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THE ERON LENDER COMMITTEE

Eron Lenders Committee Newsletter: September 7, 1999

Judicial Trustee & Receiver: Capital Recovery -- Realization, Distibution, Litigation

1. Realization
* The projects that are now confirmed by PWC as realized or near realization are: ABC Boat Charters, Balak, Capital Place, Castlegar, Crampton, Davie, Desert Springs, Discovery Ridge, Fairways at Arrowhead, Gaetz Crossing, Gallie, Grande Prairie Airport, Homer Street, Leewood Village, Morewood, Proctor, Ravenswood, Rusin, Wallace. The fact that a project has been realized does not mean that the project will result in a net positive $ return to lenders in that project. Please see item #2, below.


2. Distribution Issues
* September1-3 Justice Tysoe heard R&D's lawyer John Grieve present PWC's application respecting the 34 remaining distribution questions. Lawyers representing Eron Projects and individual lenders spoke to the Court about numerous issues, the most contentious of which appeared to be the matter of the overfunding in projects and how to allocate legally and/or equitably the funds realized in those projects. A gain in allocation by any Eron lender/project must be at the expense of some other lender/project because of the fixed amount of the total $'s realized by the Eron projects and estate.

* Tysoe stated he would issue written decisions on all the matters discussed; possibly these will be available before the end of the September. A mandatory 30-day appeal period follows the date of his Orders. Depending upon how complex the legal challenges are to any of his rulings, the eventual pay out of individual lenders will be delayed by that appeal process. It is conceivable PWC will be in a position to begin issuing payments to lenders by December 1999. Distribution payments to lenders will be net of over-subscription amounts (to be determined by Justice Tysoe's eventual formula re. this complex matter), inter-company advances, and trusteeship costs (direct and indirect), and any holdback for estimated future Trusteeship and legal expenses to the conclusion of Eron affairs.

* The currently estimated zero-return or near-zero return projects: are Columbia Street, Commonwealth, EFS, Enterprise Park, Everbrite, Maxim, Gail Taylor, Goodrich, M. Graye 1st & 2nd & 3rd, Quadra, Rusin, Schiel / Emerald 3rd & 4th & 5th Schiel / Uclulet, Shushwap South Thompson Guest Ranch, USCAN, Vocal Point, P.G.Wood 2nd. There are other projects that may eventually be determined to be zero return, or near zero return.


3. PWC Civil Litigation / Insurance Claims
* On Feb.2 / 99 a Statement of Claim was filed by PWC/R&D against the Slobogians jointly and severally for funds owing to EFS, in the amount of $1.2M. Neither of the Slobogians have filed a Statement of Defense in response. PWC/R&D has subsequently, on May11, served on Brian Slobogian - through substitution on his lawyer - a Petition for Receiving Order and an Affidavit of Truth in Bankruptcy Petitition. A date will be in September or October set for the Court to hear PWC's B.Slobogian Bankruptcy Petition. See the Apr.6/99 ELC-Projects `Minutes', #5. PWC has received from the Slobogians' lawyers a `Proposal' under the B.I.A. (Bankruptcy and Insolvency Act) that would result in the affairs of both parties being settled with respect to Eron. The ELC has examined this Proposal and has offered its response to PWC. See item # 4, point 2, below.

* PWC continues to investigate the possibility of civil lawsuits against other individuals related to the Eron failure.

* PWC is pursuing on behalf of Eron lenders an insurance settlement from the lawyer D. Jackie, who worked for Eron Mortgage Corporation. The B.C. Law Society's insurer is in negotiations with PWC and other parties who have made claims against Jackie.


4. PWC Administration
* Project leaders and lenders with concerns about specific matters relating to PWC and R&D's Trusteeship costs (project direct costs, indirect costs, allocation of costs) are requested to send them in writing to any member of the ELC or to David Craig. Concerns about a project's direct costs, in particular, should be addressed to D. Craig (tel.713-6680, fax 713-6696). The ELC will be responsible for overseeing the taxation process of PWC's indirect costs.
* The ELC has been notified by PWC that the Trustee will file in September an Application to Justice Tysoe seeking a clarification of the judge's original intention for the role of the ELC in relation to the work of the Trustee. Communication between the two parties has become ineffective in resolving various issues important between them. The ELC will respond to that Application once the document is available. The hearing for this matter is set for September 24, but will likely be adjourned until early October.

* The costs to date of the Trusteeship and legal fees are approximately $9.6M, to include all direct and indirect charges, and all discounts agreed upon. Note: this amount corrects an erroneous report announced in the June 1/99 "Minutes of the Projects and Lenders' Meeting", in which a sum of $14.4M is mentioned in paragraph #4.


5. RCMP / FBI Criminal Investigations / lawsuits
* The RCMP continues its review of information held in PWC files pertinent to their criminal investigations; as well, it closely followed the evidence presented at the BCSC hearings. Once cases are suitably defined, the information will be presented to the B.C.Crown Counsel, and it will be the B.C. Attorney General's decision as to how to proceed.

* According to information Tindle has received, the RCMP now has given priority to its work on the Eron case


6. Brian Slobogian Bankruptcy (2nd)
* See item # 3 & 5, above.


7. Onalee Slobogian
* See item # 3, above.


8. Frank Biller
* On May 10 PWC filed an Amended Statement of Claim against F.Biller, M. Biller, Biller Holdings Ltd., and A. & H.Biller Enterprises Ltd., which alleges breach of fiduciary duty, breach of trust, misrepresentation, and the charging of criminal or usurious interest rates. The result of these alleged acts was wrongful profits in the amount of $6.5M. On behalf of Eron lenders PWC claims a judgment against the Defendants " for the amount and interest found due upon the accounting, a charge against their lands or other assets, and an interim injunction prohibiting the transferal, assignment, conveyance, encumbrance or other dealing with any of the assets pending a trial of the matters". No date has yet been set for this trial.

* See item # 5, above.


9. Frank Biller Bankruptcy (2nd)
* McKay and Co. reports that Biller in his latest bankruptcy accounting states he is earning no income. Payments of his living expenses and legal fees are being made from Mrs. Biller's accounts. At the BCSC hearings Biller stated that his legal expenses now amounted to over $1M.


10. Michelle Biller
* See item #8, above.

* PWC and Mckay and Co. continue in negotiations with the lawyer for Mrs.Biller (F. Shandro) to settle her involvement in her husband's Eron affairs.


11. Other Investigations- The ELC is working to investigate other information that may prove useful to all Eron lenders in the attempts to recover our $capital. *Important*: contact James Tindle or any other member of the ELC with information you think might further these efforts-tel #438-0915 or fax #438-2795.


12. Revenue Canada
* The week of September 7 /99 PWC will begin sending to Eron lenders the first round of Revenue Canada refiling forms. The projects that will be managed first are the zero-recovery and near zero-recovery ones. See # 2, above.


13. Laurentian Bank & Canadian Western Trust: RRSP & RIF accounts
* No news to report.


14 .BC Securities Commission
* On September 13 the summary submissions of S. Angus (for the BCSC) and M. Skwarok (F. Bller's lawyer) will be heard. Thereafter, the BCSC panel will issue its findings and any fines &/ sanctions.


15. Institute of Chartered Accountants of British Columbia
* The ICABC has released its July 8/99 report of the investigation of a complaint against D. Reid, the accountant for Eron. Reid admitted he had breached the Rules of Professional Conduct in the course of performing the 1996 audit, having relied on management prepared information that he failed to critically evaluate. Reid was reprimanded, fined $7000., ordered to pay costs of the investigation in the amount of $10,000. and has had his practice restructured such that he is precluded from issuing audit reports or opinions and his review engagements are subject to a tutor's pre-release approval.

* A copy of the complete text of the decision may be obtained from S. Ripley, tel.222-1646/ fax 222-1641.



E.L.C

Communications, Projects, Volunteers, Class Action Litigation

16. Litigation: Class Action
* The government of B.C.has filed for an appeal of Justice Tyson's decision certifying the Cooper lawsuit as a class action. The judicial panel that will determine if the matter is justified in being forwarded to the B.C. Appeal Court will hear the government's application on December 1 / 99. The ELC encourages all lenders to attend this very important judicial matter.

* General updates on this litigation process are available at the websites:www.campchurch.com and www.geocities.com/WallStreet/6380


17. Project Leaders-* Important * Please remember to distribute to your project members as completely as your committee can the essential information in the newsletter. This is one of your commitments and responsibilities as a leader! Recall: this saves all Eron lenders significant $ money by informing individuals of a wide range of information that otherwise they may believe they can only obtain by phoning PWC directly--at considerable hourly rate cost to the estate assets.

* The following information was provided to Project Leaders and lenders at the September 7 / 99 ELC-Projects & Lenders Meeting: Sept.7 Agenda, Sept.7 Newsletter, June1 / 99 Project Leaders Meeting Minutes, I.C.A.B.C.Decision re. D. Reid, ELC Schedule-Fall 1999.

* For project leaders who wish to use the website for postings, please telephone / fax / email your information to Catherine Palmer. Catherine Palmer's email address is: contact@eron-pwl.com, to be distinguished from PWC's Eron website, www.eron-pwl.com

* Preparation of your material will be assisted by our volunteer webmaster, David Jackson, tel #986-3718 or fax #986-6215 or email address www.vanlang.com


18. ELC Administration

* Members of the ELC met with the Chair of the Taylor Ventures steering Committee on June 23 to ask what lessons he and his committee had learned from their experience with a somewhat similar (though much smaller and confined) mortgage company collapse. Initially, PW had been their Trustee & Receiver; later, they applied to the Court and obtained a substitution Trustee & Receiver.

* The ELC has begun planning for the 1999 Annual General Meeting and attendant election process for the 1999-2000 ELC. Volunteers who would be willing to help with these events should contact our Volunteers' Coordinator, Wendy Menghi, tel. 929-6003. See item # 19, below.


19. Nominations and Election of the 1999-2000 ELC

* The ELC invites all project leaders to notify their lenders to nominate individuals for the third term ELC, 1999-2000. Written nominations should be forwarded to the ELC sub-committee organizing the election, attention: Anthony Jasich (986-0419) and Erika Inacio (438-0485), c/o 4725 Glenwood Ave. North Vancouver, B.C., V7R 4G6, or fax (604) 986-0499. The cut-off date for the committee receiving the nominations is October 5 / 99, which is also the date of the next ELC Projects and Lenders meeting at the Legion Hall. Seven (7) positions are available to be filled. Before nominating any individual please first check with the person to learn if he/she is willing to be nominated and serve on the committee, if elected. It requires a significant time commitment!

* The committee will prepare an election ballot to be sent to all Eron lenders the week of October 11, and the committee asks lenders to vote and return the ballots as quickly thereafter as possible. Ballots may also be brought to the annual general meeting to be counted at that time.

* The Annual General Meeting of Eron lenders will be held on November 14 at 12:00 noon-2:00 PM, probably at the same location as last year (the Kitsilano Secondary School auditorium, 2550 West 10th Ave. Vancouver).The location will be confirmed to lenders at the time of the election ballot.


20. Volunteers

* Wendy Menghi is Head of Volunteers (tel: 929-6003, fax 924-0629). Contact Wendy with your questions about how you can help with the small, specific, manageable volunteer tasks that will contribute to your fellow lenders, your ELC committee, and yourself! THANK YOU!


* The ELC has begun planning for the 1999 Annual General Meeting. Volunteers who would be willing to help with this event please contact our Volunteers' Coordinator, Wendy Menghi, tel. 929-6003.


21. Letter-Writing Campaign
* Because articles about the Eron financial disaster continue to be published in the newspapers please continue to send your letters to the editors, regulatory agency officials, and politicians. See #. 22, below: use these newspaper articles as the basis of your further letters! For copies, contact S. Ripley at tel.222-1646 / fax 222-1641 Thank you!


22. Media
* James Tindle coordinates media relations for the ELC.

* The Feb. 13 & 16 / 1999 "Vancouver Sun" carried important articles, the first by David Baines, the second written by the editors, both of which suggested that, given FICOM's knowledge of Eron's non-compliance record, the B.C. Government & / the Superintendent of Mortgage Brokers had been negligent in not warning Eron lenders of the risks in dealing with Eron Mortgage Corp..


23. ELC Funding
* The ELC, on behalf of all lenders, thanks those individuals who have contributed various amounts up to $100. For those lenders who are able to contribute, and who have not yet done so, may we ask your participation? Please recall it has been through the sacrifices of other lenders who have already contributed that the work of your committee is enabled. Please send your cheque to the ELC Treasurer:

Eron Lenders Committee
c/o Anthony Jasich, "in trust",
4725 Glenwood Ave.
North Vancouver, B.C.V7R 4G6


24. ELC Treasurer's Report
The ERC-ELC Consolidated Income Statement for Oct.3/97-Nov./98 and the ELC Financials for Nov.'98-August '99 are available from the Treasurer: tel A. Jasich, 986-0419, fax 986-0499.


25. ELC Legal Counsel -
* No news to report.


26. Website
* The Eron website www.eron-pwl.com also functions as our archives. Project leaders; please encourage your members who are unfamiliar with visiting a website to try it at a friend's home, at a public library, or at a cybercafe.

* A `link' has been made from the PWC/ELC website to the Camp Church & geocities websites for updates on the class action lawsuit. See item # 16, above.

* For those lenders using the internet please recall that you can access written decisions via the B.C. Supreme Court documents website at: www.gov.bc.ca


27. Database

* John Hall is Manager of the database, tel #876-9081 or fax #876-9082.Please send John your changes re. address, telephone, fax, email, name, Eron beneficiaries, or deceased Eron lenders.


28. Postal Communication
* PWC will be sending the Revenue Canada refiling election forms to members of projects, in a project by project sequence.


29. Newsletter
* This newsletter is the production of the ELC. It will be posted on the website without editing by PWC or R&D, who take no responsibility for its contents. Any Eron lender who wishes to suggest ideas or contribute to the preparation of the newsletter is invited to contact Steve Ripley (tel. 222-1646, fax 222-1641).


30. Minutes
* Minutes of the monthly ELC-Project Leaders & Lenders meetings are available to all Eron lenders. For a copy by fax please contact Steve Ripley, tel: 222-1646, fax: 222-1641, or else find them posted on the website.


31. Calendar / Schedule
* An updated calendar to December 1 / 99 is posted on the website. Please contact Steve Ripley with suggestions for items to be included: tel. #222-1646, fax #222-1641, email: sripley@imag.net


32. Next Meeting
* October 5,1999, Tuesday, at 7pm -- ELC-Project Leaders and all lenders meeting, Royal Canadian Legion Hall # 148, 4356 East Hastings St., Burnaby.For further information regarding meetings, please contact our Meetings Coordinator Martje Hartman, tel #538-6601; also, see the ELC calendar on the website.




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