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beneficiary M/IC Partnership and stating as follows: “WE HEREBY
OPEN OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. 531075 IN YOUR
FAVOR, FOR ACCOUNT OF THOMAS E. GLEASON, * * * FOR A SUM NOT
EXCEEDING SIX MILLION AND 00/100’S U.S. DOLLARS AVAILABLE BY YOUR
DRAFT AT SIGHT ON COMERICA BANK”.
By January of 1996, neither Alofs nor Target could make
their debt payments and payroll. E&Y’s asset accounting and
cashflow analysis had incorporated substantial errors.
Mr. Gleason informed Comerica of these developments in mid-
January, and Comerica at that time began sweeping accounts held
at the bank for payments on notes relating to the entities,
including the $6 million note executed by Mr. Gleason and
referenced above.
Both Alofs and Target filed for bankruptcy on October 30,
1996, and were completely liquidated in May of 1997. During the
course of the bankruptcy proceedings, in late 1997, Comerica
agreed to settle “any and all claims for avoidable transfers,
whether based upon allegations of fraudulent conveyance,
preferential transfer or otherwise” by paying a lump sum of
$1,125,000 and funding an “LBO Litigation Fund” in an amount not
to exceed $500,000. Thereafter, in May of 1999, Mr. Gleason and
the bankruptcy trustee for Alofs and Target executed a settlement
agreement and mutual release of claims related to the bankruptcy,
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Last modified: May 25, 2011