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series of renewable notes (the notes). Beginning in 1984, and
until 1989, Ridge stood as a guarantor of the notes. Borrowings
pursuant to the notes reached $2 million by 1989. On
February 26, 1990, the board of directors of Ridge (the Ridge
board) authorized the withdrawal of Ridge’s guaranty of Sunbelt’s
debt to the bank (the Ridge guaranty) if there was not "a prompt
cessation and controlled liquidation of the millwork division."
Ridge could not force a shutdown of the millwork division because
it was unable to outvote Hutto, who, like Ridge, was a 50-percent
shareholder in Sunbelt. The Ridge board reasoned that, without
the Ridge guaranty, Sunbelt would be unable to obtain new funds
to cover future losses, and, as a result, Hutto would be forced
to shut down the millwork division.
On May 18, 1990, Ridge withdrew the Ridge guaranty and,
shortly thereafter, the millwork division was liquidated. On
September 17, 1990, Ridge purchased Sunbelt’s 1989 note (the 1989
note) from the Bank for $630,000, the balance due. Thereafter,
Ridge financed Sunbelt directly by extending and modifying the
1989 note on numerous occasions. In that way, Ridge was able to
exercise control over the management of Sunbelt.
In mid-1992, Hutto decided to sell his shares in Sunbelt and
leave the company. Hutto’s decision culminated several months of
negotiations between Ridge and Hutto, in which Ridge sought
either to purchase Hutto’s interest in Sunbelt or sell its
interest to Hutto. Ridge instigated those negotiations because
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