Joseph Nachman - Page 5

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            after Swirl ended the Bill Tice agreement, Swirl introduced the                            
            Oscar de la Renta product line under a business plan it designed                           
            to eliminate the losses.                                                                   
            D.    Swirl's Line of Credit With Chemical Bank                                            
                  In the mid-1980's, Swirl had a $3.8 million line of credit                           
            with Chemical Bank which was secured by Swirl's trade accounts                             
            receivable, machinery and equipment.  Swirl had borrowed $3.3                              
            million against its line of credit by January 1986.                                        
                  In January 1986, Chemical Bank became unhappy with Swirl as                          
            a customer.  Chemical Bank believed that Swirl was not meeting                             
            the standards Chemical Bank set for its borrowers.  Chemical Bank                          
            froze Swirl's line of credit in January 1986.  At that time,                               
            Swirl had serious financial difficulties and needed the line of                            
            credit for working capital.  Lack of working capital precluded                             
            Swirl from buying enough raw materials and filling orders.                                 
            Swirl began to lose money.                                                                 
                  Chemical Bank told Swirl in March 1986 that it no longer                             
            wanted to have Swirl as a customer and wanted another lender to                            
            assume the $3.3 million line of credit.                                                    
                  Chemical Bank had a workout division which handled loans it                          
            made to companies that were financially troubled.  The workout                             
            division tried to maximize Chemical Bank's recovery on loans by                            
            liquidating the loans or by taking other steps.  The workout                               
            division generally did not help borrowers find new financing; it                           
            concentrated on trying to get borrowers to repay the loans.                                




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