Brazoria County Stewart Food Markets, Inc. - Page 17




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          self-serving and unconvincing.  There was no appraisal of UPE’s             
          inventory.  The witnesses estimated the value on the basis, in              
          great part, of a one-time brokered sale of two turbines for                 
          $14,500,000 in which UPE received a $450,000 fee.  Petitioner has           
          not shown that its inventory was similar to the example used by             
          the witnesses.  There is little in the record to show exactly the           
          type of equipment in UPE’s inventory and/or that the equipment              
          was in good working order.                                                  
               Significantly, UPE’s inventory was sold locally, only a few            
          years later, for scrap.  Grocers made one loan directly to UPE              
          with its equipment as security.  All other loans from Grocers               
          went through petitioner.  It is likely that Grocers would not               
          lend more directly to UPE because of UPE’s lack of capital for              
          security.  The value of UPE’s inventory was, therefore,                     
          insufficient to provide security for a loan or improve UPE’s                
          financial picture at the time of the advances.  Accordingly, even           
          if the inventory had been pledged by UPE as security for                    
          petitioner’s advances, it would have been insufficient to provide           
          the security that a creditor would require.                                 
               Without petitioner’s advances, UPE would have been unable to           
          continue the salvage operations, purchase equipment, or perform             
          under the Formosa contracts.  UPE reported a loss during every              
          year of its existence.  Even after it began receiving progress              
          payments from Formosa, UPE needed large infusions of capital                






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Last modified: May 25, 2011