6.1 EDSR 12-16-2013 - Laserfiche WebLink

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Elk River EDA Finance Committee Decembe 3,2013 Page Two 7. Participation Certificate and Agreement between First National Bank of Elk River and the Elk River EDA wherein Elk River EDA agreed to advance 100% of the Loan to the Borrower. In addition I reviewed various emails and letters relating to this matter between the First National Bank of Elk River and the Elk River EDA. You have asked me to discuss the possibility of the Elk River EDA collecting the amount owed by the Borrower and/or the Guarantors under the Note and the Guaranties,respectively. Based upon my review of the foregoing documents,the first action that the Elk River EDA should take is to determine if the Borrower and/or the respective Guarantors have any assets that could be attached and sold in order to collect the amount of any judgment that the Elk River EDA might obtain against the Borrower and/or the Guarantors in the event they should start a lawsuit under the terms of the Note and Guaranties. At this time the only method of determining what assets of the Borrower and/or the Guarantors might be available would be to review all financial statements provided by the Borrower and the Guarantors to the Elk River Bank;unfortunately,these financial statements are probably very old and if some of the memos in the file are accurate,then the actual • financial statements provided to the Elk River Bank were not in and of themselves accurate and, therefore. it would be very hard to determine if there are any assets that could be used to satisfy any judgment obtained by the Elk River EDA. If the Elk River EDA determines that the Borrower and/or the Guarantors have assets that could be used to satisfy any judgment against them or decides that notwithstanding the inability to determine whether or not there are any assets of the Borrower and/or the Guarantors to collect under any judgment,and that they still want to pursue a judgment against the Borrower and/or the Guarantors,they should have the Elk River Bank assign the Note,Mortgage, Security Agreement and Guaranties to them. Although the Note is secured by the Mortgage, it appears from the various documents that there are several Mortgages ahead of the Elk River EDA Mortgage and therefore it appears that there is not any equity in the property covered by the Mortgage and it would not be cost effective to foreclose the Mortgage. The cost to the EDA to pursue collection under the terms of the Note and various Guaranties would be approximately as follows: 1. Drafting of the Summons and Complaint,$750. 2. Service of Process on the Borrower and the Guarantors,approximately$200. 3. Filing fees with the County, approximately$322. 173697v2