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to make an additional $3 million for CATCO's expenses (Emery
settlement).
On April 14, 1993, SPELI again notified CATCO of its failure
to make the installment payments. On April 15, 1993, SPELI
notified CATCO that it was declaring the note to be immediately
due and payable for the unpaid balance of principal, interest and
late charges in the amount of $36,505,715.15
On April 23, 1993, CATCO paid $11,318,575.52 to SPELI from
the proceeds of the settlement with Emery. A dispute arose
regarding whether this payment made CATCO current under the terms
of their agreement. On June 4, 1993, SPELI notified CATCO that
it would thereafter exercise CATCO's rights under the lease with
American.
CATCO failed to make the installment payment due September
1, 1993. On that same day, SPELI again demanded payment from
CATCO. On September 7, 1993, SPELI, CATCO, and CAC entered into
a settlement agreement in which CATCO conveyed the remaining
aircraft to SPELI in exchange for satisfaction of the balance of
payments due to SPELI. Under the agreement, SPELI permitted
CATCO to retain $500,000 of the proceeds from the prior
settlement agreement between CATCO and Emery.
On its consolidated Federal income tax returns for taxable
years ending September 30, 1989, through September 30, 1992,
respectively, CAC reported that CATCO's liabilities exceeded its
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Last modified: May 25, 2011