- 5 - 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 becausePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011