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MUTUAL BEN. LIFE INS. CO. v. ATLAS FIN. CORP.

November 25, 1970

The MUTUAL BENEFIT LIFE INSURANCE COMPANY, Plaintiff, and The Equitable Life Assurance Society of the United States, John Hancock Mutual Life Insurance Company, Aetna Life Insurance Company, Bankers Life Company, Connecticut General Life Insurance Company, Continental Assurance Company, Indianapolis Life Insurance Company, Maccabees Mutual Life Insurance Company, and the United States Life Insurance Company in the City of New York, Intervenor Plaintiffs,
v.
ATLAS FINANCIAL CORPORATION, Defendant


Hannum, District Judge.


The opinion of the court was delivered by: HANNUM

HANNUM, District Judge.

 Presently before the court is the Motion of plaintiff and intervenor plaintiffs, pursuant to Rule 65, Fed. R. Civ. P., for a Preliminary Injunction seeking to restrain defendant from making any payments to its former parent corporation, Scientific Resources Corporation, under the terms of a tax sharing agreement dated September 15, 1965, as amended December 31, 1966. Accordingly, after hearing and due consideration of this matter, the court makes the following:

 FINDINGS OF FACT

 1. Plaintiff and intervenor plaintiffs are among a group of institutional lenders ("noteholders") who have made certain loans to defendant. Defendant is a finance company and is primarily engaged in the financing of consumer loans, and in particular, home improvement loans.

 2. Noteholders, including plaintiff and intervenor plaintiffs, were owed by Atlas, as of September 30, 1970, the principal sum of $26,550,000.

 3. By virtue of various acts of default on the part of defendant under the Note Agreements with noteholder, the entire principal balance of $26,550,000 was accelerated and became immediately due and payable during the period June-July, 1970.

 4. Defendant was unable to pay the sum of $26,550,000 to noteholders, and accordingly plaintiff and intervenor plaintiffs, on behalf of all noteholders, entered into an interim Stipulation with defendant dated September 30, 1970, which Stipulation resolved, on an interim basis, a number of the matters in dispute between the parties hereto.

 5. Just prior to the time the parties entered into the Stipulation dated September 30, 1970, defendant advised plaintiff and intervenor plaintiffs that defendant proposed to make a payment of approximately $385,000 to its former parent corporation, Scientific Resources Corporation, pursuant to a tax sharing agreement.

 6. Plaintiff and intervenor plaintiffs requested defendant to defer making such a payment until they had an opportunity to review the propriety of such a payment under the tax sharing agreement.

 7. Defendant was unwilling to agree to defer said payment, and defendant advised plaintiff and intervenor plaintiffs that it intended to make such payment on September 30, 1970.

 8. Plaintiff and intervenor plaintiffs thereupon filed a motion for temporary restraining order which was granted by this court, and a temporary restraining order was entered by Judge Joseph Lord, III on September 30, 1970 restraining defendant, until further order of the court, from issuing any checks or making any payments to Scientific Resources Corporation, or any affiliated corporation, under the terms of the tax sharing agreement.

 9. By stipulation of the parties hereto, said temporary restraining order was extended to November 10, 1970, on which date plaintiff and intervenor plaintiffs filed a motion for preliminary injunction.

 10. Said motion for preliminary injunction requested the court to enjoin the defendant, its agents, servants and employees, pending the final hearing and determination of this action, from issuing any checks and making any payments to Scientific Resources Corporation or any ...


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