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roughly 2,500,000 deutsche marks (DM)8 from Bankhaus Reuschel
(Reuschel).9 In February 1992, when Reuschel indicated it would
demand immediate payment of the loan without Flint’s guaranty,
Flint guaranteed the loan. Because G�nther was operating at a
loss by then, Flint’s management knew that guaranteeing the
Reuschel loan was risky. Still, Flint extended the guaranty, as
it saw no economically reasonable alternative short of advancing
G�nther the cash to repay the note.
G�nther’s long-term liabilities also included a lease for
G�nther’s building in N�rnberg. This building was owned by
Actium Leasobjekt GmbH & Co. KG (Actium), a limited partnership.
G�nther owned a 99-percent limited partnership interest in
Actium. In the early 1980s, shortly after acquiring G�nther,
Flint guaranteed the lease for G�nther’s building in N�rnberg.
G�nther’s bank loans were listed on its balance sheets as
notes payable. As of April 30, 1992, the principal balances of
G�nther’s notes payable to banks totaled $10,976,220, and accrued
7(...continued)
G�nther’s management to enter into loans, those restrictions on
management's actual authority were unenforceable with regard to
third parties because managers of a German GmbH have statutory
authority to represent and bind the company in transactions with
third parties.
8On average, 1 deutsche mark was worth approximately 60
cents during the years at issue.
9Flint decided to terminate Albert at least partly because
of this transaction. The terms of his severance were being
negotiated when Flint discovered the Omega transaction (discussed
infra), at which point Albert was abruptly fired.
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