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EXHIBIT 8.1
Arcadia Receivables Finance Corp.
c/o Associates First Capital Corporation
250 East Carpenter Freeway
Irving, Texas 75062
Re: Registration Statement on Form S-3
File No. 333-82281
Ladies and Gentlemen:
We have acted as counsel to Arcadia Receivables Finance Corp. (the
"Seller") in connection with the registration under the Securities Act of 1933,
as amended, by the Seller of $2,500,000,000 of Automobile Receivables-Backed
Certificates (the "Certificates") and Automobile Receivables-Backed Notes (the
"Notes") to be issued from time to time by trusts established by the Seller, the
related preparation and filing of a registration statement on Form S-3, filed by
the Seller with the Securities and Exchange Commission (the "Commission") on
July 2, 1999 (the "Registration Statement"), and the preparation of a Prospectus
Supplement, dated June 16, 2000, and related Prospectus, dated June 16, 2000
(together, the "Prospectus") relating to the offering and sale of $207,000,000
aggregate principal amount of Class A-1 Automobile Receivables-Backed Notes (the
"Class A-1 Notes"), $92,000,000 aggregate principal amount of Class A-2
Automobile Receivables-Backed Notes (the "Class A-2 Notes"), $301,000,000
aggregate principal amount of Class A-3 Automobile Receivables-Backed Notes (the
"Class A-3 Notes"), $64,583,000 aggregate principal amount of Class M Automobile
Receivables-Backed Notes (the "Class M Notes") and $85,417,000 aggregate
principal amount of Class B Automobile Receivables-Backed Notes (the "Class B
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class M Notes, the "Notes") to be issued by Associates
Automobile Receivables Trust, 2000-1 (the "Trust"). The corpus of the Trust will
consist of a pool of motor vehicle retail installment sales contracts and
promissory notes (the "Receivables") and certain other property. The Notes are
to be issued under an Indenture (the "Indenture"), dated as of June 1, 2000,
between the Trust and Bank One, National Association, as Indenture Trustee. The
Notes are described in the Prospectus forming part of the Registration
Statement.
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Arcadia Receivables Finance Corp.
June 22, 2000
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You have requested our opinion with respect to the federal income tax
characterization of the Trust and the Notes. For purposes of rendering our
opinion we have examined the Registration Statement, the Trust Agreement (the
"Trust Agreement"), dated as of June 1, 2000 between the Seller and Wilmington
Trust Company, as Owner Trustee, the Indenture, and the related documents and
agreements contemplated therein (collectively, the "Transaction Documents"), and
we have reviewed such questions of law as we have considered necessary and
appropriate. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Prospectus.
Our opinion is based upon the existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), currently applicable Treasury Department
regulations issued thereunder, current published administrative positions of the
Internal Revenue Service (the "Service") contained in revenue rulings and
revenue procedures, and judicial decisions, all of which are subject to change,
either prospectively or retroactively, and to possibly differing
interpretations. Any change in such authorities may affect the opinions rendered
herein. Our opinion is also based on the representations set forth in the
certificate dated the date hereof delivered to us by the Seller, the
representations and warranties set forth in the Transaction Documents and the
assumptions that the Seller, the Servicer, the Owner Trustee and the Indenture
Trustee will at all times comply with the requirements of the Transaction
Documents.
An opinion of counsel is predicated on all the facts and conditions set
forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the opinion.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
1. Characterization of the Trust. In many respects, the Trust is similar to
trusts established to hold collateral pledged as security in connection with
lending transactions. Section 2.11 of the Trust Agreement provides that the
Depositor and the Trustee shall treat the Trust as a security device only and
shall not file tax returns or obtain an employer identification number on behalf
of the Trust, unless a class of Notes is treated as an equity interest in the
Trust. Therefore, the Trust should be disregarded for federal income tax
purposes and should be characterized as a mere security arrangement. Treas. Reg.
Section 1.61-13(b); Rev. Rul. 76-265, 1976-2 C.B. 448; see also Rev. Rul.
73-100, 1973-1 C.B. 613; Rev. Rul. 71-119, 1971 C.B. 163.
If the Trust is recognized as an entity for federal tax purposes, whether
as a result of a class of Notes being treated as an equity interest in the Trust
or for some other reason, the Trust will be a business entity whose federal tax
characterization will be determined under Treasury Regulations Sections
301.7701-2 and 301.7701-3. Treasury Regulations Section 301.7701-2 provides that
"a business entity is any entity recognized for federal tax purposes . . . that
is not properly classified as
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Arcadia Receivables Finance Corp.
June 22, 2000
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a trust under Section 301.7701-4 or otherwise subject to special treatment under
the Internal Revenue Code."
Treasury Regulations Section 301.7701-2 also provides that certain types of
entities are treated as corporations for federal tax purposes, including
entities formed under a state statute which refers to the entity as
"incorporated or as a corporation, body corporate or body politic," or as a
"joint-stock company or joint-stock association." The definition of corporation
also includes insurance companies, certain banking entities, foreign entities
and other entities specified in Section 301.7701-2. The Trust is not an entity
which is treated as a corporation under Section 301.7701-2.
Treasury Regulations Section 301.7701-3 refers to a business entity that is
not classified as a corporation as an "eligible entity." That section provides
that an eligible entity with a single owner can elect to be classified as an
association (which is taxed as a corporation) or to be disregarded as an entity
separate from its owner. An eligible entity with at least two members can elect
to be classified as either an association or a partnership. Treasury Regulations
Section 301.7701-3 further provides certain default rules pursuant to which,
unless the entity affirmatively elects to be classified as an association, an
eligible entity is disregarded as an entity separate from its owner if it has a
single owner, and is treated as a partnership if it has two or more members.
Under Sections 2.6 and 5.5 of the Trust Agreement, the Seller and the Owner
Trustee have agreed not to file any election to treat the Trust as an
association taxable as a corporation.
Based on the foregoing, it is our opinion that the Trust will not be
treated as an association taxable as a corporation for federal tax purposes.
Under Section 7704 of the Code, certain publicly traded partnerships are
treated as corporations for federal income tax purposes. This treatment does not
apply, however, to any publicly traded partnership if 90% or more of the gross
income of the partnership constitutes "qualifying income." For purposes of
Section 7704, "qualifying income" generally includes interest, dividends and
certain other types of passive income. Based on the representations made in the
Transaction Documents, we conclude that if the Trust is treated as a partnership
for federal income tax purposes, 90% or more of the Trust's gross income will
constitute "qualifying income" within the meaning of Section 7704 of the Code.
Therefore, it is our opinion that the Trust will not be taxed as a corporation
under the publicly traded partnership rules of Section 7704 of the Code.
2. Characterization of the Notes. The characterization of an instrument as
debt or equity for federal income tax purposes depends on all of the facts and
circumstances in each case. In any such determination, several factors must be
considered, including, among other things, the independence of the debt holder
and equity holders, the intention of the parties to create a debt, the creation
of a formal debt instrument, the safety of the principal amount, and the debt to
equity ratio of the issuer. In this regard, we note that the Owner Trustee, on
behalf of the Trust, and each
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Arcadia Receivables Finance Corp.
June 22, 2000
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Noteholder will agree to treat the Notes as debt for federal income tax
purposes. Based on such agreement, the factors listed above and other
considerations, although there is no authority on transactions which resemble
the issuance of the Notes by the Trust, it is our opinion that the Notes will be
treated as debt for federal income tax purposes.
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the heading "Federal Income Tax
Consequences" in the Prospectus Supplement, and we hereby confirm that, insofar
as they constitute statements of law or legal conclusions as to the likely
outcome of material issues under the federal income tax laws, the discussion
under such heading accurately sets forth our advice.
Dated: June 22, 2000
Very truly yours,
/s/ Dorsey & Whitney LLP
CFS
