- 39 -
LTL entered into postponement agreements in favor of RBC and
BBC in November 1986. RBC and BBC relied on the agreements. The
agreements provided that Canadian law applied.
On December 11, 1986, LTL's board of directors agreed to
subordinate LII's debt to LTL to any loan from RBC to LII to
prevent default under the RBC loan agreement. On the same day,
LTL's board signed a loan agreement with LII and LWSI in which
LTL lent LWSI $350 million to be due on October 14, 1989. The
loan agreement required that, at LWSI's request, LWSI's
indebtedness to LTL would be subordinated to the indebtedness of
LWSI to RBC and BBC.
LTI and LTL signed a joint loan agreement with RBC in 1987,
under which LTL guaranteed RBC's advances to LTI. LTL, LTI, and
LII signed subordination agreements with several commercial
banks, including RBC, BBC, and TDB in part because LTL and its
subsidiaries were highly leveraged after the GSX acquisition.
Petitioners and LIIBV gave each commercial bank priority over the
intercompany advances from LTL and its subsidiaries (including
LIIBV).
On February 13, 1987, Haworth told LIIBV that subordination
of the LIIBV advances to petitioners would no longer be
necessary. On March 16, 1987, LIIBV's board voided the
subordination agreement in the first "as of September 1, 1986"
agreement. A second "as of September 1, 1986" loan agreement,
signed by Haworth and Cairns for Transit, included the amendments
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011