Philip A. Sellers - Page 15




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               4.  Right To Enforce Payment                                           
               A definite obligation to repay principal and interest weighs           
          toward debt.  See Stinnett’s Pontiac Serv., Inc. v. Commissioner,           
          supra at 639.  Repayment that is within the discretion of the               
          parties and not conditioned upon the occurrence of certain events           
          weighs toward equity.  See id.  Even where there is a basic right           
          to enforce payment, failure to take customary steps to ensure               
          payment–-such as securing the advance or establishing a sinking             
          fund–-weighs toward equity.  See In re Lane, 742 F.2d at 1317.              
               As far as the record reveals, Gandy’s had no fixed                     
          obligation to repay the two 1993 advances of $25,000 each.  With            
          regard to the other five advances, even if we were to assume                
          arguendo that petitioner had a basic right to enforce payment,              
          petitioner made no effort to do so and failed to take customary             
          steps to ensure payment.  The advances were unsecured.  There is            
          no evidence that any sinking fund was established by which the              
          principal and interest could be paid.  In short, the record does            
          not establish that the parties expected Gandy’s to repay the                
          advances.                                                                   
               This factor weighs toward equity.                                      
               5.  Increased Participation in Management                              
               An increase in the nominal creditor’s participation in                 
          management of the nominal debtor as a result of the advance                 
          weighs toward equity.  See Stinnett’s Pontiac Serv., Inc. v.                






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