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Eron Lenders
Projects 1109, 1174 and 1208
Borrower: Everbrite Ventures Ltd.
Lender update
Date: February 16, 1998
Lender leads for all positions had not responded positively to settlement, accordingly on January 28 all leads were written to advising with facts of the situation and advising that if nothing heard, we would waive Court approval of settlement and proceed. This communication made it clear that no decision on distribution issues was contemplated in this settlement with the borrower.
On January 29 lawyer representing lender lead of 3rd advised of opposition
We therefore applied to Court on February 2 for Court approval
Despite our motion seeking no instruction on distribution issues and advising all that distribution would be addressed later, the Court saw fit to declare that unless lenders in 3rd and 4th mortgages put up $300,000 within 30 days, as security for 2nd mortgage, the interests of the 3rd and 4th mortgages would be foreclosed from that settlement fund.
We advised all parties and their counsel that not all of the $300,000 could be attributed to the value of the lands securing the mortgages and the Judicial Trustee's opinion was that there would be a sharing of those funds attributable to the covenants amongst all lenders in the three mortgages.
We subsequently received Court approval, by consent, on February 6 of the settlement with the borrower. One condition of that settlement was the agreement by the 2nd mortgage lender lead that an amount not less than $150,000 was attributable to the covenants.
Borrower was advised of Court approval. We now anticipate receiving payout of the $300,000 by February 27.
Once funds received, we shall prepare an outline of distribution issues with a proposal that addresses: costs, property value, cash balances held, settlement attributable to covenants, etc.
Parties will be able to concurr to proposed distribution. If concurrence not possible, we shall make application to Court at which time dissenting lenders may speak to the issue.
Yours truly
Judicial Trustee
Eron Lenders
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