- 3 -
the bank syndicate extended a revolving credit facility (revolv-
ing credit facility) to certain of petitioner’s operating subsid-
iaries and extended a $40 million term loan (term loan) to its
operating subsidiary ITC. As of June 30, 1993, petitioner’s
operating subsidiaries were in default under the 1990 bank
agreement, and fr76,000,000 (approximately $14,179,000) under the
revolving credit facility and $40 million under the term loan
were due and payable.3
On June 25, 1992, petitioner executed a document entitled
“GUARANTEE AND POSTPONEMENT OF CLAIM” (guarantee and assignment
agreement). The guarantee and assignment agreement provided in
pertinent part:
FOR VALUABLE CONSIDERATION, receipt hereof is
hereby acknowledged, the undersigned and each of them
(if more than one)[4] hereby jointly and severally
guarantee(s) payment on demand to Royal Bank of Canada
(hereinafter called the “Bank”) of all debts and lia-
bilities, present or future, direct or indirect, abso-
lute or contingent, matured or not, at any time owing
by InterTAN Canada Ltd. (hereinafter called the “cus-
tomer”) [ITC] to the Bank or remaining unpaid by the
customer to the Bank, heretofore or hereafter incurred
or arising and whether incurred by or arising from
agreement or dealings between the Bank and the customer
or by or from agreement or dealings with any third
party by which the Bank may be or become in any manner
whatsoever a creditor of the customer or however other-
wise incurred or arising anywhere within or outside the
country [Canada] where this guarantee is executed and
3The record does not disclose whether petitioner was liable
as of June 30, 1993, as guarantor under the bank agreement.
4Petitioner was the only signatory to the guarantee and
assignment.
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