ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

MINUTES OF MEETING - MARCH 3, 1998

Joint Eron Lenders Committee - Project Leaders Meeting
Royal Canadian Legion Hall - North Burnaby, BC
Recorded by D'Ann Madsen and edited by Steve Ripley

The meeting was called to order at 7:00 pm by David Craig. The first announcement was regarding the resignation of three members of the Eron Lenders Committee: Janet McDermott, Ian Wragge, and Bob Dominick. They were thanked for their contributions and received a round of applause.

The two remaining members of the ELC, David Craig and Steven Ripley, issued three documents:
1. Transition Plans - this 5 page document includes Summary of Mandate, Structure, By-laws, Volunteer Sub-committees, Dissolution, Meetings, Funding, Accountability, Professional Advisors, Honorariums, and an Organizational Chart.

2. ELC Projects Information - this 1 page document seeks an updated status report from each Eron project.

3. ELC Volunteer Information - this 1 page document requests volunteers to assist Craig and Ripley with telephoning, faxing, data organization, opinion sampling, newsletter writing, Website coordination, and informa tion gathering for class action.

David Craig gave a Financial Report:
1. Approximately $100,000 has been raised by contributions from Eron lenders. In response to the question of what has been accomplished for $100,000, Craig responded that Ladner Downs has been useful in getting the ELC and the individual projects focused on the key legal issues. Ladner Downs will provide more information in the next few weeks regarding future class action litigation.

2. Billing from Ladner Downs to the end of January is to be reported at the next meeting. They have stated that they will complete work in progress, whether or not they are paid, and will pass on information to Russell and DuMoulin. Furthermore, they will provide the ELC with a roadmap for class action. Refer to the Feb. 3 ELC newsletter for more detailed information on Ladner Downs activities.

David Craig responded to the question regarding the ELC goals:
1. To better organize the projects to increase capital recovery. Not all projects are organized and more initiative and expertise would be helpful. Approximately half of the projects are not represented at the Joint ELC -Project Leader monthly meetings. Less than 20% of the projects responded to Craig's request for specific challenges to Price Waterhouse billing.

2. It is a goal of the ELC to help the legal teams coordinate any class action suits.

3. Reducing Price Waterhouse's costs is a goal. Significant savings may occur from taxing their bill. Additionally, PW will need to be held accountable in court for their billing. The same activities apply to the bills of Russell & DuMoulin.

The "ELC Transition Plans" has been written by David Craig and Steven Ripley. David Craig stated that changes will be made as they see what works and what does not work. Craig and Ripley would be the only two people on the ELC, dividing specific roles, and supported by volunteer sub-committees. New ELC members are to be elected by a general vote of the Eron Lenders, to take place at a yearly election called each November 14th. The costs for an annual election should be minimal if ELC information is included with PW mailings. Between annual meetings where input is needed on matters of significance to lenders, the ELC will refer to the Project Leaders.

There were numerous questions regarding remuneration for the ELC. Craig believes lenders might receive significant savings from ELC efforts. The "ELC Transition Plan" states that honorariums, if any, for the ELC will be the subject of consultation with the project committees of the ELC, and may also be the subject of confirmation with lenders-at-large before formalization with Price Waterhouse and the courts. At the previous meeting of Project Leaders on February 11, 1998, a straw vote indicated a majority is prepared to pay an honorarium to the ELC. Price Waterhouse has indicated it will facilitate funding if it feels lenders are backing this.

David Craig stated that he would like to see honorarium recognition for those ELC members who have resigned as well as honorariums for future ELC activity. An Honorarium Committee of volunteers is being assembled with a decision on their recomendations to be made at the April meeting of the ELC and Project Leaders.

A straw vote was taken for the "ELC Transition Plan". It received unanimous backing.

The Eron Lenders web site "geocities" has been cancelled until the webmaster is compensated. The possibility of using the Price Waterhouse web site will be investigated.

Jamie Engen spoke regarding the relationship of the ELC with Price Waterhouse. He stated that PW is willing to work closely with the ELC and their "Transition Plan". He related that Russell and DuMoulin have considered against whom legal action should be commenced. The major potential recovery from litigation could come from FICOM. Litigation against the government could take 5 to 8 years and cost $5 million plus, with no assurance of winning. A potential defense on the part of FICOM could be that they did not have enough money to properly regulate Eron Mortgage Corp. If litigation remains possible, Engen also foresees the possibility to negotiate a settlement with FICOM, with a minimal aim being to recover all realization fees.

A cost/benefit analysis must be considered regarding any other potential law suit. Engen stated that PW will sue lawyer Doug Jackie. His Law Society insurance will pay twice a year at $1 million per instance. PW will consider suing him repeatedly. Other litigation is being considered against the Laurentian Bank, the auditor Doug Reid, Eron principals and brokers, and other lawyers.

Engen noted that Russell and DuMoulin are independent from PW, and their bills can be taxed by the ELC and project leaders.

Price Waterhouse plans to go to court seven weeks from now with its bill for Eron work to January 31, 1998. The process of taxation of their fees is:
- copy of fees to David Craig and project leaders.
- Craig and project leaders have two weeks to respond in writing.
- Price Waterhouse has two weeks to respond with their reasons for billing.

Regarding Engen's proposal to have EIC lenders transferred from mortgages back to the EIC pool, his schedule is:
- list of EIC lenders issued on Friday, March 6, 1998.
- letter is to be sent to each EIC lender.
- meeting will be held for EIC lenders.
- application to Judge Tysoe in early April.

In response to a question on whether Price Waterhouse can provide payment to the ELC, Engen stated that there is provision in the Trustee Act for doing this, providing there is support from project leaders or lenders. This money would come from PW's general costs.

The meeting concluded shortly after 9 pm. The next Joint ELC - Project Leaders Meeting is to be held April 7, 1998.




BACK