fee and in part because Mellon Bank which was to participate in the loan determined that Blue Coal was financially weak.
60. A loan request made by Durkin to the Chemical Bank for $10,000,000 was denied after officials at the Bank determined that the Raymond Group would be unable to repay the loan in a reasonable time.
61. In July, 1973, Durkin proposed to the Gillens and Clevelands that they accept for the sale of the stock $4,000,000 in cash plus a $4,500,000 note secured by Raymond Colliery and Blue Coal assets.
62. The proposal described in the preceding paragraph was rejected by the Gillens and Clevelands upon the advice of their counsel, Bernard Brown.
63. Brown advised against the proposal because he was of the view that the transfer to the Gillens and Clevelands of a mortgage of the assets of Raymond Colliery and Blue Coal as security for the purchase price of the stock would be susceptible to a challenge by creditors as a fraudulent conveyance.
64. Besides serving as counsel to the Gillens and Clevelands during 1973, Bernard Brown was also Chairman of the Board of Raymond Colliery.
65. As a result of Durkin's difficulties in obtaining financing, Hyman Green, a wealthy entrepreneur, was brought into the transaction by Hoffa in the summer of 1973. Hoffa sought Green's participation because he was of the view that Green would be more adept than Durkin at obtaining financing.
66. Green became a 10% shareholder in Great American. The remaining shares of Great American were held 50% by Zafft and 40% by Durkin.
67. During the summer of 1973, the services of Benjamin Levinson, a loan broker, were sought by Green. Levinson put Green and Durkin in touch with Institutional Investors Trust (IIT).
68. IIT is a real estate investment trust with headquarters in New York City.
69. IIT is an independent lender and was unrelated to any party to the August 3, 1973 option agreement between Durkin and the Gillens and Clevelands.
70. Durkin sought $7,000,000 to $8,530,000 from IIT to finance the purchase of Raymond Colliery's stock by Great American.
71. Durkin, Zafft, and Green concealed from IIT Hoffa's ownership interest in Great American.
72. On July 24, 1973, Great American received a loan commitment from IIT for a loan in the amount of $8,530,000.
73. Under the IIT loan commitment as revised in the fall of 1973, separate loans were agreed to be made by IIT to Raymond Colliery, Blue Coal, Glen Nan and Olyphant (hereinafter sometimes collectively referred to as the "borrowing companies") in an aggregate amount of $8,530,000. These loans were to be secured by encumbrances on assets of the borrowing companies.
74. The borrowing companies as well as Gillen Coal, Moffat, Northwest, Minindu, Gilco, Maple City, Powderly, Olyphant Premium, Clinton and Carbondale (hereinafter the "guarantors") each agreed to execute mortgages guaranteeing payment of the $8,530,000 loan secured by encumbrances on the assets of the guarantors (hereinafter the "guarantee mortgages").
75. IIT set up an interest reserve of $1,530,000 to relieve the debtors of initial interest payments.
76. James Hillary, IIT's chief in-house counsel, discussed with Walter M. Strine, Jr., counsel to IIT and a member of the firm Morgan, Lewis and Bockius, Messrs. Gellis and Taub, IIT Trustees, and John Streiker, the IIT loan administrator, the possibility that the proposed loan was structured in a manner that might hinder the collection efforts of the Raymond Group's present and future unsecured creditors.
77. Rosenn, Jenkins and Greenwald discussed with counsel for IIT the substance of the conversations described in Finding of Fact No. 58.
78. By letter of September 26, 1973, Walter M. Strine, Jr., advised James Hillary that creditors might challenge IIT's security interest in the property of the borrowing companies because the bulk of the IIT loan proceeds was to be used to pay the selling shareholders for their stock. Mr. Strine further advised IIT that the guarantee mortgages were vulnerable to a challenge by creditors of the guarantors.
79. On October 13, 1973, using assumptions far more optimistic than those which reasonably could be drawn from Blue Coal's financial statement for the year ending June 30, 1973, John Streiker forecast that, with the imposition of the proposed IIT liability, Blue Coal would have cash deficits of $704,000 by 1976 and of $904,000 by 1977.
80. In addition to the loan promised by IIT, Durkin obtained approximately $3,452,250 in additional loans to be used for the purchase of Raymond Colliery's stock. These loans were made by lenders either to James Durkin, Sr. and Anna Jean Durkin, who then lent the funds to Great American, or directly to Great American.
81. The following funds used to acquire Raymond Colliery's stock were obtained from loans reflected on Great American's books as payable to James J. and Anna Jean Durkin:
Edward & James Durkin, Jr. $400,000
First Valley Bank 85,000
United Penn Bank 100,000
Wyoming National Bank 955,000
Eugene Zafft 188,000
No. 1 Contracting Co. 200,000
Mr. Tedesco and/or individuals 150,000
J. J. Durkin, Sr. 165,020
Thrift Credit 394,230
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