is free from of any encumbrance...
If BMFL should either
>
operate the 4th October Agreements or otherwise arrange
for the US properties to be charged by further documentation, CIL'S other creditors will clearly be
shocked to find that they had entered into a rescue
agreement upon the wrong premises. Undoubtedly, this
would result in at least some of the areditørs seeking
rescission of the rescue agreement. This would immediately
result in the liquidation of CIL. In this event, there
is bound to be litigation of a very aggressive kind by
liquidators of CIL and other creditors.
Therefore, even if CIL should cooperate in causing the
additional security documents proposed in the paper
relating to the US$6.70 million
million loan, there is no
guarantee that these additional security documents will be
free from attack. In any event, BMFL will be locked into
long war of attrition in the Courts in both Hong Kong
and the United States with uncertainties hanging over
their security for a long period, thereby, inviting its
Auditors to ask for yet more provisions for contingency,
both the
*
11.
Further, BMFL would be accused of standing. by
while a deception on the part of CIL took place. Not only
will its reputation suffer, this accusation will most
certainly be used to attack whatever securities BMFL may
have in any litigation. This would not necessarily
invalidate the additional securities which BMFL can obtain
from CIL, but will most certainly create a most
:5