Kenneth R. and Carol L. Bauer - Page 5

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               By the end of May 1992, petitioners began to suspect that              
          the Dubatos were having serious financial problems because they             
          started “letting people go” and because they were not meeting               
          many of their expenses.  At that point, Mrs. Bauer went to                  
          Drunken Lobster once a week, not so much to assist, but to “bug”            
          the Dubatos for payment.  Petitioners offered to accept $500                
          every other week, without interest, if the Dubatos would just               
          start paying them back.  The Dubatos, offering only excuses, did            
          not agree with that arrangement.                                            
               Throughout 1993, the Drunken Lobster ran on a skeleton                 
          budget and crew.  In fact, there were days that the Drunken                 
          Lobster did not open.  The Dubatos permanently closed the Drunken           
          Lobster in October 1993.  At no time during 1993, did petitioners           
          advance the Dubatos additional funds, despite the fact that the             
          Dubatos requested them to do so.                                            
               Petitioners did not take legal steps to collect on the debts           
          (other than possibly writing one demand letter) because the                 
          Dubatos had no assets from which to satisfy their debts.                    
          Petitioners’ personal observations of the Dubatos’ financial                
          situation revealed that they owned no assets outright and that              
          they had leased everything, including the three-bedroom house in            
          which they lived, the premises where the Drunken Lobster was                
          located, and all the Drunken Lobster’s property and equipment               
          (i.e., kitchen equipment, tables, chairs, tablecloths,                      





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