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Shortly after petitioners settled on the South Coast Thrift
loan, construction on the building resumed. However, work
proceeded very slowly as petitioner encountered further problems.
Among other things, multiple thefts of building materials and
electrical fixtures forced petitioner to install a security alarm
system for the building. The city of Los Angeles also required
petitioner to perform unanticipated additional work and repairs
to the building, including replacing the sewer system from the
building to the street curb and installing an elevator from the
first to the second floor, a sprinkler system, and a unified
electrical system for the building.
Sometime in 1990, after construction on the building
resumed, representatives of South Coast Thrift informed
petitioner that South Coast Thrift would not provide enough money
under the South Coast Thrift loan to complete all the work that
had been contemplated in his loan application.4
By the end of 1990, petitioner was forced to scale back his
plans for renovating the building and reopening the 5-4 Ballroom.
At this point, petitioner decided it would be more feasible to
4In 1991, litigation between South Coast Thrift and
petitioners ensued. On Mar. 18, 1992, petitioners commenced a
proceeding under ch. 11 of the Bankruptcy Code with the U.S.
Bankruptcy Court for the Central District of California.
Ultimately, in or about September 1994, petitioners and South
Coast Thrift entered into a settlement, pursuant to which they
agreed to reconfigure petitioners’ former South Coast Thrift loan
as a new $450,000 loan secured by the 5401-9 S. Broadway
property.
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