menu bar

Valley of Lakes RICO Class Action against PNCBANK, et al.
ripped edge: exhibits


NOGI, APPLETON, WEINBERGER & WREN, P.C.
MYLES R. WRENI ESQUIRE
415 WYOMING AVENUE
SCRANTON, PA 18503
(717)   963-8880                                          
(717)	963-9372 (Facsimile)

HOEGEN & MARSH                                     
PETER J. HOEGEN, JR., ESQUIRE
25 N. RIVEIZ STREET
WILKES-BARRE, PA 18701
(717) 826-1810
(717) 824-8431 (Facsimile)
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
		IN THE UNITED STATES BANKRUPTCY COURT
	       FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

IN RE:				:
				:
C.B.G. LIMITED,			:	CASE	NO:	5-92-00525
TRACHELE, INC.,			:	CASE	NO:	5-92-00615
EAGLE ROCK SRI AREA,		:	CASE	NO:	5-92-00616
VALLEY UTILITIES COMPANY, INC.,	:	CASE	NO:	5-92-00617
RAVENS RUN EQUESTRIAN CENTER,	:	CASE	NO:	5-92-00618
ONEIDA WATER COMPANY,		:	CASE	NO:	5-92-00619
CHEZ-RAEL, INC.,		:	CASE	NO:	5-92-00620
				:
	Debtors                 :       CHAPTER 11
				:
FIRST EASTERN BANK, N.A.	:
				:
				:	(Consolidated Cases)
				:
	Movant			:
				:
VS.				:
				:
C.B.G. LIMITED,			:
TRACHELE, INC.,			:
EAGLE ROCK SKI AREA.		:
VALLEY UTILITIES COMPANY, INC.,	:
RAVENS RUN EQUESTRIAN CENTER,	:
ONEIDA WATER COMPAYY,		:
CHEZ-RAEL, INC., and		:
the U.S. TRUSTEE AS HIS		:
INTEREST MAY APPEAR,		:
				:
Respondents			:
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::


		STIPULATION FOR CONSENT ORDER FOR RELIEF
		  FROM STAY, ADEOUATE PROTECTION, LEASE
		     REJECTION AND CASH COLLATERAL






TO THE HONORABLE JOHN J. THOMAS
UNITED STATES BANKRUPTCY JUDGE

	C.B.G. Limited, and its affiliates, above captioned 

(hereinafter sometimes collectively called the "Debtor") First 

Eastern Bank, N.A., ("the Bank"), and First Eastern Equipment 

Leasing ("FEEL"), by and through their counsel respectfully 

represent as follows:

			  I.

		STATEMENT OF FACTS GIVING

		 RISE TO THIS AGREEMENT

	The debtor owns five (5) classes of property, to wit:

1.  Fully developed commercial properties which are run and

operated by Debtor, to produce a continual income stream at a

profit.

2.  Fully developed real properties, intended for sale by 

Debtor to others as a profit.

3.  Partially developed commercial properties, intended to 

be run and operated by Debtor to produce a continual income 

stream at a profit.

4.  Partially developed real properties, intended for sale 

by Debtor to others at a profit.

5.  Undeveloped real and commercial properties planned for 

development. by Debtor.

	The property is subject to a first mortgage to an individual 

and subordinate mortgages to the Bank and there are lease 

agreements with FEEL affecting some of the personal property.  It 

is the Bank's and FEEL's interests that are to be protected by 

this agreed order, and the parties intend that this Agreement

				2



shall also assist Debtor to maximize Debtor's effort and 

opportunity to achieve a successful Reorganization, thereby 

enhancing the potential recovery by other creditors, both secured 

and unsecured.

	WHEREAS; Subordinate to the Bank's interests is a suggested, 

but unrealized equity cushion.  It was against this equity 

cushion that the Debtor heretofore sought to "borrow" $600,000 by 

the request to grant a super priority lien in that amount and 

subordinating the existing mortgages.

	As a result of the hearing thereon, this court found on July 

7, 1992 that:

	The existing equity cushion was $4,604,216 or 16% of the 

total value of the property;

	The subordination would reduce the equity cushion to 14% 

of the total value;

	Uniformly, an equity cushion of 20% is always adequate and 

an equity cushion of 11% is not; the courts are divided on 

cushions between those percentages;

	Arrears in interest and taxes exist post-petition and 

continue to grow with the Debtor having no ability to pay the 

same.

	Based upon these findings, this Court denied the super pri-

ority loan and grant of prime lien.

	The Bank has advanced its claim for relief from the 

Automatic Stay, the only issue remaining is whether Debtor can 

"Adequately Protect" the Bank (11 USC Section 361).  The Debtor

				3



represents it cannot absent this agreement, and the assistance of 

Bank, continue its day to day operations, while seeking to 

formulate a plan of reorganization which can be approved by this 

court.

	WHEREAS; Debtor believes that it can obtain new financing 

and/or equity capital contribution within a limited period.

	WHEREAS; prior matters came to be heard on the Motions (the 

"Motion") of the Bank, by its attorneys, for the entry of an 

Order authorizing the Debtor to use certain "Cash Collateral" (as 

defined in Section 363 (a) of the Bankruptcy Code) and Relief 

from the Automatic Stay (11 USC 362), the Cash collateral of 

which is presently subject to security interests and rights of 

set-off in favor of the Bank which secures the prepetition 

liabilities direct and contingent indebtedness of C.B.G. LIMITED 

(the "Pre-Dip") to the Lender on their Lending as follows: 

(See Addendum (4a))

	These are secured by, among other instruments, i) Loan 

Agreements, Mortgages, and Security Agreements, Security 

Agreements - Personal Property, Financing Statements, including 

Pennsylvania, and local filings, the Guarantees of Frank V. 

Cedrone and (ii) consists of the funds on deposit or to be 

deposited in depository accounts maintained at various other 

banks (the "Other Bank Accounts") and in connection with such 

authorization, granting certain substitute and additional liens 

and other relief for the benefit of the Bank.


				4



	Debtor's Counsel and Lender's Counsel appearing do hereby 

consent for use of certain Cash Collateral up to the amount 

stated in the Exhibits attached, provided such use is conditioned 

upon the entry of this order in this present form imposing 

certain conditions and granting certain relief for the benefit 

of Debtor and the Bank as hereinafter set forth.  Notice of this 

Proposed Order will be given to the Debtor and to the Debtors 

twenty (20) largest unsecured creditors and the U.S. Trustee and 

its unsecured creditors, and such notice being adequate under the 

circumstances and in light of the nature of the Motion and the 

notice procedures for further objection to this Order, as set 

forth below:

		THE COURT HAS BEEN ADVISED, AND

		C.B.G. LIMITED AS PRE-DIP

		AND DEBTOR AND THE BANK HEREBY

		STATE ADDITIONAL SUPPORT OF THIS 

		AGREED ORDER THAT:

	WHEREAS; on March 30, 1992, the Debtor filed its Petition 

for Relief (the "Petition") under and pursuant to Chapter 11 of 

Title 11 of the United States Code (the "BarAkruptcy Code").  It 

continues to operate its business and manage its properties as a 

Debtor-in-Possession under  1107(a) and 1108 of the Bankruptcy 

Code.  No trustee or examiner has been appointed in this case.

				5



	WHEREAS; the Debtor's business consists of real property and 

related resort type facilities owned by the Debtor.

WHEREAS; the Debtor executed various agreements, evidenced 

by various Notes and Security Interests as better shown by the 

Bank's Motions.

	WHEREAS; as of March 30, 1992, the Debtor was indebted to 

the Bank on these various transactions, in amounts previously 

identified herein.  The above amount excludes costs and 

attorney's fees.

	WHEREAS; as security for repayment, the Debtor and the Bank 

entered into various Notes, Loan Agreements, Mortgages and 

Security Agreements (the "Security Agreements") granting to the 

Bank a security interest in collateral which is essentially of 

all Debtors' Assets (the "Collateral").

	WHEREAS; the Bank duly filed and perfected its security 

interest in the Collateral.

	WHEREAS; Frank M. Cedrone is a principal who has 

guaranteed some of the lending.

	WHEREAS; the Debtor has defaulted under the provisions 

of the Notes.

				6



	WHEREAS; the Bank has further asserted its entitlement to 

adequate protection of its claimed security interests in the 

Collateral pursuant to Sections 361, 362 and 363 of the 

Bankruptcy Code.  To avoid complex, protracted and costly 

litigation and the attendant delay and uncertainty related 

thereto, the Debtor and Bank have agreed to the terms hereinafter 

set forth.

	WHEREAS; this court has jurisdiction over the parties to 

this Stipulation and all of the property of this estate and 

jurisdiction over the subject matter of this Stipulation pursuant 

to Sections 157 and 1334 of Title 28 of United States Code.  

Venue of the Stipulation is proper in this district pursuant to 

Section 140 of Title 28 of United States Code.

	WHEREAS; FEEL and the Debtor had entered into a Master 

Equipment Lease on August 22, 1988, with FEEL as a Lessor and the 

Debtor as a Lessee;

	WHEREAS; as part of the lease financing transaction, the 

Debtor executed eleven (11) Acceptance Supplements which describe 

the specific items of property to be leased to the Debtor by FEEL 

(hereinafter the "Master Equipment Lease" and "Acceptance 

Supplements" shall be collectively referred to as the "Lease").

				7



	WHEREAS; the Debtor has defaulted under the terms of the 

Lease and is indebted to FEEL for arrearages in the following 

amounts:

Acceptance		Months		Amount		Late Charges
Supplement No.		Delincruent	Delincruent

6708			15		$ 60,705.75	$26,535.02

6734			9		$169,497.18	$32,868.95

6847			14		$ 12,996.20	$ 6,086.69

6911			16		$34,055.68	$12,068.80

6962			14		$29,790.60	$10,940.45

6977			14		$9,649.92	$ 3,186.07

7039			23		$28,951.25	$ 6,650.38

7521			21		$34,398.84	$ 8,654.11

7551			9		$95,361.84	$18,492.60

7897			23		$53,469.71	$13,378.48

7971			7		$47,774.44	$ 7,404.39

	WHEREAS; the Debtor has possession of the leased property;

	WHEREAS; FEEL filed a Motion to Compel Adoption or 

Rejection of Lease on May 29, 1992, and an Answer was filed by 

the Debtor on June 16, 1992;

	WHEREAS; a hearing was held on June 29, 1992 in the United 

States Bankruptcy Court in Wilkes-Barre, Pennsylvania.

				8



	WHEREAS; the above factual statements are accepted as 

correct and acknowledged.



				ORDER

	IT IS HEREBY ADJUDGED, ORDERED, AND DECREED this /22nd/ day

of /October/, 1992, that:

	It appearing some of the Pre-Petition Collateral will be

converted to cash and used by the Debtor pursuant to this order

during the period contemplated by this order, it is the intent

and purpose of this Order, inter alia, to grant to the Bank a 

security interest in all assets now owned or hereafter acquired 

or generated by the Debtor, whether through the use of Cash 

Collateral or otherwise (the "DIP Assets") in which such security 

interests are granted may, in time, be converted to cash which 

also will be used by the Debtor-in-Possession pursuant to this 

Order and replaced in whole or in part by additional DIP Assets; 

for purposes of this Order the term "Cash Collateral" shall mean 

and include all "Cash Collateral" as defined by Section 363 of 

the Code, together with cash arising from the collection or other 

conversion to cash of assets of the Pre-DIP or the Debtor-in-

Possession in which the Lender has security interests, whether 

security interests existed as of the commencement of these 

proceedings or arises thereafter pursuant to this Order, and 

whether such assets converted to cash existed as of the

				9



commencement of these proceedings or arose or were generated 

thereafter.

	The Debtor-in-Possession shall operate and use Cash 

Collateral only (i) for the purposes described in its Business 

Plan and Budget, Pro Forma - Cash Collections And Cash Use" and 

further as allowed by the Bank, pursuant to this order and (ii) 

to the extent the Debtor's Statements of the "Current Asset Base" 

shall be maintained and not diminished, or as (iii) the Bank 

consents in writing after entry of this Order, to the use of Cash 

Collateral in larger amounts prior to the Debtor's use of such 

larger amounts if not then, Debtor's use of such larger amount 

must cease.

	The Debtor shall retain "MLA" to assist and aid the Debtor 

with Management Assistance, the "Management Assistant".  The 

function of MLA shall be to review and verify previously approved 

budget line item expenses, verify work performed and generally 

monitor for Debtor's compliance with this Order, and to file 

reports concerning the same with Bank.

				10



	On appropriate notice to Debtor, MLA shall at all times have 

complete and free access to areas of Debtors' property and 

operations as well as all books, records, plans, drawings, maps, 

approvals, etc. of Debtors, the same of which are secured 

property of the Bank.  MLA shall be provided with suitable 

facilities to perform the functions described.

	The Debtor shall cause to be delivered to the Bank the 

following Reports every Tuesday before 3 P.M.

	a)  Weekly - Cash Receipts and Disbursements

	b)  Weekly - Cash on hand

	c)  Bi-Weekly - Accounts Receivables

	d)  Bi-Weekly - Accounts Payable

	e)  Bi-Weekly - Summary and Variance of Business Plan and

	Budget

	f)  Bi-Weekly - Summary and Variance of Assets 

	The Bank may fund operational shortfalls in a purely 

discretionary manner and is granted a perfected security interest 

in Debtors' assets for this post-petition lending, the same of 

which is approved and the Debtor from excess cash flow may repay.  

Reports shall be made and records kept on each of the Debtors 

separately, and shortfalls and available cash collateral shall be 

determined separately for each Debtor.

				11



	In addition to the other terms and conditions contained in 

this order, the Debtor may use the Bank's Collateral after the 

period commencing on the date of this order but ending at 12:00 

p.m. on the 22nd day of May, 1993, unless extended by mutual 

agreement or other order of court.

	In addition to its existing rights and interests in the Cash 

Collateral authorized by this order for limited use by the 

Debtor-in-Possession, as protection for the interests of the Bank 

(which is not necessarily adequate protection as such terms is 

defined in Section 361 of the Code), the Bank is hereby granted a 

valid, perfected and enforceable security interest equivalent to 

a lien granted under Section 364 (c) (2) of the Code in and upon 

all of the assets owned by the Pre-DIP and the Debtor-in-

Possession, including without limitation, their accounts, 

contract rights, inventory, equipment, fixtures, documents (as 

said terms are defined in the Uniform Commercial Code), motor 

vehicles and equipment and real property and interests in real 

property, whether owned or existing on the date of commencement 

of the present proceedings or thereafter acquired or arising 

(subject in priority only to valid and duly perfected security 

interests and liens, including mortgages and deeds of trust, 

existing at the time of commencement of the present proceedings), 

and all improvement, additions, and accessions thereto, all 

replacements thereof, all books and records with respect thereto

				12

and all products and proceeds of the foregoing.

	The security interests and liens herein granted; (i) are and 

shall be in addition to all security interests, liens and rights 

set-off existing in favor of the Bank on the Petition date and 

(ii) are and shall be valid, perfected, enforceable and effective 

as of the date of commencement of the present proceedings without 

any further action by the Debtor-in-Possession or the Bank and 

without the execution, filing, or recordation of any financing 

statements, security agreements, vehicle lien applications, 

mortgages or other documents; and (iii) shall secure the payment 

of an amount equal to (a) the aggregate Cash Collateral used or 

consumed by the Debtor-in-Possession.

	To execute and deliver to the Bank financing statements, 

mortgages or other instruments or documents considered by the 

Lender to be necessary or desirable to further evidence the 

perfection of the liens and security interests herein granted, 

the Debtor-in-Possession is hereby authorized and directed to 

execute and deliver such financing statements, instruments and 

documents.  Nothing in this order shall in any way restrict the 

scope of the Lender's pre-petition liens, security interests or 

claims with respect to the Pre-Petition indebtedness, which shall 

extend to the maximum extent provided in li U.S.C. Section 552 

and shall not be subject to restriction under Section 552 by

				13

Motion or Objection of any party.

	Upon approval of this Stipulation and Entry of Order, the 

Debtor shall use the cash Collateral (i) only in the amounts and 

for the purposes for which it was requested, which amounts and 

purposes shall be set forth in Debtors' Business Plan and Budget 

(unless the Bank shall consent otherwise) and (ii) subject in all 

respects to the limitations set forth in this Order.  In 

particular, the obligations to generate income in the amounts as 

shown and maintaining the current assets as described.  In 

accepting the Budget, and by taking any other actions pursuant to 

this Order, the Bank shall not have any liability to any third 

party and shall not be deemed to be in control of the operations

of the Debtor-in-Possession or to acting as a "responsible 

person" or "owner or operator" with respect to the operation or 

management of the Debtor-in-Possession inclusive of the actions 

of the Management Assistant.

	The Debtor has agreed to share all reports and information 

it has or collects with the Bank.

	Debtor and Guarantor are allowed and shall give to the Bank 

a "General Release".

				14



	Notwithstanding anything to the contrary in this Order, the 

Debtor-in-Possession's authority to use Cash Collateral pursuant 

to this Order shall terminate on 5 days written "FAX" notice to 

Debtor with copy to Debtor's Attorney, of any Default under terms 

of this Order, unless the Court, after expedited hearing, rules 

that the Debtor may continue to use cash collateral, or, unless 

the Court, after expedited hearing, rules that the period should 

be shortened.  Either Debtor's counsel or Bank's counsel may move 

for an expedited hearing for continued, or termination of, cash 

collateral use.

	Upon final approval of this Order, Immediate Relief from the 

Automatic Stay (11 USC Section 362) is granted to the Bank to 

sell, foreclose, or otherwise enforce its rights in the 

collateral.  This relief shall not be enforced immediately but 

shall be subject to the Debtors operational development plan.  At 

the end of the time period provided, on a default which would 

jeopardize the Bank's collateral the Debtor must assist and 

cooperate in the actions undertaken by the Bank to enforce its 

rights as a secured lender and the hired Management Assistant may 

then be retained by the Bank.

	The Debtor acknowledges it does not have the available funds 

to make administrative payments for its continued post-petition 

use of the leased property.

				15



	As a result of the unavailability of funds to cure its 

payment default under the Lease as described in the 

aforementioned recitals, or to provide adequate assurance of 

future performance under the Lease.  Its Leases with FEEL are 

deemed rejected.

	As a result of its rejection of Lease, the Debtor will 

immediately make available, the leased property, to FEEL.

	The Debtor has consented to relief from the Automatic Stay 

for FEEL and, as such, FEEL is allowed and authorized to take 

whatever steps it deems appropriate for the liquidation or 

disposal of the leased property pursuant to its right as a Lessor 

under applicable state law.  Notwithstanding the relief from the 

Automatic Stay granted hereby, FEEL shall leave Debtor in 

possession of the leased property during the term of this 

agreement.

	Judgment is entered against the Debtor for its post-petition 

months of use of the leased property as a result of the Debtor's 

failure to pay its administrative payments to FEEL for the 

reasonable value use of the leased property in the amount of the 

post-petition lease payment amounts.

				16



	The Bank and Debtor have agreed that Debtor shall be 

permitted to seek equity investors, or purchasers for the entire 

property of Debtor during the next seven (7) months following the 

date of this order.  During that time, the Debtor must sell the 

property, if offered, for the price determined by this Court to 

be the Fair Market Value in its prior order and the Bank shall 

accept this price.  Following this time, the Bank may foreclose.



				/s/
				UNITED STATES BANKRUPTCY JUDGE



				17





Consented to:

/s/
Pre-DIP and Debtor-in-Possession







BY: /s/
    One of Its Attorneys



/s/
GUARANTORS



FIRST EASTERN BANK, N.A. and FIRST EASTERN

EQUIPMENT LEASING COMPANY


BY: /s/
    ONE OF ITS ATTORNEYS




				18




		LOAN HISTORY AND PRESENRBALANCE
	(Secured By Mortgages on Real Property of Debtor)



August 21, 1989         I	* $11,500,000.00 Loan Revolver - increase in $8,500,000 revolver
					loan

				Principal			$11,500,000.00
				Interest (08/31/92)		  1,349,012.99
				Late fee, costs and
				Attorneys fees	- to be computed

			II	* $10,000,000.00	Receivable Line - increase in $5,000,000 line

				Principal			  $5,070,275.84
				Interest (08/31/92)		      (1,684.63)
				Late fee, costs and
				Attorneys fees	- to be computed

March 2, 1989		I	$ 1,500,000.00 Issued Letter of Credit
				to Italian Bank

				Principal			     $25,378.19
				Interest (08/31/92)		       3,038.14
				Late fee, costs and
				Attorneys fees	- to be computed

December 13,1989 	I	$ 1,500,000.00 2nd Revolver Loan - expired 3/13/90

February 26, 1990       I    	Mortgage re letter of credit       $ 500,000.00

				$ 500,000.00 Collateral Position

June 13, 1990           I    	$ 3,000,000.00 3rd Revolver - August 31, 1990 maturity -- takes
					       out 2nd revolver -- New documents for this note

				Principal			  $2,997,422.47
				Interest (08/31/92)		     351,697.57
				Late fee, costs and
				Attorneys fees	- to be computed


October 31, 1990	I	$ 600,000.00 Line of Credit - Valley Utilities Company

				Principal			    $583,367.27
				Interest (08/31/92)	     	      17,484.80
				Late fee , costs and
				Attorneys fees	- to be computed

					ADDENDUM 4 (a)



December 31, 1990 	I	$ 550,000.00 Loan for working capital

				Principal			    $549,979.50
				Interest (08/31/92)		      77,115.56
				Late fee, costs and
				Attorneys fees	- to be computed


Note: Certain Additional Small Lendings Exist

* Amended Existing Documents

TOTAL SECURED DEBT                               		  $23,023,087.70
								  _______________




Valley of Lakes RICO Class Action against PNCBANK, et al.

Home | Court Decisions | News Articles | RICO Complaint | Exhibits