- 6 -
arm’s-length discussions on behalf of Blackland occurred in
connection with the terms of the $2 million revolving credit
note.
According to the May 31, 1992, balance sheet and year-to-
date income statement of Blackland that is in the record, at the
time the $2 million revolving credit note was executed on
April 13, 1992, on behalf of Blackland, Blackland had no capital,
no income, and no retained earnings. No security agreement was
entered into between petitioner and Blackland to provide
collateral in favor of petitioner for any funds petitioner
transferred to Blackland under the revolving line of credit.
During 1992 and until July of 1993, in spite of the
existence of the April 13, 1992, revolving credit note, no
transfers of funds occurred between petitioner and Blackland.
Minutes of the meeting of the nominal shareholders of
Blackland held on March 9, 1995, state that the $2 million
revolving credit note was orally renewed for 1993 and 1994.
On March 10, 1995, another document also entitled “revolving
credit note” was executed by the president of Blackland in favor
of petitioner under which Blackland again purported to agree to
repay to petitioner funds to be extended to Blackland under a
loan from petitioner up to a maximum principal amount of $2.5
million at an annual interest rate of 8 percent. No schedule for
the payment of principal or interest is set forth in this second
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011