Love the name "Alan Butcher is the solicitor for the defendants."
Getting some more details about the loan shark...
Dimethaid Research disputes Leadenhall's mortgage terms
2005-11-15 12:50 ET - Street Wire
by Stockwatch Business Reporter
When the right hand cuts a deal that the left hand claims it knows nothing about, all kinds of trouble can ensue. Such is the case with Dimethaid Research Inc. and Dimethaid Management Inc. The junior drugmaker is accused of not keeping up its payments on a $2-million (Canadian) mortgage on its head office. It claims the loan is neither "outstanding or enforceable" because the terms agreed to by two sides of the company were in conflict with each other. The penny-stock company has recently changed its name to Nuvo Research Inc. and now trades under the symbol NRI on the Toronto Stock Exchange. The charges against it are filed under its former names.
On the one hand
Dimethaid Management, in its statement of defence and counter claim filed in Toronto in May, 2005, admits it entered into a mortgage bearing interest at 2 per cent monthly dated July 18, 2003, with Leadenhall Bank & Trust. The plaintiff's statement of claim says originally the mortgage was due May 31, 2004, but it struck a deal with the Dimethaid Research on May 20, 2004, to extend the loan's expiry date by four months to Sept. 30. Leadenhall says the mortgage went into default on Sept. 30. The lender and Dimethaid Research then entered into a "Forbearance Agreement" under which the bank was paid all of the outstanding interest owing in American dollars, plus legal costs in Canadian dollars.
Dimethaid Management, however, says it did not agree to the "material changes" in the loan. It says Dimethaid Research acted without Dimethaid Management's consent to the extension of the loan past its May, 2004, maturity date. As well, it says the advance and maintenance of the loan in United States dollars was contrary to the original terms that stated the loan would be paid in Canadian dollars, "thereby creating a currency risk that was material." Also, it says monies were advanced above the two million dollar limit established under the mortgage and subsequent payments were allocated "to the excess balance, without the agreement of Management and to its prejudice." As result, Dimethaid Management claims it is released from its covenant and "entitled to a discharge of the mortgage."
And as a sort of hedge against an unfavourable outcome, Dimethaid Management says, "in the alternative," the amount owing under the mortgage cannot exceed the amount found to be owing to the plaintiff by Dimethaid Research, if any.
On the other hand
Dimethaid Research admits it executed a promissory note for $2-million (Canadian), but denies it is under an obligation to make the repayment called for in the statement of claim filed in Toronto on March 1.
It alleges a promissory note for which the mortgage was collateral contains no provision for payment of interest and, as a result, the note and the mortgage are limited to an annual interest rate of 5 per cent, as provided for by provisions contained in the Interest Act (Canada).
Dimethaid Research states it is entitled to an accounting of the loan recalculated at the "correct interest rate."
The defendants request that Leadenhall's legal action be dismissed with costs.
Both hands together
Dimethaid Management seeks a declaration from the plaintiff that the mortgage is null and void, and an order directing the discharge of the loan. As well, it seeks its costs of the action and the counterclaim.
Dimethaid Research claims against the plaintiff a declaration that interest payable under the loan is limited to 5 per cent per annum. Any extra amounts of interest paid should be applied against the loan. It also seeks costs of the action and the counterclaim.
Alan Butcher is the solicitor for the defendants.
Plaintiff's reply and defence to counterclaim
The oldest privately owned bank in the Bahamas, in its "Reply and Defence to Counterclaim" filed on May 20, denies there were material changes to the loan arrangement between the parties. It states further that both sides of the company knew what the other side was up to with respect to any aspects of the renewal and extension of the mortgage and loan arrangement itself. Leadenhall states that it was always at the request of the defendants that they were permitted to not pay off the loan at the appropriate time.
The bank says there was no material change or increase of risk under the loan to which Dimethaid Management did not agree. It argues that Management is not released from any obligations under the mortgage itself.
The Caribbean financial services institution insists Dimethaid Research is obligated to make repayment. It says the allegations concerning the non-calculation of interest are nonsense and "states that the interest as claimed is appropriate and ought to be paid by the Defendants."
The plaintiff says Dimethaid Management is not entitled to a discharge of the mortgage without making full payment. As well, it denies Dimethaid's counterclaim it is entitled to a recalculation of interest payable under the loan to 5 per cent per annum.
Leadenhall seeks to have the counterclaim dismissed with costs.
The plaintiff's lawyer is J. David Sloan.
On the home front
Dimethaid Research announced on Sept. 21 that it has signed a deal to sell its head office in Markham for $2.9-million (Canadian). The deal is expected to close in January, 2006.
Leadenhall bankruptcy
On Oct. 12 Dimethaid Research said in a press release that it had been informed Leadenhall's licence had been suspended and that it was in receivership. The company said it is in discussions with the receiver to negotiate a settlement of the balance owing under the head office mortgage. |
