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May 4, 1992, board of directors' meeting, it is represented that
no repayment was ever made on this purported debt obligation.
The lack of a written promissory note, of collateral, of
security, of repayment terms, and of interest, among other
things, indicates that Peoplefeeders and its officers and
shareholders never intended for Peoplefeeders to have a fixed
repayment obligation to Square Pan or to the other related
subsidiaries of the $3,751,930 difference between cash receipts
transferred into the Intercompany bank account on behalf of
Peoplefeeders and expenses and loan payments paid out of the
Intercompany bank account on behalf of Peoplefeeders.
Square Pan's identity as a wholly owned subsidiary of
Peoplefeeders indicates that the relationship between the two
entities with regard to the $3,751,930 difference did not
constitute that of a creditor/debtor, but rather that it
constituted that of a subsidiary/parent, and that the $3,751,930
should not be treated as a bona fide debt obligation.
Between 1987 and 1992, with the operating assets of Square
Pan already secured in favor of the Motsenbocker and Commerce
Bank loans and with the failure in 1988 to raise funds through a
private placement memorandum, Peoplefeeders was not in a position
to repay the difference in funds paid out on its behalf from the
Intercompany bank account.
The significant relevant factors indicate that the
$3,751,930 in question should not be treated as a genuine debt
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