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Tanglewood, and L&C Springs made no further payments of real
estate taxes due on the L&C Properties.
Neither in 1987 nor at any time thereafter did Tanglewood
take any foreclosure action against L&C Springs' leasehold
interest in the L&C Properties, nor did Tanglewood take any other
formal action to recover the $2,250,000 stated balance due on the
L&C Note.
After January 31, 1987, on its books and records, L&C
Springs continued to accrue unpaid interest on the $2,250,000
principal balance due on the L&C Note, and rental income received
from the L&C Properties, after operating expenses, was turned
over to Tanglewood and Cal Fed and was used to pay down
Tanglewood’s senior debt obligation to Cal Fed. No portion of
such net rental income paid to Cal Fed appears to have been
applied to reduce the principal amount of the balance owed on the
L&C Note.
From approximately 1985 forward, rental activities relating
to the L&C Properties operated at an annual cash deficit of at
least $63,000.
During 1988, 1989, and 1990, Eastern, National, and Pan
American Airlines each encountered financial difficulties. By
1990, layoffs of airline employees had occurred, and the
occupancy rate of the L&C Properties declined.
In 1988, Tanglewood defaulted on its mortgage loan payments
owed to Cal Fed, and Cal Fed commenced foreclosure proceedings.
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Last modified: May 25, 2011