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To the Lenders in Project: #1186 - Wilmington River Development
Lender update
July 13, 2000
Current Status
Further to our letter of December 22, 1997, we are writing to update you on the status of the above noted mortgage.
In our last letter to you with respect to Wilmington, we indicated that the Judicial Trustee was negotiating with the borrower for a payout of the mortgage to include consideration for the guarantees of the principals. Unfortunately, no satisfactory response was received from the borrower.
A foreclosure action was commenced with a non-judicial foreclosure sale to take place on September 1, 1998. On the eve of the sale, Wilmington declared Chapter 11 bankruptcy thereby halting the foreclosure action. Our legal counsel tried to have the property removed from the bankruptcy proceedings. The borrower raised allegations of fraud and usury against Eron. To resolve the issues, a lengthy and expensive court battle would have been necessary with no assurance of success. Your Lender's Committee and the Judicial Trustee agreed that the best course of action was to arrange a settlement with the borrower.
On June 14, 2000, the Judicial Trustee received a cheque in the amount of US$335,000 in settlement of the mortgage principle outstanding on the Wilmington property. These funds are being held in an interest bearing trust account pending an application to the Court to approve distribution.
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. The Eron Lenders Committee has set up an information line, which can be reached by dialling (604) 878-4484. If your enquiry is of a general nature, you should contact James Tindle of the Eron Lenders Committee at (604) 438-0915. 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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