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On October 29, 1990, Cal Fed and Tanglewood executed an
agreement (October 1990 Agreement) in which Tanglewood agreed to
dismissal of its bankruptcy proceedings in exchange for Cal Fed's
agreement to reschedule the foreclosure sale of the L&C
Properties until after February 15, 1991. Under the October 1990
Agreement between Cal Fed and Tanglewood, management and control
of the L&C Properties were turned over to Cal Fed, including all
security deposits, receivables, contracts, and books and records
relating to the L&C Properties and rental income received.
Tanglewood’s bankruptcy was dismissed on November 1, 1990.
By November 1, 1990, Cal Fed had obtained control over the
L&C Properties and possessed all of the burdens and benefits of
ownership of the L&C Properties.
As indicated, in spite of L&C Springs' 1987 default on the
L&C Note, Tanglewood never initiated proceedings to terminate L&C
Springs’ leasehold interest in the L&C Properties.
The October 1990 Agreement effectively conveyed to Cal Fed
L&C Springs' remaining 6-year leasehold interest in the L&C
Properties (as of 1990, the remaining term on L&C Springs' 15-
year leasehold was 6 years), terminated L&C Springs' underlying
ground lease relating to the L&C Properties, and relieved L&C
Springs of its obligation to Tanglewood on the L&C Note. Under
the October 1990 Agreement, it was represented that no right of
redemption would be exercised to interfere with foreclosure of
the L&C Properties.
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