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Summary of Occurrences’ Since our Bank Failed
On February 13, 2009, Pennell Forklift Service, Inc was notified that its primary bank (Corn Belt Bank and Trust) was closed by the Illinois Department of Financial Regulation Division of Banking and that the FDIC had been appointed as receiver of the bank. This was the first step in a series of events that ended with our notes being sold to an out-of-state investor that ultimately decided to call our loans rather than to continue to receive monthly payments under the original schedule of payments. At the time of the FDIC receivership of Corn Belt Bank, Pennell Forklift Service, Inc. was not in default under the terms of any of its loans and has continued to pay all scheduled principal and interest payments even as the notes were transferred to various owners.
The Monday following the announcement of the FDIC receivership, we called the bank to discuss our situation. We set up a meeting with our case manager, James Horton, to explain our concern that a small personal real estate note would be maturing in April, as well as 5 business lines of credit that were scheduled to mature in July 2009. We asked if the FDIC would extend the notes for a minimum of six months to allow time to re-finance the debt with an alternate lender. At first, we understood that this would not be a problem. However, this request was not granted. Instead, our case manager indicated that the FDIC would consider a consolidation and refinance proposal for our existing notes.
On April 10, 2009, we requested that the FDIC look at consolidating our notes for a term of 3 years with a ten year amortization. This was fairly typical for our lending relationship up to this point. We provided our case manager with updated financial statements, tax returns, financial projections, and our Business Plan. Our case manager indicated that he would write up the proposal for FDIC review. Shortly thereafter, we were assigned to a new case manager. Our new case manager requested a meeting. We met with the new case manager and again discussed our request. On May 7, 2009, our second case manager indicated that this would be written up and sent up the ladder to Dallas for approval. Unfortunately, approval was not granted, and on June 10, 2009 we received a letter of default on all debt from the FDIC.
We eventually refinanced the small personal real estate note with a local bank. However, we still had several ongoing business notes with the FDIC. At this time, we discussed an agreed payoff. The FDIC stated that our notes would command a premium over the proposed payoff at that time if they were sold into the secondary market due to our strong financial condition.
On August 6, 2009, our six notes were sold to a Delaware corporation for 46 cents on the dollar. This was significantly less than the negotiated payoff that we offered the FDIC. Almost immediately, the notes were transferred to another company, NLP Finance, LLC. Since the purchase of the notes we have met with representatives of NLP Finance to discuss numerous restructuring or payoff options. After some discussions, NLP informed us they were not interested in long term financing and would like payment as quickly as possible. We offered to continue payments to NLP while alternate financing could be arranged. In response, NLP sent a notice of default, a notice of demand for full payment, a notice that our interest rates would be increased 5% and 6.25% respectively, and filed a lawsuit against the company.
Unfortunately, due to the failure of the FDIC to extend our notes prior to the sale to outside investors, Pennell Forklift Service has been put into a position that is not of its doing. The only course of action left to protect our company, our employees, our customers, and our suppliers is Chapter 11 Bankruptcy protection. This course of action will allow us to continue to operate the business and give us the time that is needed to obtain a permanent banking relationship with a new lender.
We wish to express our sincere gratitude to our employees, customers, and vendors for their support during this difficult period of time. |
