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Weimar Bank Indebtedness
In April 1983, the $300,000 debt, plus accrued interest of
$22,553.42, to Weimar Bank matured. At the time of maturity, the
obligors on the loan were Wood, Klutts, and petitioner. Unable
to pay off the loan, the obligors and Weimar Bank entered into
another loan agreement (referred to as a renewal agreement),
effective April 26, 1983. As a condition for renewal, the bank
required payment of the accrued interest and a pledge of
collateral. Because the obligors could not make a payment, Heger
arranged for Klutts and petitioner to borrow $52,553.42 from
Weimar Bank (loan #2). Of that amount, $22,553.42 was applied as
payment of the accrued interest on the original indebtedness.
The balance, $30,000, was transferred to the National Bank of
Commerce to pay a secured debt owed by Wood. The collateral on
the secured debt, certain oil and gas wells in which Wood had an
interest, was then released. Thereafter, the oil and gas wells
were pledged as collateral on the original Weimar Bank
indebtedness.
By April 1983, petitioner and his partners were
substantially in debt. Eventually, Wood and petitioner had
approximately $3 million in personal liability on debts incurred
in connection with the various partnerships and joint ventures.
Wood's indebtedness at Weimar Bank reached such a high level that
the bank would not give him any additional financing.
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Last modified: May 25, 2011