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by their corporations. As of the time of the commencement of
this case, the new loan to Mrs. Bowden remained outstanding.
4. NBSC
In 1985 and 1986, petitioners’ corporation Pac-Tech obtained
a loan from NBSC. NBSC took, as security, assignments on a
number of the vending machine leases.7 Funds were disbursed to
Pac-Tech in return for the assignments. Pac-Tech defaulted on
the notes.
On February 24, 1986, petitioners agreed with NBSC to pay
the outstanding loan balance of $442,595.29 with a new loan
issued to Mrs. Bowden and guaranteed by Mr. Bowden. Mrs. Bowden
assigned her interest in the 1 Crestwood Drive, Newport Beach
property (Crestwood property) to NBSC via a deed of trust. In
return, NBSC agreed to release all corporate guaranties.
Paragraph 6 of the settlement agreement states:
Bank will release to Hollis Bowden its security
interest in 41 water vending machines and 3rd party
leases presently held as collateral for the original
obligation.
On February 25, 1986, Hollis Bowden, who is the brother of
petitioner Charles R. Bowden, executed an agreement subordinating
7 A typical lease submitted for the record states that AVC
is the “supplier of equipment”. Pac-Tech is denominated as
“lessor” and “secured party”. An unrelated third party is
“lessee”. NBSC is the “assignee” of the “secured party”.
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