Foretravel, Inc. - Page 11

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            inventory of used coaches that had been taken in as trades.  Used                              
            coach sales also declined, and Northwest suffered cash-flow                                    
            problems from the cost to inventory the used coaches.                                          
                  As the problems mounted, Northwest used the proceeds from                                
            the sales of coaches to pay the most pressing operating expenses                               
            or floorplan costs rather than floorplan loans, thus rendering                                 
            itself "out of trust".  Nicholson admittedly "robbed Peter to pay                              
            Paul".  In April 1988, checks from Northwest payable to                                        
            petitioner were rejected by the bank due to insufficient funds;                                
            however, Northwest did eventually pay the checks that were                                     
            rejected.  Franklin began contacting Nicholson on a regular basis                              
            about Northwest's accounts payable to petitioner.  Nicholson                                   
            pacified Franklin by telling him whatever was needed "to keep                                  
            things going" so that Northwest could find a way to pull out of                                
            the slump.  Northwest had a deficit equity of $105,434 on April                                
            30, 1987, which increased to $469,176 on June 30, 1988.  Prior to                              
            October 1988, Northwest's officers included Nicholson as                                       
            president, Moore as vice president, Weaver as treasurer, and Mrs.                              
            Fore as secretary; while Nicholson, Mr. Fore, Moore, and Franklin                              
            served on the board of directors.  From the time petitioner                                    
            purchased Fishfader's stock in Northwest through the fall of                                   
            1988, Nicholson managed Northwest, and petitioner exerted no                                   
            control over Northwest and did not dictate Northwest's policy.                                 
                  By late September or early October 1988, Nicholson had                                   






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