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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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