ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

Eron Lenders Committee Newsletter: July 7, 1998

Capital Preservation, Enhancement, and Recovery

Capital Preservation, Enhancement, and Recovery

1. Taxation of bills
Price Waterhouse Coopers Ltd, Russell & DuMoulin, Campney & Murphy, et al -- David Craig continues his discussions with PWC. On July 3/98 Judge Tysoe heard PWC's Application for Directions regarding the interim taxation of the Judicial Trustee's fees and disbursements. This seven page document is the first step in the legal process by which the costs of the Trusteeship &/ Receivership will be determined and paid. Tysoe's orders will be issued by mid-August and will be available on the Court's website: www.courts.gov.bc.ca Briefly stated, he said:

a) there will be an interim billing,

b) the ELC may negotiate for all lenders respecting this billing.

c) there will be a summary taxation process through which any retroactive adjustments required can be made and integrated with distribution issues, and through which any remaining individual applications can be heard.

d) the ELC has been granted funding, if required, to pursue in court this billing process.

Ladner Downs -- In addition to discussing with Ladner Downs the settlement of their bill, David Craig has engaged Gordon Johnson to assist in the preparation of the taxation of PWL's billing. The fees for this process have been granted by Tysoe/ PWC to the ELC from Eron's general assets in a reasonable amount because of the large sums that may be saved by this effort.


2. Distribution Issues

June 16, 1998, Eron Investment Corporation (EIC) Hearing --Applications were heard from lawyers for EIC #1, #2, #3, and creditors in EIC #4 were also heard. Judge Tysoe reserved judgment. No counsel for EIC #4 was authorized because disgorgement of funds was not deemed by him as an issue for legal determination at the time.
July 13, Judge Tysoe issued his orders regarding EIC.See the Court website for the complete 22 page ruling (or request from S. Ripley, fax 222-1641, a copy of the 2-page summary order). Specifically ,respecting pooling, he ordered:

" all investors who were allocated to mortgages as part of the overall allocation process in or about May 1997 should be pooled and should share in EIC's interests in the EMC mortgages on a pro rata basis, and investors who were not assigned to their mortgages as part of the overall allocation process have liberty to apply for determination of their status".

Projects' Asset Realisation -- Proceeds from the sale of the assets of a number of projects will be realised from July to December, 1998. PWL, under Judge Tysoe's orders, will be addressing as soon as possible the process of distribution for each project. At the July7 ELC- Project Leaders Meeting Jamie Engen (Price Waterhouse Coopers Ltd.) discussed the issues , referring to their being dependent upon Judge Tysoe's EIC ruling and any subsequent related rulings or clarifications about pooling and the other associated distibution processes. He also informed the meeting that he will be leaving PWC for other work in Europe.

The PWC executives that will replace Engen for Eron work are Craig Bushell and Darryl Eddy, each of whom has had 20 years of experience dealing with insolvency problems at Coopers Lybrand.They will be dividing the Eron tasks between themselves, including directly overseeing the PWC Ltd. project -contacts. The number of those PWC contacts will gradually decrease as the next stage of the projects' realisations progresses.

Judge Tysoe will be in Vancouver this summer and fall for hearings on the following dates:
August 31 - September 4
October 5 - October 9
October 19 - October 30
November 16 - November 27


3. Litigation

Price Waterhouse Coopers and Russell & DuMoulin Initiatives --

Civil -- Detailed evidence continues to accumulate. Actions are being prepared. For now the first priority of Price Waterhouse and the ELC is to realise the maximum dollars for Eron lenders from the careful sale of the project's assets, and to distribute the funds as quickly as possible.

Criminal -- Evidence accumulated by PWC will be turned over to the RCMP.

Frank and Michelle Biller - PWL continues negotiations with Michelle Biller's lawyer regarding the amount of funds that are in dispute and owed to Eron lenders from her assets.

ELC Initiatives --
a)Letter-writing and rallies, public awareness campaign, advocacy for change of regulatory agency legislation -- news and initiatives to be announced, when, as and if our strategy requires A list of names to write to, and a list of facts and issues to write about, have been prepared by the Communications Committee (see enclosure).Project Leaders received a draft copy on July 7.

b) Class action registration - The ELC will assist in organizing any set of lenders who wish to form a class-action group. Please refer to www.eron-pwl.com. Once in the website, go to the ELC section, and see the Ladner Downs' directory 'class action' for initial guidance in forming your group. At this stage the ELC, itself, does not contemplate becoming the litigant adversary in lawsuits. PWL will be pursuing civil litigation on our behalf against those Eron principals, officers, and related firms and professionals they believe warrant such action. Effectively, that leaves brokers, investment advisers, Laurentian Bank, and regulatory authorities against which to consider lawsuits. Since actions against a specific broker or investment adviser may involve very particular complaints related to an individual's special circumstances, a class action by large numbers of Eron lenders may be less obviously organizeable (and less rewarding) than an action against a bank or the regulatory authorities. Therefore, the ELC's main focus of assistance will be respecting charges against these institutional authorities. See below regarding negotiations with the B.C. Government.

c) Negotiation with the B.C.Government - David Craig. is discussing with PWC a joint approach to negotiating with the appropriate governmental authority a financial resolution to lenders' complaints.

d) Statute of LimitationsóDavid Craig, Ladner Downs, and the Volunteer Legal Committee will be assessing the various time limits for initiating litigation under various Statutes respecting assorted potential defendants.


4. Investigations

RCMP -- The RCMP continues their investigation, but their progress has not been disclosed to date. James Tindle is our liaison volunteer. If an Eron lender has information he/she wishes to disclose that may be of value regarding a criminal action, feel free to contact James to discuss your concerns. He can provide counsel regarding appropriate steps towards speaking with the RCMP.


5. Revenue Canada

No news to report at this time.


6. B.C. Securities Commission

The BCSC has requested certain lenders and Eron employees to respond to its subpoena letter of June 15, 1998, which followed the BCSC's questionnaire to selected lenders.


7. Media

- "Business in Vancouver" magazine had an article on Seasons Memorial Park in the June 2, 1998, edition, written by Ian Noble. - CKNW continues to keep in touch with Craig.

- David Baines continues important investigative reporting of assorted other similar,questionable investment and lending debacles. - Charlie Smith has written an article on the EIC decision in the July 16 "Georgia Strait".


8. Funding

New cheques for $100. are being received. On behalf of all Eron lenders, we wish to express our sincere thanks for this assistance. For those of you considering making a contribution, remember that you will be helping those who have helped you by their earlier donations. Send your cheque to:
David Craig, "in trust"
Treasurer, ELC
#707 - 1112 West Pender St.,
Vancouver, B.C. V6E 2S1


9. Auction

Eron Financial Services' office assets were auctioned June 20, 1998, by Century Services Inc. under the direction of Richard Roose, with a contract guaranteeing a minimum recovery of $115,000. Over 600 lots were sold. The total gross proceeds received were about $150.000. The Ministry of Labour on behalf of a Worker's Compensation Claim, has placed a lien against these funds. PWL will be assessing this claim, and may contest it. Were EFS to be put into bankruptcy then the alleged priority of this claim may be nullified.


10. Price Waterhouse Coopers Ltd. regarding Eron lease

PWC moved June 12th from Eron's office back to the PWL office at 601 W. Hastings.The lease has been terminated at the Kilborn building. This saves $19,700/mo. . The PWC telephone and fax numbers remain the same: tel: 669-5087 and fax: 688-6128.


Communications, Projects, Volunteers

1. Project Leaders

Please return to D. Craig your signed form ëAuthorization to Negotiate with Price Waterhouse.' Regarding the form "Authorization to Negotiate with the B.C. Government", the ELC will be enclosing this in the all lenders mail-out planned for early August.The ëNominations to the ELC' form will also be an enclosure in the all lenders mail-out. Please encourage the members in your projects to complete these forms and return them by Sept.1.

Project volunteers'' liability -- Judge Tysoe has provided a ruling and copies are available from Steve Ripley, fax 222-1641. Please post your news on the website (see below). Make use of your telephone tree to encourage all lenders in your project who do not have personal internet access to go to a public library, or to visit a friend who does have internet access, so they can remain current with Eron affairs.

Please update our Project Information and Committee members data files: names, telephone numbers, fax, email. Contact Wendy Menghi, telephone #929-6003, fax #924-0628.Also, please send Wendy a copy of your latest master list of project members and their addresses, and telepone and fax numbers.


2. Website

www.eron-pwl.com continues to accumulate information. Catherine Palmer, our contact at Price Waterhouse, will receive project leaders information, preparation of which may be assisted by our volunteer webmaster, David Jackson tel: 986-3718, fax: 986-6215, or email: www@vanlang.com.


3. Database

All lenders, please send changes of your postal and email addresses, telephone and fax numbers to John Hall tel: 876-9081 or fax: 876-9082.


4. Telephone, Fax, Email Network

The volunteer response is increasingly encouraging. On behalf of all Eron lenders we welcome and thank those new volunteers who have committed to helping our communication coordinators. We can still use more help! Please contact:
Erika Inacio tel: 438-0485
Wendy Menghi tel: 929-6003 fax: 924-0629
Martje Hartmann tel: 538-6601 fax: 536-6108


5. Postal Communication

The date of the next all lenders mail-out will be early August.


6. Schedule/Calendar

An updated calendar will be posted on the website. Please send suggestions of items for inclusion to: Steve Ripley, tel #222-1646, fax #222-1641, email sripley@helix.net


7. Nomination, Election, Annual General Meeting

The nomination and election process for members on the ELC for the 2nd year, November 1998 to November 1999, will occur this August through October. A nomination form has been prepared. This form will be sent to all lenders in the August mail-out. The completed forms should be returned by lenders to David Craig by September 1, 1998. .At the September 7 Joint ELC-Leaders meeting the set of nominees will be organized for an election ballot, and the process that will be undertaken during the Sept.-Oct. period will be descibed. .The November 3rd Annual General Meeting will conclude the election process. Details will follow.


8. Newsletter

This newsletter is the production of the ELC and of volunteer committee members. It will be posted on the website without editing by Price Waterhouse Coopers Ltd. or Russell & DuMoulin, who take no responsibility for its contents. Any Eron lender who wishes to offer information or suggest ideas for its preparation is invited to contact Steve Ripley at tel. #222-1646, fax #222-1641, or email sripley@helix.net


9. The Minutes of the Joint ELC-Project Leaders Meeting

If you wish a copy, please telephone Steve Ripley at #222-1646. Volunteer recorder and writer of July 7th Minutes is James Tindle.


10. Meetings -- see "Schedule/Calendar"

Next Joint ELC - Project Leaders meeting is Wednesday, September 9 at 7 pm, (note: NOT Tuesday!) Royal Canadian Legion Hall, 4356 East Hastings, Burnaby. For further information regarding meetings, contact Martje Hartmann at tel: 538-6601 or fax: 536-6108.




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