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Eron Lenders
Project Name: Angel Care 2nd and 3rd Mortgages
Lender update
November 22, 2000
Further to our letter of December 22, 1997, we are writing to provide you with a further update on the status of the above noted mortgages.
Project Status
In our last letter to you with respect to Angel Care we indicated that the mortgages were in default and that the Judicial Trustee was in the process of demanding on the loans.
Demands were issued on January 9, 1998 and judgement against the borrower, Mr. Les Broadway was obtained in July 1999. The Judicial Trustee and the Angel Care Lenders Committee agreed to the appointment of a receiver on the marina subject to the completion of a phase I and phase II environmental study of the marina property. The environmental studies revealed significant soil and shoreline contamination. As a result, the appointment of a receiver did not proceed.
Throughout 1998, 1999 and early 2000, offers were made by the Judicial Trustee to the borrower to settle the mortgages on the marina and the guarantee of Mrs. Broadway secured by the equity in her residence. The offers received from the borrower were not considered acceptable to the Angel Care Lenders Committee.
An updated appraisal of the marina was obtained in August 1998 which gave a value to the marina of $790,000. The Royal Bank has a 1st mortgage on the marina of $500,000 with interest only payments. Realty taxes and lease payments on the marina property were in arrears by approximately $50,000.
Under threat of foreclosure on Mrs. Broadway's residence, she agreed to settle her guarantee for $50,000 and these funds were received in June 2000. On August 3, 2000 the Court granted an Order for Sale on the marina. This gave the Judicial Trustee the right to list the marina for sale, which consists of two foreshore properties leased from the B.C. government.
With the assistance of the Angel Care Lenders Committee, the Judicial Trustee approached four real estate firms requesting listing proposals. Two firms responded with suggested listing prices below the total amount of debt outstanding on the marina, and the other two firms would not consider taking on the listing until the environmental contamination was remedied or the cost to remedy was known. According to an independent review of the phase I and II environmental studies, the cost to remove the contaminated soil was estimated at between $40,000 and several hundreds of thousands of dollars. As a result, we have not undertaken a listing of the marina property as the expected sale proceeds would not cover the current outstanding debt much less the probable environmental costs of cleaning up the site contamination.
The total of funds received has not been sufficient to cover the direct costs associated with the project. There will be no recovery of Lender funds from the project.
Lender Communications
We will continue to communicate directly with all lenders. However, we urge you to take advantage of the web site at http://www.eron-pwl.com for project specific updates as well as related court orders and other general information. The Eron Lenders Committee has set up an information line, which can be reached by dialling (604) 878-4484. If your enquiry is of a general nature, you should contact James Tindle at (604) 438-0915. If you need information on reclaiming tax on interest income in prior years, please call David Craig at (604) 713-6680.
Yours truly
Judicial Trustee
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