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waiver, and was made "to create a sound financial basis for
future operations * * * and to recapitalize G�nther."
Sometime between January and April 1994, petitioner finally
found a purchaser for G�nther. Robert P. Romano, an individual
who had worked for one of Flint's other electronics subsidiaries
and had started an electronics company of his own, agreed to
purchase G�nther through GAI, a corporation formed to acquire
G�nther.
Under the terms of a sale agreement dated April 13, 1994,
GAI gave Flint Electronics a promissory note for DM 5,000,000,
Flint assumed all of G�nther's remaining bank debt ($3,709,460)
and forgave the remaining intercompany receivable balance
($761,228), and Flint Electronics relinquished its right to
reinstate the waived intercompany receivable ($11,429,665).
GAI’s promissory note provided for minimum principal and interest
payments beginning in FYE May 31, 1996, and specified that the
payment schedule would accelerate if GAI sold assets other than
in the ordinary course of business or became profitable.
Petitioner bargained for the note to discourage GAI from
liquidating G�nther.
GAI retained Mr. Nowell as gesch�ftsf�hrer. In the years
following the sale of G�nther, the company reported a small
operating loss followed by marginal profits. In 1996, the first
year payment under the promissory note became due, GAI/G�nther
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