- 6 - the general partner. The IHCL Restated Agreement further provided that after approximately 5 years, the net losses were to be allocated to the partners on a pro rata basis. Pursuant to the IHCL Restated Agreement, IHCL’s net income was allocated to the partners in the same ratio as net losses until such time as the allocated amount of income equaled the amount of IHCL’s cumulative net losses; thereafter, IHCL’s income would be allocated to the partners pro rata. Moreover, as part of Dondi’s entry into IHCL, the limited partnership agreements of Landmark and Gateway were amended to allocate 90.91 percent of Landmark’s and Gateway’s net losses to IHCL. IHCL maintained capital accounts for each of its partners. The partnership agreements of IHCL, Landmark, and Gateway all required that upon liquidation distributions to partners would be made in accordance with the partners’ positive capital account balances. By January 1986, Dondi had contributed $10.8 million of the required $19.8 million to IHCL and agreed to pay the balance due ($9 million) in subsequent quarterly installments. Dondi encountered financial difficulties and failed to make the installment payment due January 6, 1987. (By that time, the Federal Deposit Insurance Corporation (FDIC) had become the receiver for Vernon.) As a result, in April 1987, THEI gave DondiPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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