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From: doug@terak.UUCP (Doug Pardee)
Newsgroups: net.micro.amiga
Subject: Re: Chapter 11?
Message-ID: <997@terak.UUCP>
Date: Fri, 17-Jan-86 15:28:36 EST
Article-I.D.: terak.997
Posted: Fri Jan 17 15:28:36 1986
Date-Received: Mon, 20-Jan-86 05:39:44 EST
References: <253@houligan.UUCP> <458@ssc-bee.UUCP>
Organization: Calcomp Display Products Division, Scottsdale, AZ, USA
Lines: 39

> Now the bankers don't want to kill a company that has a reasonable chance of
> making restitution...

Seems reasonable, right?  Well, we at Terak found out that you can't
depend on bankers being reasonable.  Our banker (the Bank of Boston)
forced us to seek refuge in Chapter 11 last year even though it was not
at all to their advantage (and it certainly wasn't to *our* advantage!)

Our operating credit line was a demand line, secured by accounts
receivable.  At the time they pulled the plug, the receivables were
worth about $1.5 million face value, our credit limit was about
$800,000, and we had exercised only about $450,000 of that.  We had
about $250,000 in our checking account at the Bank of Boston.  We had
just reported our most profitable quarter in a number of years, and
had a major new product line about ready for introduction.

About two weeks after the Bank of Boston was caught laundering Mafia
money, it notified us that it was exercising its option to demand
immediate payment in full.  This was obviously out of the question,
and we counter-offered a pay-off over 3 months.  They refused that,
and we explained that since we couldn't possibly arrange a new
credit line before the payment deadline, if they were to insist on
immediate payment in full we would have no options except to file
for protection.  They not only insisted, they siezed our checking
account (apparently a few days before they even notified us that
they were going to).

We filed for protection -- there was no choice.  The judge ordered
Bank of Boston to return our checking account, to accept a pay-off
over ten months, and to relinquish their lien on our receivables.

The moral is that the bank knew darn well that they'd be worse off
if they forced us to seek refuge in Chapter 11, but did it anyway.
A wheeler-dealer of my acquaintance tells me that it's not the
first time he's heard of bankers operating irrationally.

I hope Commodore fares better than we did.
-- 
Doug Pardee -- CalComp -- {hardy,savax,seismo,decvax,ihnp4}!terak!doug