Aventis, Inc. and Subsidiaries, Docket No. 11832-20, filed 10/22/24, are inventive. Aware that their Section 860L FASIT (Financial Asset Securitization Investment Trust) may be cratering, they added the claim that, if they flunked the FASIT test, they could take interest deductions for payments made by a counterparty. For backstory, see my blogpost “Playing FASTIS and Loose,” 7/5/24.*

Now Aventis wants to claim client-attorney privilege on some documents they exchanged with their high-priced transactional attorneys. This notwithstanding they handed over opinion letters from said attorneys to a would-be outside purchaser and to IRS.

IRS claims subject-matter waiver. Once client hands over otherwise privileged material, whatever else they may have on that subject has lost privilege. Aventis says that’s true only if extreme disadvantage to adversary results from keeping the other stuff under wraps.

Maybe so it might could be that these documents throw shade on the debt-vs-equity arguments Aventis wants to raise on the trial. Howbeit, Judge David Gustafson says put all the cards on the table.

“We do not think that subject-matter waiver requires an extreme disadvantage. It is enough that Aventis has at its disposal all the unvarnished information about the parties’ intent as revealed in their consultations with counsel, but Aventis has selected a portion that is useful to itself and resists disclosure of the rest. We think it is fair to say that Aventis is using the privilege not just as a shield but as a sword, and in that circumstance we will not sustain its claim of privilege.” Order, at pp. 4-5.

* https://taishofflaw.com/2024/07/05/playing-fastis-and-loose/