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Eron Lenders
Project Name: USCAN Free Trade Zones Inc. (2nd and 3rd Mortgages)
Lender update
20 October, 1999
Further to our letter dated December 19, 1997 we are writing to update you on the status of the above noted mortgages.
Project Status
In our last letter to you we indicated that we had commenced foreclosure proceedings. In addition, the former owner of the property sued USCAN on the basis that title did not pass to USCAN and therefore the mortgages on the property were not valid. The Judicial Trustee successfully defended the lawsuit. However, the former owner was in the process of appealing the court decision.
The court action continued throughout 1998 and in 1999, the court finally ruled that USCAN owned the property and the mortgages were valid charges. During the court proceedings, the court suggested that the property value was closer to $600,000 based on a more recent appraisal. As a result, the Judicial Trustee reconsidered the merit of foreclosing the property since the first mortgage plus interest was approaching US$700,000.
The first mortgage holder completed its non-judicial sale on July 30, 1999 claiming mortgage principal, interest and legal costs of US$799,000. USCAN is insolvent. There will be no recovery of lender funds from the mortgage or the company.
The only other avenue for recovery is the guarantee of Kenneth Grosick the president of USCAN. According to our US counsel, Mr Grosick is likely insolvent himself and therefore has no assets to cover his guarantee. It was decided with the support of the Lenders Committee that no further costs should be incurred as there appeared to be little if any chance of recovering any of the outstanding lenders' funds from this source.
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. If your enquiry is of a general nature, you should contact Steve Ripley at (604) 222-1646. 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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