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regarded or treated as “repayments” of any debt obligation, but
rather simply as a process of placing all of the cash receipts of
each of petitioner's related restaurants and corporate entities
into a single cash pot for purposes of cash management, credit
enhancement, and payment of bills. Such transfers into the
account were contingent on the amount of cash receipts received
from sales, a feature not typically associated with the payment
of genuine debt obligations.
In its brief, petitioner refers to the "ebb and flow" of
funds into and out of the Intercompany bank account. Such "ebb
and flow" in the transfer of cash between petitioner's related
entities reflected the mere management of funds and cash-flow and
an apparently efficient way for Peoplefeeders to move funds
between itself and related entities, not the establishment of
genuine debt obligations.
Because of the absence of fixed maturity dates and repayment
terms associated with the payment out of the Intercompany bank
account of Peoplefeeders’ expenses and loan payments, Square Pan
had no means of establishing Peoplefeeders' default and no basis
for seeking to enforce repayment of alleged debt principal or
payment of interest.
The evidence does not indicate that Square Pan ever
requested repayment from Peoplefeeders of the purported
$3,751,930 debt obligation, and in the minutes of Square Pan's
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