstroke engines are lighter Boats are designed for new engines Boating Magazine If you need to focus on outboards in the 225 hp to 300 hp range Yamahas newwave Offshore series 225 250 300 hp provides the power and torque of a 42liter V6 block but lowers the overall weight of these triplets to an incredible 562 pounds This mechanical miracle was accomplished by taking out the sixpack of steelcylinder liners which opened up the bore volume which was then plasmainfused to provide a superslick surface to reduce pistonring friction I have personally tested all three of these new lightweight fourstroke outboards in single twin and triple configurations on both new and Hopefully some of the lessons Ive shared about repowering older boats will help you when its time to repower yours To see a chart of horsepower and transom weights of outboard repowering options visit boatingmagcomrepoweroptions What Some Experts Say About Problems Associated with Adding Weight on the Transom To get some science on the subject I contacted respected toptier builders and a naval architect to get their spin on the challenges of repowering legacy boats that were built prior to 2002 David Neese Vice president of engineering GradyWhite Boats Boating Magazine David Neese Vice president of engineering GradyWhite Boats Greenville North Carolina Back in early 2001 by fortunate planning a redesign of our SeaV2 hulls coincided with the introduction of the Yamaha F225 outboards in 2002 and the newer Gradys had no trouble supporting the weight and torque of the fourstroke power plants he said When repowering older pre2001 GradyWhite boats many of our bracket designs and conventional transoms will successfully support the newer fourstrokes but it depends on the application In addition to the deadrise and chine width of the boat to be repowered the weight and size of the boat should also be considered Often the added weight on a From a structural standpoint sound construction is sound construction regardless of the materials used Neese said A wellbuilt boat will be somewhat overbuilt structurally but when you are talking about older boats you reach a point where the new engines can dish out more than the old hulls with some miles under their transoms can take Joan Maxwell President Regulator Marine Boating Magazine Joan Maxwell President Regulator Marine Edenton North Carolina The first thing that a customer should do prior to repowering a boat is to contact the manufacturer of the boat and provide the boats HIN hull identification number There really isnt a quick answer on whether every model in the line or even every boat built of a specific model could be safely repowered with newer fourstroke engines Maxwell explained We at Regulator Marine have built boats that were powered by both transom and bracketmounted outboard engines The bracket could support the weight of the existing engines but then the gamechanging 225 fourstrokes came along and we had to completely redesign the bracket Customers should call and ask us before just going out and slapping a new pair of engines on their boat she said The Yamaha F350 V8 for example has a lot of lowend torque However the engine could not safely be placed on an older Regulator 23 or 24 even though the boat may have been rated for the horsepower because the transom simply was not built for that kind of weight and torque As the fourstroke engines have gotten larger and torquier our transom laminate structures have been redesigned to support the change in these engines Maxwell said Lou Codega Naval architect engineer designer for production and custom boatbuilders Boating Magazine Lou Codega Naval architect engineer designer for production and custom boatbuilders When I design a hull I select a location for the center of gravity forward of the transom early on and arrange the interior of the boat accordingly This center gives me the best combination of fuel efficiency at cruise speed and the highest top speed taking into account how the boat will be used Second handling problems can occur if the center strays too far from the sweet spot Too far aft leads to porpoising too far forward can cause bow steering a wet ride and serious instabilities None of this bodes well for repowering with engines that are substantially different in weight or horsepower Weight added so far aft in the boat makes a substantial change to the original center of gravity To make matters worse the change in weight and horsepower suggests a new center of gravity to better suit the repowered boat When Ive redesigned a boat for different power Ive found that other changes are always needed These can be as minor as a change to the bracket flotation or a major redistribution of weights Obviously this complicates the project far beyond simply swapping engines controls and fuel fittings It is far simpler to choose an engine package that closely matches the power and weight originally installed Seven Marines 557 can provide another repowering option for older boats those designed and built before about 2002 Seven Marine SingleEngine Option Have big superpowerful new outboards changed the repower game by allowing multiengine boats to be propelled by just one engine Its a theory thats thrown around here our EditorinChief opines on the viability of that theory Big powerful outboards like the 557 hp Seven Marine 557 and the 350 hp Mercury Verado and Yamaha F350 can provide another repowering option for older boats those designed and built before about 2002 This is particularly true if the boat in question was originally powered by multiple outboard engines Can is the operative word For example if your boat is rated for two outboards and 400 hp you might consider installing a single 350 hp outboard Doing so would net you somewhat less horsepower than the original twin installation But with only one gear case creating drag in the water compared to two gear cases creating drag comparable speed and performance would likely be attained Additionally the price and complexity of the installation for one big single engine can cost less than those for multiple engines since fewer gauges wiring harnesses and propellers are required and controls and steering equipment are simpler So why doesnt everyone do this There are several reasons and the first is that these monstrously powered outboards deliver enormous amounts of torque possibly more than your older boats transom can handle Furthermore unlike with multiple engine installations all the power and torque transmitted to the boat is concentrated at one spot on the transom instead of spread across multiple locations on the transom Safety concerns are another reason why swapping out two or more lowerpowered outboards for a big single engine isnt common As trustworthy as outboard motors have become they may now rank as the most reliable propulsion type in the history of marine transport boaters who cruise far from shore still rely on the redundant safety of multiple engines Should one break down the others can get you home Then there is dockside maneuverability While outboards do not respond like inboards due in part to torque propeller size and a pivot point farther aft a multiengine boat handles close quarters better than a singleengine boat Multiple engines also allow boaters to avail themselves of the convenience and admit it coolness of the joystick control systems now available for outboards Swapping multiple engines for one big engine is a great idea But not every boat is up to the task Kevin Falvey Tags Engines Used Boats outboards spring fittingout How To Read comment 1

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Welcome By registering with us youll be able to discuss share and private message with other members of our community Home Forums Graffiti Forums Tools and tips Some Tips On Wheatpasting Discussion in Tools and tips started by SnpEr May 22 2007 Share This Page SnpEr Member Messages 7 Likes Received 0 For those of you that dont want to browse through all of the other threads just to find this out here is all you will probably need to know Mod dont delete this because it will stop others from making more threads Add sugar into your wheatpaste for added strengthonly a Tablespoon or two Add some Wood Glue to strengthen it Normal white Bleached flour is better than wheat flour More adhesive and wont discolor the poster After applying your poster take a very sharp razor and make a lot of small fine cuts into it so if they try to rip it down they will only get some of the small splinters instead of the whole thing Use an extension pole to get higher places Smooth out the poster and leave NO Bubbles or Wrinkles etcor at least try not toSome people after placing it on the wall they hold it on the wall with one hand and use a squeegee to flatten it out completely with the otherthen paste over the top Wheatpaste the wall then after you place the poster paste over the face of the poster too This is what will really seal it to the wall Use thin paper like Butcher paper Xerox Paper or Newsprint Use the Rasterbater if a photocopier to enlarge it isnt available Rasterbater If using a home printer use a Laserjetnot an Inkjet Wheatpaste should ALWAYS be as consistant as Tomato Juice Use oilbased markers when making handdrawn poserssharpies magnums etc ALWAYS spray handdrawn posters wclear acrylic coating OR after handdrawing them go and get them copied and printed on a Xerox machine for better qualitymaybe a little more expensive for colorbut hey Not everyone can get Clear Acrylicor maybe you want to MASS produce more Here are some Recipes Classic Wheatpaste â Begin by pouring one cup of Bleached White flour into 1 12 cups of water â Heat to a boil until it thickens stir to remove all lumps with a whisk and add more water until it turns into a thick clear goop â Cook on low heat for at least half an hour being careful not to burn it After approx 30 mins paste will become thinner and more transparent â Upon reaching desired smooth pliable and somewhat transparent consistency take paste off the heat and let cool â Pour into airtight container Bombing Paste by Sorryforgot who contibuted this 1 cup of Bleached flour 12 cup of rice flour 3 teaspoons of cornstarch 2 cups of water Combine bleached flour rice flour and water in a pot on the stove on low heat The mixture should be very watery Stir the mixture constantly with a wire whisk until the paste begins to thicken just a tiny bit This may take about ten min Take the pot off the heat when you start to feel the mixture thickening In a jar with a lid combine three teaspoons of corn starch with a half a cup of water Tighten the lid and shake the mixture until there are no lumps of cornstarch visible Add the cornstarch mixture to the flour mixture and stir for another 2 minutes Make sure you stir constantly Now i still have one unanswered question If one were to plan on wheatpasting a poster and was going to use Clear Acrylic to make it last longerwould you spray it on BEFORE pasting it DURING pasting it Or AFTER pasting it and its dried Hope somebody can answer that and can stop all the threads on Wheatpasting SnpEr May 22 2007 limbo New Member Messages 3 Likes Received 0 spray the clear acrylic on before you start the pasting right after you finish drawingprinting it out limbo Jun 2 2007 Slushi Banned Messages 2134 Likes Received 0 Use a paint brush if youve never wheat pasted before Slushi Jun 2 2007 G Wahl Elite Member Messages 675 Likes Received 0 what about that elmers spray can glue shit does that help if i spray that over a sticker or somthing G Wahl Jun 2 2007 fnt Senior Member Messages 213 Likes Received 0 Ive been wondering what people thought of spray glue not like craft glue but 3m 77 80 90 and Molotow and Mtns Some people use a mixture of rice and wheat flour Ive also added cornstarch Laser printers work very well because they apply plastic to the paper this makes them waterproof and resistant to fading in the sun Inkjet printer ink runs with water which is why if inkjet is your only option you need to mist it with clearcoat spraying fullon will make the ink run and putting wheatpaste on without the clearcoat will make it run Inkjet ink also fades very easily About the acrylic the person who already posted seemed like they were thinking about a clearcoat or something I think spraying clearcoat shellac or acrylic over it when its dry is best but should help some while drying this should work for spraypainting too Last edited Jun 3 2007 fnt Jun 3 2007 RaZoR123 Senior Member Messages 371 Likes Received 0 Bumpi started this threadbut somethings wrong with my username I changed the password and it still wont lemme login Oh well RaZoR123 Jun 7 2007 oh wat Senior Member Messages 255 Likes Received 0 where the fuck do u get your picture on huge papers and i know about rasterbator but i want it to be one sheet oh wat Jun 9 2007 KLYPSE6193 Banned Messages 109 Likes Received 0 KLYPSE6193 Jun 9 2007 C3ZR ONE Moderator Messages 3112 Likes Received 3 why did we start a new wheatpasting thread The old one was dope It had hella info Bump that and dump this one The guy that asked about enlarging I use a projector I bought at a craft store and use poster paper rolls The guy that asked about glue I didnt know Molowtow and Montana made glue I call bullshit It could be true but I never seen it Mr Breakfast uses a secret industral strength spray glue for small posters in heaty spots but overall you just need to practice using paste When you get good with it itll be quicker then trying to use spray adhesive Heres a tip when hitting a heaty spot forget about the brush just put a bottle of water in your pocket and some paper towels Nothing is gonna get your poster up quicker then just spreading it with your hands Thats how I rock unless its reeeeally huge then you pretty much gotta use a roller or preferably a soft broom C3ZR ONE Jun 9 2007 paint fumes have rotted my brain Senior Member Messages 77 Likes Received 0 can you just put some wheatpaste on before you go pasting and let this act as a clearcoat how many posters can you get outta a can of clearcoat paint fumes have rotted my brain Jun 10 2007 sN Senior Member Messages 163 Likes Received 0 I want to attach newspaper scraps onto a canvas to form a flat newspaper surface 1 Will wheatpaste let the newspaper adhere flattened to stretched canvas 2 If so how long should I let it dry for sN Jun 10 2007 fnt Senior Member Messages 213 Likes Received 0 C3ZER ONE said The guy that asked about glue I didnt know Molowtow and Montana made glue I call bullshit It could be true but I never seen it Mr Breakfast uses a secret industral strength spray glue for small posters in heaty spots but overall you just need to practice using paste When you get good with it itll be quicker then trying to use spray adhesive I call not bullshit from mtn colors website Montana Contact Adhesive Great for wheat pasteing and all other gluing needs heres a pic from a montana distributor Broken External Image httpwwwillegalsupplycompicsadhesvjpg Also from Molotows website threeway adjustable valve for variable working hightech fiber adhesives for permanent temporary gluing For all interior and outside applications Sticks fast and reliably on foam material plastic rubber textiles metal glass leather wood carpet expanded polystyrene and soft foam Liquid no color heres a pic also from that page Broken External Image httpmolotowcomuploadspicssprayglue2jpg sN said I want to attach newspaper scraps onto a canvas to form a flat newspaper surface 1 Will wheatpaste let the newspaper adhere flattened to stretched canvas 2 If so how long should I let it dry for it will stick fine it might take a while to dry but very long just check on it every once in a while paint fumes have rotted my brain said can you just put some wheatpaste on before you go pasting and let this act as a clearcoat how many posters can you get outta a can of clearcoat you could I just dont think it would work quite as well also depending on how you create your image you might need to mist it which would be difficult to do with wheatpaste how many posters you can get from a can of clear coat depends on how many coats you do how large your posters are the type the size of can and the brands coverage thats like asking how many square feet you can get out of a can of paint C3ZER ONE said why did we start a new wheatpasting thread The old one was dope It had hella info Bump that and dump this one I agree everyone should go back to the old thread fnt Jun 10 2007 C3ZR ONE Moderator Messages 3112 Likes Received 3 Paint fumes Wheatpaste will act as a mild clearcoat on its own but dont put it on before you go when it dries it gets hard Your posters would be kinda ruined Heres a tip If youre really worried about a posters longevity consider which direction the poster will be facing Eastwest facing posters will get more sun exposure and fade quicker regardless of clearcoat sIn Yeah itll work but Id be concerned about the smell after a few days I know wheatepaste rots and smells like hell if you leave it in a bottle I dont know if youd have the same problem if you spread a thin layer on a canvas or not Lemme know how it turns out Or you could just use Teknabond wallpaper paste C3ZR ONE Jun 10 2007 C3ZR ONE Moderator Messages 3112 Likes Received 3 Oh snap I just saw that glue post Damn Im tempted to check some of that out but chances are Ill stick with paste C3ZR ONE Jun 10 2007 percoset fun Senior Member Messages 131 Likes Received 0 G Wahl said what about that elmers spray can glue shit does that help if i spray that over a sticker or somthing thhose come with a rusto fat on them i would take the cap and ditch the can percoset fun Jun 10 2007 inkstain New Member Messages 1 Likes Received 0 I only use wheatpaste on large posters as i prefer molotow or 3m super 77 spray adhesive for anything under a 3 by 3 It works great on any smooth to semismooth surface and even holds up well to weather and can be used in the cold as long as you keep your cans warm i use handwarmers in my bpack Plus its easier to pack around than all your wheatpaste equipment when you may have to run Stay away from all cheaps brands and with 3m go for there most extreme super77 if you cant get molotow inkstain Jun 25 2010 wardogz Member Messages 13 Likes Received 0 how do you print posters i have a few things i wanted to print up but i have no clue how wardogz Jul 14 2010 zachatnca Senior Member Messages 189 Likes Received 1 yes the best piece of advice is here to spray handrawns with clear coat zachatnca May 1 2012 dadnox New Member Messages 1 Likes Received 0 Sorry to resurrect old treat new to this forum in my early days i was using even a varnish for boats as cover and must say they have achieved pretty decent look dadnox Jul 11 2018 You must log in or sign up to reply here

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Pasta with Sausage and Arugula Photo by Alex Lau food styling by Anna Stockwell 4 servings Arugula is one of those rare salad greens we can also get down with hot like when its tossed with pasta piled on top of pizza or scattered into stew Be sure to keep a box of it in the fridge all winter long November 2018 Ingredients 2 small red onions sliced into thick wedges 1 fennel bulb sliced into thick wedges 6 Tbsp extravirgin olive oil divided Kosher salt freshly ground pepper 8 oz hot or sweet Italian sausage about 2 links casings removed 10 oz gemelli casarecce or other medium pasta 1 tsp finely grated lemon zest 2 Tbsp fresh lemon juice 6 cups baby arugula Finely grated Parmesan for serving Recipe Preparation Preheat oven to 425 Toss onions fennel and 2 Tbsp oil on a rimmed baking sheet season with salt and pepper Spread out into a single layer Pinch sausage into small pieces and scatter around onions and fennel Roast until vegetables and sausage are cooked through and well browned 2530 minutes Meanwhile cook pasta in a large pot of boiling salted water stirring occasionally until al dente Drain reserving 1 cup pasta cooking liquid Combine vegetables sausage and pasta in a large bowl Add lemon zest lemon juice remaining 4 Tbsp oil and cup reserved pasta cooking liquid and toss to coat adding more pasta cooking liquid if needed until sauce comes together and coats pasta Toss in arugula Divide pasta among plates and top with Parmesan Season with more salt and pepper Recipe by Anna Stockwell Reviews Write a review Great flavor and even delicious as leftovers Like many others I used much more lemon juice than it called for and the flavor was great Will make again Anonymous South Carolina 120518 Just made this last night It was fantastic The roasted fennel is amazing And all on one baking sheet it was so easy This is going to be a regular dish for the amazing taste ease of prep and clean up and the quick cooking nature Just lovely Anonymous 111818 I love fennel sausage so this recipe caught my eye in last months edition of bon app I made a few adjustments I browned the sausage in a dutch oven instead of roasting it Added brussel sprouts to the roasting tray Used a whole lemons juice Added anchovy paste to the lemon olive oil mixture I didnt add any pasta water to the sauce either Between the fat of the sausage lemon and olive oil everything was coated very nicely with the sauce Also my pasta cooked much faster than I anticipated and I didnt want the recipe to be DarrahP State College PA 111518 This recipe is going in my weekday rotationlove the flavors and its delicious coldat room temp One note by the time my veggies got nice and golden brown the sausage dried out I would advise against buying lean links for this recipe kirklandfan Los Angeles 111318 This is delicious Simple and full of favour It will become a weekknight regular in our house The kids loved it too genkii Melbourne Australia 110518 Loved this recipe I forgot to reserve the pasta water but found it did not matter Great flavor Maryclareh MA 103118 Fantastic Recipe this is exactly what I like for a weeknight dinner Its wonderfully balanced with delicious flavors that come without a lot of ingredients The recipe is quick and easy to make definitely give it a try lteutsch Nebraska 101718 Explore Bon Appétit Pasta Onion Red Onion Fennel Olive Oil Sausage Lemon Zest Lemon Juice Arugula Parmesan Family Meals

B I I I I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O