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Storytelling must vacate building by June 1 or sooner

Rural Development has issued a new deadline of June 1 for the International Storytelling Center to vacate the building, 30 days earlier than the original agreement.
Several additional amendments were requested by Rural Development, Bank of America and the U.S. Trustee’s Office during the Feb. 7 hearing in Bankruptcy Court on the disclosure statement and plan of reorganization filed by ISC in December 2011.
Rural Development has allowed the ISC to remain in the building while proceeding toward foreclosure. Moving the date up may indicate the process is going faster than expected. In fact, an unofficial occupancy agreement allows Rural Development to provide only 30-days notice for the ISC to have to vacate.
Rural Development also requested the amended disclosure statement include a May 31 deadline for ISC to pay its 2009 and 2010 real property taxes in full rather than the planned installments. The 2011 taxes have been paid, but Rural Development wants the 2012 taxes escrowed.
The U.S. Trustee’s Office requested the salaries of the three retained ISC staff members be included in the statement. The three members are Director of Finance Sandy Reaves, Director of Programs Susan O’Connor, and Jimmy Neil Smith in his new role as founder and president emeritus.
Bank of America requested the statement include the bank’s decision to reduce the interest rate on its secured claim from 5 to 3 percent. The claim will continue to be secured by ISC equipment and inventory.
The unsecured claim with Bank of America is the remaining balance of a promissory note from ISC to the Industrial Development Board of the Town of Jonesborough. The IDB issued a revenue bond, later purchased by Bank of America, that was used to refinance existing indebtedness and to make additions and improvements to the Storytelling Center.
The IDB note was secured by a 15-year lease agreement obligating Washington County to pay two annual installments of $25,000 each due on May 1 and Nov. 1. Under the agreement, the county leases the Storytelling Center for 12 days each year with a right to use the center’s auditorium and the 20-seat meeting room in the Chester Inn. The lease expires Dec. 31, 2014.
During the post-petition period, Washington County has continued to make the biannual lease payments directly to Bank of America.
According to the disclosure statement, payments made during 2011 have reduced the balance to approximately $148,734. During the hearing, ISC Counsel Mark Dessauer said the organization agrees to pay this amount, which could be reduced by $25,000 if the county’s May 1 payment is received. However, if the reorganization plan is approved, the lease agreement will be rejected by the ISC.
The disclosure statement did not express ISC’s opinion on the effect the surrender of the Storytelling Center to Rural Development would have on Washington County’s continuing obligations under the lease or to Bank of America.
Judge Marcia Phillips Parsons approved Dessauer’s recommendation to file an amended disclosure statement within seven days of the hearing. Creditors would have five days to file an objection. If none are received, Parsons will enter an order approving the amended disclosure statement and setting a confirmation hearing.