Information Technology Reference
In-Depth Information
This wasn't the first financial proposal Kutt had devised to
help the cash-starved
MCM
and to regain his control of
MCM
.
During an earlier board meeting, on 1 October, he had in-
formed the directors that he was expecting to have financial
arrangements completed very shortly that would result in up
to $300,000 of new capital being invested in
MCM
on the con-
dition that “he be restored to the position of full authority as
President.” The board agreed that every effort should be made
to avoid falling into receivership, including giving full consider-
ation to Kutt's arrangement for the new investment. Robert-
son stated that representatives of the guarantors had met with
the proposed new investors, John T. Chittick and Manny Y.
Rotman, and that it appeared likely that satisfactory arrange-
ments could be made with the guarantors so that the bank loan
would not be called immediately if the new investment were
made.
But the deal with Chittick and Rotman didn't go through.
The legal documents drawn up by Robertson were completely
unsatisfactory to the potential new investors because of “the
unacceptable position in which they placed Kutt.” In short,
Kutt was to remain a powerless president. Robertson's pro-
posed agreement with the new investors also called for Kutt
to withdraw his request to amend By-law No. 1 and to cancel
the general meeting of shareholders scheduled for 29 October.
Furthermore, the potential investors' insistence that the cur-
rent guarantors of the bank loan formally agree to support the
existing bank line “without any legal 'hassles'” was unaccept-
able to the guarantors.
So, it wasn't the deal with Chittick and Rotman that propelled
Kutt back to power, but the new proposal based on individual
loans and salary waivers tabled by Kutt on 21 October. The
reaction of the directors to Kutt's latest financial rescue plan
was positive. Michael Davis argued in support of Kutt's offer,
calling it a last-ditch rescue attempt. All the directors (except
Robertson, who had resigned his position a few days earlier)
