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loan or the build-out loan. Briarpark was not subject to an
examination by the IRS for the taxable year 1987.
First Republic Bank Houston (First Republic) became the
successor in interest to InterFirst. The Federal Deposit
Insurance Corporation, as receiver for First Republic, assigned
the modified loan and the build-out loan (the loans) to NCNB
Texas National Bank (NCNB or bank).
During March 1989, Briarpark submitted an application to
NCNB seeking to modify the loans. On March 15, 1989, Mr. Motley
submitted several similar proposals to NCNB regarding the sale of
the property. In NCNB's view, the best proposal was one in which
the property would be sold for $12,700,000.
As of July 1989, Briarpark was in default on the loans. On
July 21, 1989, Briarpark signed a sale agreement to sell the
property to Dan Associates. Dan Associates conditioned its
purchase of the property upon Briarpark's arranging the
satisfaction or removal of the encumbrances for consideration
paid to NCNB not in excess of $11,490,000. On July 31, 1989,
NCNB agreed to release its liens to allow the sale of the
property to Dan Associates for $12,200,000 with the proceeds
being assigned to NCNB.
On October 5, 1989, Briarpark and Dan Associates amended the
sale agreement. Under the amended agreement, Briarpark was
required to arrange the satisfaction of the loans and removal of
the encumbrances for consideration not exceeding $11,036,000. On
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