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vending machines, work on this job ceased in February 1988, when
Idea Technologies lost its lease on the Huntsville building.
In March 1988, the manufacturing equipment was relocated to
a building that had just been leased by Venco, Inc. (Venco), in
Brownsboro, Alabama. John Ford located another supplier to
fulfill his vending machine order. The equipment was not used in
any further manufacturing activity.
Beginning in 1983, National Acceptance Co. of America (NAC)
provided Pacer a revolving line of credit, receiving a security
interest in Pacer’s assets, including its equipment, as well as a
personal guaranty from petitioner. Pacer became delinquent on
this debt. In 1986, NAC commenced a lawsuit seeking monetary
damages from Pacer and petitioners for loan and guaranty
obligations and seeking judicial foreclosure of its rights in
Pacer’s real and personal property. Petitioners made
counterclaims against NAC. Other creditors of Pacer and
petitioners were made party defendants in the lawsuit. Among
these creditors was the Internal Revenue Service.
The lawsuit was dismissed on July 8, 1988, after all parties
entered into a settlement agreement. The settlement agreement
indicates that Pacer owed approximately $920,000 to the various
creditors that were parties to the lawsuit, and that petitioners
were personally liable for approximately $840,000. The
settlement agreement recites that the assets of Pacer, upon
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